Nipate
Forum => Kenya Discussion => Topic started by: RV Pundit on December 07, 2015, 03:39:33 PM
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http://www.businessdailyafrica.com/Corporate-News/Pizza-Hut-set-to-open-at-Westgate-Mall/-/539550/2986098/-/109yx5bz/-/index.html
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I thought kfc is on the ground!!!
It's part of Pizza Hut
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KFC should be on their way to 10 or more franchise. Yes they are part of the same "mother" company...but operately independently. The floodgate of America food franchise is indicator of sizeable middle class in our cities. This is always an indicator that a country is turning the corner. Don't be suprised to see Wall marts rolling down....
I thought kfc is on the ground!!!
It's part of Pizza Hut
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GreT NEWS
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Very unhealthy stuff.
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KFC should be on their way to 10 or more franchise. Yes they are part of the same "mother" company...but operately independently. The floodgate of America food franchise is indicator of sizeable middle class in our cities. This is always an indicator that a country is turning the corner. Don't be suprised to see Wall marts rolling down....
I thought kfc is on the ground!!!
It's part of Pizza Hut
Walmart already up and running as Massmart...http://www.ft.com/cms/s/0/82e7a6ae-0617-11e5-89c1-00144feabdc0.html
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KFC should be on their way to 10 or more franchise. Yes they are part of the same "mother" company...but operately independently. The floodgate of America food franchise is indicator of sizeable middle class in our cities. This is always an indicator that a country is turning the corner. Don't be suprised to see Wall marts rolling down....
I thought kfc is on the ground!!!
It's part of Pizza Hut
Walmart already up and running as Massmart...http://www.ft.com/cms/s/0/82e7a6ae-0617-11e5-89c1-00144feabdc0.html
Thanks for the link, but the article is hidden behind a fortified party wall. Please post the article here. Thanks
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RVP, hopefully the authorities will button down the supply chain to ensure that Kenyan producers benefit.
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Thanks for the link, but the article is hidden behind a fortified party wall. Please post the article here. Thanks
June 1, 2015 3:56 pm
Walmart lines up for slice of Kenyan retail
Even as Walmart raced to open its first store in Kenya, there were snags. The retailer was forced to import the trademark bright magenta ink that adorns its brash price offers and doorway décor because nobody in the country could produce it.
It was one of several obstacles the world’s largest retailer has run into in Kenya. The US retail giant has spent the past few years trying — and failing — to crack the east African hub, whose growth is fuelled by aspirational consumption.
Walmart’s move into Kenya highlights the sea change in the continent, as a nascent consumer class expands and draws in foreign investors who had previously overlooked the African middle class — estimated at a total 350m people by some metrics. Accelerating growth in the continent, forecast at 4.5 per cent this year and 5 per cent next, outstrips that of all global regions bar developing Asia.
“We should have been here a while ago but we just couldn’t get the deal right — unfortunately it’s taken us too long,” says Mark Turner, marketing director at Massmart, the South African group in which Walmart bought a controlling stake in 2011.
Massmart’s chain Game already has 172 other outlets in 11 African countries, but Kenya has long been the prize beyond its reach. It is also a potential pathway for expanding Walmart’s existing presence in east Africa, a region of 240m people.
At $53bn, Kenya’s economy is far smaller than Nigeria’s $509bn economy — Africa’s largest — where Game already has stores. But it holds the retail crown for the continent. While only 5 per cent of Nigeria’s retail sector consists of formal shopping, rather than open-air markets and small kiosks, in Kenya the proportion is 30 per cent.
“The middle class in Kenya is really growing. It’s more appealing, it’s more sophisticated and it’s ready for formal retail,” says Mr Turner. Massmart considered branding its Kenyan store as Africa’s first 2Walmart,” but in the end decided against because it is too hard to manage two brands at once, he adds.
When Game ultimately opened its Kenyan doors last week, they revealed something more akin to a wholesalers’ warehouse than a flashy modern supermarket. Wide aisles, entire banks of kettles, toilet rolls, fridges and televisions make the offering clear — no frills, and no-frills prices to boot. The store launched with a host of heavily discounted deals and promises to refund the difference plus an extra 10 per cent if they failed to undercut fierce competition.
