Picture the scene 10 years ago pertinent to the Kenyan retail market sector. Small corner shops dotted the landscape each serving their itinerant customer base. A new boutique just opened shop down the street. However, the most prepossessing aspect of all was the megalithic supermarket chain that was aggressively setting up shop all around the country. The proliferation was such that even some small towns got the irrevocably high honour of having two branches of the same. The intended goal was to blot out all spectre of competition from any other retail entity that would endeavour to rival their customer base. This was a greatly market-capitalized establishment that beat all with regards to brand recognition as they had their very own mascot, some sort of bronze elephant as a totem for their store. The name is Nakumatt. Nakumatt Supermarket. The same scene was teeming with peers like then government-bailout revamped Uchumi Supermarket. Others were Tuskys, Chandarana Food Plus, Gilani’s, Eastmatt, Naivas and even then new kid on the block, Ukwala supermarket. Life was good for the entrepreneurs and shareholders of these megastores as business was booming and the flaunting of their insignia was the order of the day with each man tooting his own horn and trying to outdo the other with regards to customer acquisition and retention. All forms of media were inundated with advertisement promotions as they all clawed for a share of the market. Loyalty Cards were dished out like confetti to the most steadfast of customers with the aim of future redemption of a shiny gift after collection of sufficient points on the plastic gizmos. However, this was also a time of tumultuous change and come 2013, a regime change was effected in Kenya. Kenya’s economics savant who had the great honour of serving as President for two, 5-year terms, H.E. Emilio Mwai Kibaki was retiring from the helm of an economy he found in the doldrums but rebooted it to vibrancy. In his stead came in the bright-eyed, flashy and resplendent son of the First President of our Republic, H.E. Uhuru Kenyatta who like a seasoned windsurfer, rode the waves of a burgeoning business community all backing him to continue the economic resurgence agenda of his predecessor. It is here that the ordure probably hit the fan leaving us all with an unsightly stench. Today, the Kenyan retail market has hit turbulent waters with Uchumi, Ukwala and even foreign-owned Shoprite and Choppies falling on hard times. But their drop has not been as precipitous as it has happened for the giants of the aforementioned halcyon days a decade ago, Nakumatt and Tuskys Supermarkets. But when did the rain start beating these esteemed and gargantuan firms of business?
For some perspective, you have to be regaled with the narrative of radix for both firms. Surprisingly, the birth stories of the two are as intricately intertwined as their destinies. Nakumatt Supermarket that was hitherto a retail juggernaut in East Africa owes its existence to its founder, one Punjabi-born Maganlal Shah who just like many fellow dukawallahs fled economic hardship in his autochthonous India at the advent of their independence in 1947 to come to the region formerly known as British East Africa to join his compatriots in enterprise. He started with a small shop in Embakasi serving both quarry labourers and those building the Jomo Kenyatta International Airport in that locale. Business was only a trickle, so he soon clambered onto his wagon and hitched onwards to Kisumu town in search of better tidings. Things were not working and he later moved to Elburgon, Nakuru and then to Nandi Hills in 1961. Here, one of his two sons, Atul Shah was born. 4 years later, this nomadic capitalist was on the move again setting up shop in Nakuru town, opposite its iconic open-air market. This was a clothing store named Vimal Fancy Store after Maganlal’s firstborn son, Vimal. So successful was this venture that Maganlal opened a 2nd store in Nakuru’s Kenyatta Avenue that was named Tiku Fancy store after his youngest daughter. So much effort was concentrated on the second store that the first one had to close shop in 1973. That was the heyday for locally made items of apparel for Kenyans then, who appreciated the high-quality products and the national policy was one of protectionism for the local producers of Cotton and Wool. Kenya had major cloth manufacturers like Rivatex and Raymonds with 100 other local entities on their coattails. The Modern-day C.E.O of Nakumatt before its collapse, Atul Shah was so overawed with the booming business that he elected to drop out of high school to also throw his hands on deck. The plea was assented to without as much as a whimper from his dad in spite of the outlandish nature of the request. 