What started as a single outlet in Nairobi more than two decades ago is now East Africa’s largest retailer with 50 stores and a team of over 7,000 employees in four countries. As of last year Nakumatt Holdings was turning over US$650m a year, with an estimated valuation of $400m, up from $160m four years earlier.
Last month Nakumatt launched its 50th store in Tanzania, ahead of its 2015 target, after taking over three outlets previously operated by South African retail chain Shoprite. Dinfin Mulupi spoke with Atul Shah, managing director of Nakumatt, via email about his ambitions to become a pan-African retailer.
You recently opened your 50th store. Looking back to the starting days, what goes through your mind when you think of what Nakumatt has become?
I’ve always been a very ambitious person and I am glad I am also surrounded by optimistic and ambitious colleagues. For this reason, looking back I am proud of Nakumatt’s humble background and success this far. However, we still have a long way to go as my ambition is to be a pan-African retail player. As we did mention recently at the opening of our 50th branch in Arusha (Tanzania), our sights are now trained on our pan-African growth ambitions.
The opening of the 50th branch, which represents a $2m investment by Nakumatt, is also a major milestone as we had earlier set a corporate target to open the 50th branch by February 2015 under the Nakumatt 2.0 corporate development strategy.
Indeed, having started our supermarket operations in 1992 with the pioneer Nakumatt Mega store located along Nairobi’s Uhuru Highway opposite Nyayo Stadium, Nakumatt has been enjoying steady growth for the last 22 years.
In Tanzania you have acquired outlets of South African retail chain Shoprite. What opportunity do you see in Tanzania, and what has been your experience since you launched there in 2011?
We are very excited at the expansion opportunity granted to us by way of opening the three former Shoprite stores in Dar es Salaam and Arusha. Opening these branches alongside the previously existing Nakumatt Moshi store is a corporate dream come true. The opportunity in Tanzania is significant as the country represents a vast untapped retail market just like Kenya, Uganda, or Rwanda. Our experience in Tanzania so far has been very encouraging. The reception by all our stakeholders from the shoppers to staff, government and suppliers has been overwhelming. I have no doubt our Tanzania operations will represent a new growth momentum.
What impact is East Africa’s growing middle class having on your business?
They are a mirror image of the growing regional economies. This effectively means a positive impact for us and meeting daily challenges to better our best.
Nakumatt has over 7,000 staff regionally, thousands of brands on its shelves and now 50 stores. Describe the challenges of managing such a big entity across several countries?
The key challenge we face is one of ensuring that we maintain a consistent service across the network. Customers must feel at home in any branch whether in Nanyuki (Kenya) or Moshi (Tanzania). However, we have gathered significant experience to manage such challenges, and we continue to innovate to meet the customer demands.
There is increasing competition in the retail sector with local firms expanding aggressively and foreign brands planning an entry. How are you coping with the competition?
Our quality of service, variety of quality products, our strategic locations and of course the skills of our workforce sets us apart.
You have already surpassed the goal of opening a 50th store by 2015. What are the future plans at Nakumatt?
We have major growth plans. In the next few years we hope to establish our operations in South Sudan and Burundi. We have also embarked on a Kenya countywide expansion strategy that will see us open more branches in Kericho, Mombasa and Garissa, among other county headquarters where we currently have no presence.
What advice would you give others CEOs in Africa on building sustainable businesses?
There’s no secret to doing business in Africa. Just deliver your promises to customers and respect the cultural and related norms.