“They have really good bargains for the price, especially on duvets,” says Mumbi, a 34-year-old mother of two who rushed into the store before work.
Her two overladen trolleys at the checkout were filled with $190 worth of goods, including duvets, toys and a cafetière. Mumbi, who did not want to give her surname, says she was only disappointed there were not more international brands on offer in the store, half of whose wares are sourced locally. The most expensive television, from Samsung, is $4,300.
Although Kenya is richly coveted by retailers and the foreign investors who back them, entry into the sector is notoriously difficult, thanks to a series of tightly held family-owned supermarket chains and a dearth of affordable space.
Walmart spent years trying to buy Naivas, the country’s fourth-biggest chain, before shareholder wrangling saw family members sue each other and finally put a stop to Walmart’s efforts last year. In 2007, Game also failed to secure a space in Westgate, which was the country’s flagship shopping mall until a 2013 terrorist attack, because it could not agree terms.
“If we can’t run the right cost model we can’t give the consumer what they need,” says Mr Turner. “It’s about finding the right property deal with the right partner in the right location.”
Walmart favours greenfield retail space, and believes the answer to its Kenya woes comes in the form of Garden City, a sleek new shopping mall designed by the same team who created west London’s Westfield shopping centre. It is part of a $250m development from UK private equity house Actis, which has a 60 per cent equity stake, along with CDC, the UK government’s development finance institution, with 31 per cent, and the World Bank’s IFC.
Unlike more gloomy dens in Nairobi, the centre is light and breezy: overlapping freestanding leaves comprise the roof. On the first day of trading, as hard-hatted labourers still hammered at building work with only 30 of 120 stores open and several stairwells still closed to the public, the region’s biggest shopping mall drew 15,000 shoppers.
“We think we will get triple the basket spend and double the dwell time of the nearest shopping mall,” says Mike Kingshott, development director at Garden City, who says a forthcoming cinema will also attract an evening crowd.
However, Game, which says it is targeting sales of $1.12m a month from 35,000 shoppers, faces considerable competition. Nakumatt, the region’s biggest chain with 39 stores in Kenya alone, has also opened a store in Garden City. It was deluged by so many shoppers on opening they bumped into one another.
"We should have been here a while ago but we just couldn’t get the deal right — unfortunately it’s taken us too long"- Mark Turner, marketing director at Massmart
However, Game rang up more than twice the number of till sales as Nakumatt on the first day of trading, at 8,990 versus 4,000.
“Game can’t just have one store — to be any threat to Nakumatt they have to have five, seven, 10,” says Mr Kingshott.
Game says it wants to open at least four stores and is actively looking at two new sites.
Nakumatt managing director Atul Shah, counting customers on his newest shopfloor, believes he can give Game a run for its money. And if Walmart tried the acquisition route again in the region, his company would be ready. “If they come with a price [for Nakumatt]?.?.?.?everything is for sale,” he says.
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RVP, hopefully the authorities will button down the supply chain to ensure that Kenyan producers benefit.
The French Carrefour started off on a bumpy ride.
Just a month to the opening of French supermarket Carrefour, the chain appears to have ran into headwinds peculiar to the Kenyan business landscape.
The supermarket will be the anchor tenant at Two Rivers Mall in Runda, Nairobi. But last week it sparked controversy after some suppliers declined to sign contracts, citing restrictive conditions.
The Kenya Association of Suppliers is opposed to a requirement that all suppliers pay a non-refundable Sh1.4 million fee and commit to paying monthly rebates to do business with the firm.
Such payments — referred to as pay-to-stay and listing fees — are charged by supermarkets in the US and Europe upfront to gauge a supplier’s seriousness. The money also acts as security to the supermarket in case a supplier’s product fails to sell.
These conditions could lock out potential suppliers and derail the supermarket’s smooth entry into Kenya. The scenario points to a wider problem that global brands in Kenya are facing, as the country becomes increasingly appealing to foreign investment.
Attracted by the rising number of cash-rich consumers, Kenya’s centrality in Africa, developments in real estate and massive investment in infrastructure, globally acclaimed brands are setting up shop.