9 months later, sanity reigned as other family members prevailed upon young Atul to go back to school and leave the money-making shenanigans to the grown-ups. By 1975, the thirst for diversification hit Maganlal. He commenced the importation of ready-made garments and sheet cloth from Uganda. He was soon quite popular among fellow traders but for reasons external to his well-honed business nous that had served him well for an eon. He started selling goods on credit, premised on the promise of future payment ‘when the funds become available.’ This was not fiscally sound as many of the benefactors merely vanished into thin air after receiving the goods! He attempted to ride lightning but was met with the surly grips of eventual bankruptcy which soon forced a heavily-dejected Maganlal to close shop with debts in the region of 1.2 million shillings. Desperate to fend for his family, he approached his brother, Hasmukh for a job as a casual labourer. Unbeknownst to all not conversant with this tale, Hasmukh was running a thriving shop that selling bed linen called Nakuru Mattresses. His enterprising sons too were not left behind as they joined forces to open their own bed sheet stitching shop, Furmatts. 1978 was an exhilarating period for many Kenyan tycoons and capitalists of the time. Those who could, made their hay while the sun shone; if the stories from one Dr. Chris Kirubi, a preeminent Kenyan business mogul are to be believed. There was a boom in coffee prices in the world market necessitated by a deficit of the much-vaunted Brazilian Coffee. Kenya and neighbouring Uganda really ‘stood in the gap’ if I may use the expression. The backdrop was heavy pockets for coffee producers, middlemen and traders who virtually made like bandits in the ensuing epoch of history. This was the shot in the arm Maganlal needed with plenty of disposable income at play. Prices were hiked, but to fickle effect among the buyers as goods soon flew off the shelves. Why sacrifice style and grace if you can afford it? At around the same time, the two brothers, also touched by the hand of good fortune mobilized 300,000/- to foot a quarter of their father’s debt. Moreover, a new development was at play that would alter the entire narrative. Hasmukh was looking for a change of scenery. He had planned to move to the United Kingdom and was looking to dispose of his assets before the departure. In concert, the two sons and their father bought off the Nakuru Mattresses Holdings from their uncle and made it work. By 1979, so much profit had been made that the remaining 900,000 of Maganlal’s yoke of debt had been cleared and so the only way was up. With the business firmly in their hands, the 3 men diversified their commercial range and product offering. Soon Cooking pots, Basins, cooking sticks, frying pans and basically as many household items as were needed were stocked under a one-stop-shop. The first store outside Nakuru was opened in 1984 in Eldoret. In 1986, they broke into the Capital city with their seminal store at Ukwala Road behind the renowned ‘Bus Station.’ The marauding elephant rebranded to Nakumatt in 1987. It had now captured the market and in the intervening years, opened 32 stores in the major economic arteries of Kenya and further afield. Prior to the sudden closure, Nakumatt had a presence in Kenya, Uganda and Rwanda. Creditors formally voted to liquidate the enterprise on 7th January 2020.
Tuskys Supermarket had a similar genesis to the former. So similar that at one time, their founder Joram Kamau worked as a driver at Nakuru Mattresses. By the time he branched off into entrepreneurship in 1983, he had built such a convivial bond with his employers at Nakumatt that they agreed to advance him some nearly-expired Fast Moving Consumer Goods to start his own small self-service store that was the Gitwe General Store in Rongai, a rural hamlet in Nakuru County. He stocked mattresses, many of which he had acquired from Nakuru Mattresses in town with the promise of selling at a discounted price. His gradual variegation of business saw him also establish Jolly Grocers and Magic Superstores in no time. He soon expanded into Pundit Nehru Street in downtown Nakuru town. In May 1990, he amalgamated the business holdings which were incorporated as a Private Limited Company. A rebranding was in order and the business name morphed into Tusker Mattresses. He soon hit the concrete jungle with a spanking new branch on Mfangano Street, Nairobi. Come 2007 the mouthful was shelved with the company rebranding to Tuskys Supermarket.
