It has been an interesting few days in the Nairobi mall and supermarkets space.
Management of The Junction mall severs relationship with its anchor tenant. Nakumatt kicked out of The Junction. pic.twitter.com/7XFw9KFqX1
— Wallace Kantai (@wgkantai) October 1, 2017
It started off with a notice on social media from the Junction, a 26,000 square meter mall stating that Nakumatt had surrendered their space at the mall. Nakumatt was the anchor tenant of the mall which opened in 2004 and now has 115 stores.
But Nakumatt which has been having cash flow and supplier payment issues, and which have all resulted in most common everyday products like fresh foods and supplies missing from their store shelves, then put out a statement alluding to ongoing talks with the Junction mall and their suppliers with advanced plans to restock their shelves.
Later on the same day Nakumatt got a court injunction temporarily stopping their removal from the Junction and issued another more formal statement about how the Junction management had tricked them and illegally took over their space after they had paid Kshs 20 million, hurting their image in the mind of employees, suppliers, and customers.
Knight Frank who manage the Junction also issued a statement acknowledging the court order, which they would follow, but stating that Nakumatt had signed a surrender on 15th September and then failed in its payment obligations and had not documented a commitment to restock the shelves by the surrender date.
Tuesday also saw an announcement by Majid Al Futtaim that they would be opening their third Carrefour store in Kenya at TRM (Thika Road Mall), a 28,000 square meter mall on Thika Highway. The space had been surrendered by Nakumatt just two weeks before that. Carrefour operates stores at the Hub in Karen and Two River malls.
The release also contained some interesting stats on suppliers and employment:
– We are looking to stock over 30,000 items at the hypermarket, including fresh produce, groceries, a fresh bakery, and a butchery
– (We) work with over 640 suppliers, local manufacturers, producers, and farmers, which contribute to the overall economic growth in Kenya both directly and indirectly. Only one of the suppliers is foreign.
– The opening of the new branch at TRM will boost the staff employment count at Carrefour in Kenya to 800, with 600 already working at the other two branches located at The Hub in Karen and the Two Rivers Mall.
There has been quite a bit of clamour by customers of Carrefour, which was becoming quite crowded at Karen on month end, to expand.
I suspect the Junction has already passed on that space to Chandarana or Carrefour and they will fight the elephant in the room …
— Social Experiment (@MediaMK) October 2, 2017
An equity deal to rescue Nakumatt deal seems to have floundered, and a new announcement about ongoing discussions for a management partnership arrangement between Nakumatt and a rival supermarket chain Tuskys have not inspired the confidence of supplier and financiers of Nakumatt.
Other believed beneficiaries of Nakumatt surrendering any more stores are expected to be Naivas and Khetia. This week also saw Naivas launched Naivas Pay in partnership with Interswitch. The launch was a Ciata Mall, at their store in a space Naivas took over after it had been previously booked by the management of Uchumi.
Uchumi itself is in the process of concluding a deal to raise Kshs 3.5 billion from a private equity investor.
— Rich TvAfrica (@RichTvAfrica) August 9, 2017
Another interesting concept in the supermarket space, is Seven 2 Seven, a franchise of mini market stores that only stock fast-moving consumer goods (FMCG) and serve as agents of some banks. They are on track to have 100 stores in Machakos, Kajiado, Nairobi, Kiambu, Muranga, Nyeri, Embu, Kirinyaga, Meru and Nakuru counties by year-end.
EDIT November 30 Majid Al Futtaim announced plans to open its fourth Carrefour hypermarket in Kenya, after taking up the anchor tenancy at the Junction Mall on Ngong Road. The new hypermarket will be opened in January 2018.