Carrefour will be the latest in a year that has seen Uber, an American taxi company, and South Africa’s Game supermarket set up shop.
Botswana’s Choppies supermarket is also in talks to acquire Ukwala supermarket while American food chain McDonalds is reportedly keen on Kenya.
But some big names have in the past closed their shops in Kenya. These include South Africa’s cinema company NuMetro and fast food giant Nandos.
South Africa’s Media 24, which published Drum, True Love, Adam and Twende magazines in Kenya, also folded after failing to get a foothold. Kenyan editions of Drum and True Love are still in circulation, owing to an arrangement with a local publisher.
A similar fate befell India’s Essar and its yu Mobile brand.
Although the international companies exited for various reasons, some appear to have failed to adapt to the local business environment. Analysts warn that despite Kenya’s attractiveness as an investment destination, the demands and complexities of local business could see many global brands flounder unless they adopt.
“Unlike many African markets, Kenya’s business environment has matured and already has laid-down procedures. Any company that tries to dictate to the market what it thinks is correct will not survive,” said Mr Ronald Lugalia, an investment analyst for Africa Investment Bank.
To conform to strict regulations in their parent countries while at the same time maintaining a standard quality in Kenya, is a delicate balance many global brands are unable to strike. This adds to overall running costs while reducing profit margins.
Take American food chain KFC: It imports 37 per cent of its food supplies. These include potatoes from Egypt and cheese from South Africa. The potatoes are precooked and frozen before shipping.
This is because local suppliers are said to have been unable to conform to the standards set by a food safety law in the US that requires firm to trace a sample of their food to its source.
“KFC demands all suppliers to adhere to international standards. The standard, taste and quality of any meal that you eat here is the same one that you will eat at a KFC in New York or New Delhi,” said country general manager Justin Melvin.
But the food giant recently introduced ugali to the menu of its Kenyan restaurants in an attempt to adapt.
And last month, Uber allowed cash and M-Pesa payments on its taxis in Nairobi. Initially, the company allowed only credit card payments for the first six months in Kenya — a tricky strategy for a country with low credit card holders.
“In Kenya, we noted that cash is the prevalent form of payment. We also noticed the popularity of mobile money. Therefore, we adapted our payment options,” said Mr Mwambu Wanendeya, the firm’s Africa communications boss.
After the success of cash payments in Hyderabad, India, and Nairobi, Uber — which runs in over 60 cities globally, despite opposition from taxi operators — has expanded cash payments to five more cities.
http://www.nation.co.ke/business/Contract-row-dampens-entry-of-French-retailer-Carrefour/-/996/2834448/-/158sjl8/-/index.html
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RVP, hopefully the authorities will button down the supply chain to ensure that Kenyan producers benefit.
Should Kenyan suppliers benefit if they are unable to provide food of the right quality? Kenyans simply have to do better. For example, why does KFC-Kenya have to get its potatoes from Egypt when we have a whole region that worships the spud?
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Empedocles, it's only a matter of time before these multinationals meet Kenyan "businessmen" and the way they do business.
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Kenyans want to do it their inefficient way. Accountability is a luxury.
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Lots of negative thoughts. Look at FDI. Look at world class franchise(s) coming here and raising standards. Kenya is turning the corner.
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RVP, hopefully the authorities will button down the supply chain to ensure that Kenyan producers benefit.
The French Carrefour started off on a bumpy ride.
Just a month to the opening of French supermarket Carrefour, the chain appears to have ran into headwinds peculiar to the Kenyan business landscape.
The supermarket will be the anchor tenant at Two Rivers Mall in Runda, Nairobi. But last week it sparked controversy after some suppliers declined to sign contracts, citing restrictive conditions.
The Kenya Association of Suppliers is opposed to a requirement that all suppliers pay a non-refundable Sh1.4 million fee and commit to paying monthly rebates to do business with the firm.
Such payments — referred to as pay-to-stay and listing fees — are charged by supermarkets in the US and Europe upfront to gauge a supplier’s seriousness. The money also acts as security to the supermarket in case a supplier’s product fails to sell.