There is actually an inescapable thread that runs through both these stories. For some reason, many thriving megastores in Kenya pay credence to Nakuru town as their birthplace. Allow me to indulge you all. There must be something special about Nakuru. Nakumatt, Tuskys, Naivas. There must be something in the water! Indeed, before Tuskys ran aground themselves, they had committed to trying to repay some old-time gratitude to try to resuscitate Nakumatt. This was set to be a heartwarming gesture that was unfortunately not meant to be. So you may be forced to ask what contributed to the downfall of both megastores. I have attempted to pore through this conundrum and have come up with a few reasons.
- The King David Conundrum. For those who have chanced upon the Old Testament in the Bible, you may have met the name of a formerly unassuming shepherd boy who greatly pleased the Lord and was exalted. His name was David. King David was officially the 2nd but the greatest of all Kings of Israel. So much importance is attached to King David that even today; his royal insignia, the Star of David adorns the flag of the modern-day nation of Israel. So much is said about his valour and strategic brilliance in battle that helped Israel eternally conquer bigger armies & the seasoned foes that they met in confrontation. Some of the tales about King David and his most formidable allies are the stuff of legend chronicled in the Books of 1st and 2nd Samuel and the aptly named 1st Chronicles. Who can forget the tales of how he ruled for the first 8 years of his reign from the small town of Hebron before the Lord revealed that the Ark of the Covenant and indeed the King of God’s chosen people shouldn’t live in some idyllic, backwater outpost. He made the step to capture the City on a Hill that would be easy to fortify and be a crowning jewel of the Jewish nations’ conquest of the Promised Land. I will not get into details but King David led the Israelite army to the fortified Canaanite city of Jebus, found an underground tunnel route into it, crept stealthily in, caught its dwellers flat-footed, easily captured it and drove out its inhabitants renaming it to the great City of Jerusalem. King David excelled in many walks of life but he failed in an important role that ultimately brought him great misery in his later years. He totally flunked in his role as a Father. His eldest son, Amnon begotten from Ahinoam was a spoilt brat who in exercising his whims as an ostensible crown prince willfully raped his younger half-sister, Tamar – daughter of Princess Macaah from Geshur. Absalom who was King David’s 3rd born son also born of Maacah was predictably enraged when he got wind of the desecration of his sister’s honour under Amnon’s hand and decided to take vengeance upon his brother. He organized a feast for Amnon, got his brother drunk, fomented a riot and in the ensuing kerfuffle, he slit Amnon’s throat. Absalom eschewed his father’s wrath for 3 years but was admitted back as a prodigal son to the throne. Nevertheless, how did Absalom repay his father’s forgiveness? He abused his irresistible charm, gift of the gab and exquisite good looks to usurp his father from the throne in a bloodless putsch. He felt his time had come. King David was now forced to run into the wilderness and sleep in the bushes to escape his son’s iron fist. To add insult to injury, the ill-bred Absalom also burnt down his uncle Joab’s wheat plantation for refusal to help him in the coup against King David. Joab, the loyal Commander of King David’s army was severely displeased with his upstart of a nephew. In two shakes of a ram’s tail, King David recaptured Jerusalem, his handsome son with a diadem on his head was put into headlong flight ahead of none other than his uncle Joab on horseback, his long flowing locks of hair suddenly getting tangled up in previously unaccounted for shrubs leaving him in pendulous misery; the horse cantering into the horizon devoid of payload. He begged for his life but Joab had enough of the boy and eviscerated him. Later, his 4th son; Adonijah, begotten of Haggith also threw his hat into the matter of royal succession and decided to proclaim himself King. This time, King David was preemptive and on the other side of town declared that the crown prince-elect was the sagacious; Solomon – the youngest son of the royal consort, Bathsheba. That debacle had been kicked to the kibosh much to the public ignominy of Prince Adonijah. Eventually, after King David’s demise young Solomon had to suffer the agony of putting out of his misery, his malcontent and grumbling elder sibling, Adonijah to counter dissent. What is the moral of this long-winded anecdote as it relates to our subject matter? Tuskys demise is poignant of this tale. For both Nakumatt and Tuskys, they saw it fit to keep the leadership structure as a family affair with minuscule regard to professionalism through a faulty corporate structure in its managerial echelons which proved their Achilles heel. In a space rife with stiff competition only to yield slim profit margins as is wont of the retail sector, the importance of a cost-efficient stratagem cannot be gainsaid. For Tuskys, the founder was a visionary and probably a workaholic who spared little time to cultivate the value of unity in the family unit as sacrosanct in maintaining the profitability of a thriving enterprise. Now in death, his 6 children are squabbling like village mongrels who may end up pilfering their inheritance in frivolous litigation challenging the legitimacy of their father’s will and testament among other vexations. Mzee Joram Kamau must be furiously turning in his grave!
