Majid Al Futtaim had grand plans for the Carrefour franchise in Kenya which they have since accelerated as other supermarket chains have encountered financial difficulties. This was revealed at a media session by Majid Al Futtaim managers at their Two Rivers Mall office, located at their second hypermarket in Nairobi. The company which is the leading operator of malls in the Middle East and North Africa holds franchises for Carrefour stores in 38 countries, including 14 in Africa.
Their Country Manager for Kenya, Franck Moreau said they had an initial target to open 5 hypermarkets and 10 supermarkets within 5 years but that has all changed now. When Majid Al Futtaim decided to invest in East Africa, back in 2012, local retailers like Nakumatt and Uchumi were doing quite well. The took up a 20-year lease at Two Rivers, opened their first Kenya store at the Hub in May 2016, and in the last two months, they have signed on to replace Nakumatt as the anchor tenant at two large malls in Nairobi – at TRM on Thika Highway and the Junction Mall on Ngong Road.
They operate decentralized hypermarkets with each store doing its own ordering, deliveries, storage, handling, marketing, maintenance, payments, and human resources all at the store sites. The financial aim is to create value and market share while meeting or exceeding budgets, and going by current trends in e-commerce, they target to have 15% of online sales in the next two years.
Majid Al Futtaim operates 220 stores in 15 countries, serving 200,000 customers a day. They plan to reach at 500 stores in 5 years with the “great moments, every day, for everyone” theme through innovation in customer service, being a great employer, and working with local suppliers as they take the hypermarket store and adapt it for different countries, customers and cultures.
For Kenya, 1,000 unique products items are imported by Carrefour to differentiate the stores from other supermarkets, and 29,000 other items are sourced from 650 Kenyan suppliers that they work with. Moreau said 50% of their customers at Two Rivers are from the neighbouring Ruaka area who come to shop at Carrefour for the quality, fresh, and available range of products for different classes. But he added that one unique Kenyan thing was a distrust of ‘promotions’ (buyers think there is something wrong with the products on sale) and they are the only supermarket chain asking suppliers for to give continuous and permanent promotions.
The conversion of malls stores to fit the Carrefour model takes time and large investments which Moreau estimated was five times more than what other local retailers spent on their stores and that it will take about nine months to convert the spaces they are taking over at the Junction and TRM to full completion, by which time they will have over 1,100 employees in Kenya.