These conditions could lock out potential suppliers and derail the supermarket’s smooth entry into Kenya. The scenario points to a wider problem that global brands in Kenya are facing, as the country becomes increasingly appealing to foreign investment.
Attracted by the rising number of cash-rich consumers, Kenya’s centrality in Africa, developments in real estate and massive investment in infrastructure, globally acclaimed brands are setting up shop.
Carrefour will be the latest in a year that has seen Uber, an American taxi company, and South Africa’s Game supermarket set up shop.
Botswana’s Choppies supermarket is also in talks to acquire Ukwala supermarket while American food chain McDonalds is reportedly keen on Kenya.
But some big names have in the past closed their shops in Kenya. These include South Africa’s cinema company NuMetro and fast food giant Nandos.
South Africa’s Media 24, which published Drum, True Love, Adam and Twende magazines in Kenya, also folded after failing to get a foothold. Kenyan editions of Drum and True Love are still in circulation, owing to an arrangement with a local publisher.
A similar fate befell India’s Essar and its yu Mobile brand.
Although the international companies exited for various reasons, some appear to have failed to adapt to the local business environment. Analysts warn that despite Kenya’s attractiveness as an investment destination, the demands and complexities of local business could see many global brands flounder unless they adopt.
“Unlike many African markets, Kenya’s business environment has matured and already has laid-down procedures. Any company that tries to dictate to the market what it thinks is correct will not survive,” said Mr Ronald Lugalia, an investment analyst for Africa Investment Bank.
To conform to strict regulations in their parent countries while at the same time maintaining a standard quality in Kenya, is a delicate balance many global brands are unable to strike. This adds to overall running costs while reducing profit margins.
Take American food chain KFC: It imports 37 per cent of its food supplies. These include potatoes from Egypt and cheese from South Africa. The potatoes are precooked and frozen before shipping.
This is because local suppliers are said to have been unable to conform to the standards set by a food safety law in the US that requires firm to trace a sample of their food to its source.
“KFC demands all suppliers to adhere to international standards. The standard, taste and quality of any meal that you eat here is the same one that you will eat at a KFC in New York or New Delhi,” said country general manager Justin Melvin.
But the food giant recently introduced ugali to the menu of its Kenyan restaurants in an attempt to adapt.
And last month, Uber allowed cash and M-Pesa payments on its taxis in Nairobi. Initially, the company allowed only credit card payments for the first six months in Kenya — a tricky strategy for a country with low credit card holders.
“In Kenya, we noted that cash is the prevalent form of payment. We also noticed the popularity of mobile money. Therefore, we adapted our payment options,” said Mr Mwambu Wanendeya, the firm’s Africa communications boss.
After the success of cash payments in Hyderabad, India, and Nairobi, Uber — which runs in over 60 cities globally, despite opposition from taxi operators — has expanded cash payments to five more cities.
http://www.nation.co.ke/business/Contract-row-dampens-entry-of-French-retailer-Carrefour/-/996/2834448/-/158sjl8/-/index.html
This article doesn't tell the whole story especially about carrefour. Carrefour 1st store will be in karen the new mall called the hub and its opening in January 2016. The price of listing a new product is 10k which is peanuts. If one fails to fulfill contractual agreement like not going out stock, incomplete orders or late deliveries there are penalties, failure to meet annual sales target also result in penalty. On the other hand after every 45days the suppliers are paid. For me as a small manufacturer when they approached me I signed up in a heartbeat and I believe carrefour will do really well and offer unique products that have almost zero chance of being listed in other supermarkets since the chief supermarket buyers are so corrupted.
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Hk
good analysis, but 10k is peanuts?
You must have insider info!!!
I also believe supermarket buyers are more corrupt than NYS.
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Hk
good analysis, but 10k is peanuts?
You must have insider info!!!
I also believe supermarket buyers are more corrupt than NYS.
The 10k listing fee is one time off. So for example uniliver is charged 10k to list omo. And also one doesn't pay upfront its deducted from invoice. Considering how tough its to get buyers from nakumatt,naivas,uchumi and tuskys to list a product 10k is peanuts. The good thing is carrefour is bringing new standards and the nakumatts of this world will be looking over their shoulders and maybe they'll copy both practise and item selection.