2. Lack of Government Support For Local Enterprise – In the Pre-NARC then eventually the ODM – PNU coalition government, Kenya was ruled by a hierarchy of clueless apparatchiks more adept at grabbing & primitive accumulation of wealth than actual entrepreneurial acumen to create it. Indeed a cartoonist who is now an elected MP, once made a post satirizing the former President; the Late H.E. Daniel Moi, as having merely shrugged off the collapse of another Kenyan household megastore, Uchumi Supermarket. In his characteristic gruff voice he uttered, “Kama Uchumi naanguka basi tutagwenda Nakumatt!”(If Uchumi collapses we will always have Nakumatt) to raucous applause & high-fives from his lackeys. You can wager that even he, the long-necked giraffe of Kenyan politics did not anticipate the current status quo. As one not privy to statecraft during the earlier periods off the Nyayo-era due to chronological constraints (I was a kid), I have been forced to make my own deductions of Baba-Moi’s rule. My thesis, a State run gung-ho by men and women who only curried favour with the powers that be due to paying fealty, political correctness and tribal considerations. Meritocracy fell by the wayside in the foregoing with both public & private enterprises suffering for it. Those in the loop witnessed the ravenous pilferage of State Corporations and Agencies to their knees by the uninitiated. Uchumi Supermarket, which was partly state-owned did not survive the onslaught of these economic predators adjunct to incompetent management.
3. Rapid & Misconceived albeit Overambitious Expansion – Both Nakumatt and Tuskys became the unwitting victims of this strategic waterloo. They were tidally-locked in a rapid expansion spree that at some point manifested as a head-to-head battle for prime commercial space in the newly-built malls and pristine residential real-estate projects. As aforementioned, both grew from slightly over a dozen shopping outlets in Kenya’s major commercial centres in the early 2000s to nearly quadruple the number all over Kenya. Nakumatt even took the plunge to unchartered territory outside our frontiers in Rwanda and Uganda. There was a time when Nakumatt supermarket even listed in our national bourse, the Nairobi Securities Exchange, often featuring as a leader with regards to market capitalization butting heads with blue-chip companies like Safaricom, Kenya Commercial Bank and Equity Bank. Nakumatt even ventured further into the establishment of the Nakumatt FC football team that took its right of place in the Kenya Premier League. The intent behind this all must have been noble, but what about meeting the bottom-line of any commercial outfit that is turning a profit? Nakumatt, for a period existed in some sort of utopian bubble perhaps fueled by the audacity of hope sprinkled upon the entire globe by a First Black POTUS, Barack Obama where the clarion call “Yes we can” pervaded every stratum of society. To say they scalded their fingers is an understatement as the collapse that was shrouded in conjecture by suited & wry-smiling PR gurus was so precipitous, it could no longer be hidden from all and sundry. The implicit demerit in the strategy of ferocious expansion is in losing sight of the big picture. More often than not, this precipitates in companies overextending their pecuniary muscle all the while reaping minimal returns thanks in part to the very slim profit margins to be made in the retail sector.
4. Lack of a Company Mantra, Ethos & Disengagement of Employees From the well-being of the Establishment – Failure is seldom an event but a sequence of small dips in performance until a whole entity is beyond salvation. Methinks, Nakumatt and Tuskys blundered in not having employees as partial shareholders in their holding from its inception. I personally am torn on this one cognizant of the issue of the profit margins vis-à-vis democratizing ownership, but hear me out. If the origin story I have penned above is plausible, then the owners have all the right to enjoy the best things in life bought out of the profit from their incessant and ceaseless toil. However, it would have served the best interest of all involved to give each new employee a personal stake of the company in joining the company. Maybe a few shares. This would engender accountability as each man/woman would take the success or failure of the enterprise as a personal responsibility. In the final embers before the eventual collapse, evidence has filtered through of systematic & dry-eyed theft of both cash and products not by ill-borne shoplifters but disillusioned employees, junior-level management & the Directorial Cadre of this very enterprise. For the ordinary staff, the spectre of under-remuneration could not be discounted. For the junior-management staff, most especially the Procurement Department, the stench was utterly ignominious to all with a moral compass. Blatant conflict of interest was no byword as highly-placed figures in management also elected to be leading suppliers to the retail chain, of course paying themselves before others. The Accounts department was the archetypal manifestation of fake, disgusting financial reporting by misrepresentation through a process in accounting jargon referred to as ‘massaging the books.’ This is definitely emblematic of persons who have lost faith in their establishment and are virtually grabbing their piece of the pie in utter disregard to the fate of their employer.
5. Economic turmoil as the whirlwind expansion has not been mirrored by the Kenyan prevailing Economic situation – Nakumatt and Tuskys took the worst time possible to engage in their expansion drive all over East Africa. This is because their main market in Kenya was in shambles in similar token to the country’s current economic outlook. This was further exacerbated by a punitive taxation regime that has seen instances of double taxation for factors of production crucial for business survival. And the results have been clear for all to see. After the regime of the business-savvy President Mwai Kibaki, his successor has been latching from one clanger to the next. All this while his very own Deputy has been on a ceaseless political campaign for his own future Presidency instead off lending a hand to our economic ship in choppy waters, an absolutely entitled git.
6. Nakumatt Suffered from involvement with a Minority Shareholder linked to the Narcotics trade adjunct to other Money Laundering activities – This is a cursory tale of the old axiom, “Don’t get your meat where you get your bread and butter” or in mafia-movie parlance, “You don’t excrete where you eat!” Well-known personalities have been bandied around pertaining to the Kenyan narcotics trade for an eon. However, some myopic aficionados at Nakumatt Headquarters decided in what can be referred to tongue in cheek as ‘infinite wisdom’ to have such characters as shareholders in legitimate business. The said luminary has at one time served as the Kenya anti-corruption czar in the inaugural Kenya Anti-Corruption Authority. All this is reminiscent of the Daedalus & Icarus Greek mythology where the dexterous Daedalus fashioned the feathers of birds into a pair of wings that he and his son were to use to escape incarceration in the Island of Crete. These were to be fastened onto their arms and backs with wax and the scheme surprisingly worked as both flapped hard and attained lift off. Nevertheless, the younger man grew hubristic and soared so high that the sun melted the wax and the young man came tumbling down with no recourse. Despondent Daedalus flew to safety but had a pyrrhic victory as he lost his beloved son! Nakumatt too flew too close to the sun. According to some recently declassified United States Diplomatic cables that were unfurled in the much-maligned WikiLeaks, Nakumatt found themselves at the crux of some shadowy consortium which used to bank at the defunct Charterhouse Bank that had been founded in 1996. Nakumatt found itself as part of a syndicate that enjoyed directorship in Kingsway Tyres, Village Market among some other heavy hitters in the Kenyan corporate scene who had a holding company domiciled in Liechtenstein, no less a tax haven. Long story short, an auditor of these affairs made the startling discovery that as early as 2001, money was already being siphoned from Nakumatt’s accounts and diverted to personal bank accounts. Underreporting of returns was also rife with the aim of avoiding various tiers of corporate taxes. Needless to say, this put Nakumatt on a downward spiral that was craftily hidden by some smart accounting entailing the creation of a real book of accounts and the ‘glossier’ version! The company’s woes are as a result of the double-pronged swords of illicit money and tax evasion. Money laundering may seem devoid of victims to the uninformed but has detrimental consequences. Taking stock of affairs today shows a company that is so much into the red that, no investor is willing any longer to burn their fingers with it. Of course, efforts at getting a government bailout came a cropper as the current government may be in deeper malarkey than even Nakumatt themselves.
7. The 2009 Nakumatt Supermarket Fire – Nairobi has had its fair share of disasters since the incursion of the ‘iron snake’ (Kenya–Uganda Railway) in the locale in 1899. A few have doubtlessly involved fires. However, I aver with unbridled conviction that few fire disasters have had the enduring mental scars of the one that razed Nakumatt Downtown on 28th January 2009. It was an innocuous Wednesday afternoon and a handful of shoppers had taken the time out to buy a few household essentials from a nearby Nakumatt branch that was then thriving and a premier shopping destination for the affluent Nairobi’s middle-class. The entire incident is mired in all sorts of controversy but what is indisputable is that a Power Transformer explosion occurred a stone-throw away, ominously astride a warehouse for gas cylinders that were primed for sale. Adjoining this building was a hardware shop that sold inflammable chemicals. The conflagration that left a fireball resulted in a helter-skelter dash for salvation among all in that store towards the exit. In an attempt to eschew the prospect of looting, the dutiful security guards in callous disregard for human life locked the exit doors. When stock was taken of the rubble and plumes of sooty smoke, they found not only the unrecognizably charred remains of those that had been trapped within but also the tattered vestiges of public affection for Nakumatt Supermarket. I would be remiss not to rue the loss of the vivacious and disarmingly easy on the eye; Angel Wainaina, then a blossoming actress in the indigenous TV series; Cobra Squad, adjunct to being a mellow-voiced radio presenter. Another was then-axed technical director and former player for the Kenya National Football team, Harambee Stars, Peter Serry. The fallout from the indifferent reaction from those at the helm in Nakumatt in the face of this tragedy may not have helped in emptying the cauldron of karma that soon befell this once-thriving supermarket chain in future.
8. The Westgate Mall Attack in September 2013 – Ever since President Mwai Kibaki declared war on the Al-Shabaab in Somalia in ‘Operation Linda Nchi’ it opened Pandora’s Box with regards to the vulnerability of Kenya becoming a terrorist target. A bull’s eye on our backs added to a lax and corruptible security apparatus put our country in the fine mess that was exploited on that fateful Saturday, 21st September 2013. It all went down at the Westgate Mall in upmarket Nairobi where 4 masked gunmen drove into the establishment before opening fire indiscriminately. On that particular day, Nakumatt Supermarket which boasted a cornerstone store in the mall suffered the double jeopardy of bloodshed in their premises and additional insult to injury as alleged security operatives looted the store during the siege to flash out the terrorists. The bungling Cabinet Secretary for Internal Security in concert with his counterpart in Defence came out exonerating the Security agents from any allegations of carting booty from the scene of crime but surveillance cameras were of a divergent opinion. Still billowing smoke was blamed on burning mattresses but by then nobody was paying any attention. When full stock was taken of the fallout from the incursion on this flagship store that according to in-house records accounted for nearly 10% of Nakumatt’s total turnover, then you realize the strain exerted on this retailer that was already treading water by that time. Let’s not even mention the eternally traumatized customers that still have flashes of Post-Traumatic Stress Disorder when they pass near the establishment to date and prefer to shun the locale like a plague.
All the factors mentioned above resulted in enterprises entrapped between the devil and the deep, blue sea. By this I make reference to the mounting debts, unpaid suppliers, loans without a repayment schedule hence heavily peeved creditors unwilling to offer any more leeway for a potential revival. Needless to say, the closing of the two colossal employers resulted in massive job losses. Millions in tax revenue that was previously assured to the exchequer also went down the drain. An ineludible fate was that of an alteration of the retail sector ecosystem as other players like QuickMart, Chandarana, familiar Naivas, with foreign-owned Shoprite & Choppies joining the fray to fill the lacunae left by the exit of these two Kenyan retail titans.
The moral of this tale is that most of the ostensibly successful enterprises we see out here are anchored on quicksand and are definitely not immune to the ravages of incompetence and deleterious business practices.