When Tuskys was reeling under the weight of an ugly sibling rivalry back in 2013, Nakumatt managing director Atul Shah tried to save it by mediating between the five sons of Tuskys founder Joram Kamau who were all pulling in different directions.
By then Nakumatt was big and had curved out its niche in upmarket Nairobi and symbolized what Tuskys itself wanted to become, the Nakumatt of lower income Nairobi or say the Nakumatt of the future.
But why would anyone attempt to save their rival in a capitalist setting like Kenya’s? Well we don’t know, what we know is that, that relationship is now helping save Nakumatt.
However with the rapid closure of outlets at home and abroad, that picture of Nakumat has been flushed down the drain rather too fast and forced Tuskys into premature market leadership.
Tuskys has moved to fill that vacuum with an audacious step to lift Nakumatt out of its mess not by putting in money but by ensuring that Nakumatt shelves are stocked. Reliable information has it that troubled Nakumatt will start getting some of its stock from Tuskys.
Nakumat has closed its TRM branch shortly after closing its outlet at Nextgen mall ostensibly for stock taking while its major outlets such as Nakumatt Life style has several of its shelves empty and the same is repeated in many other outlets.
The once prosperous chain store with branches all over the region has since closed several branches and will undergo a management shakeup that will give Tuskys a significant say. But questions abound on the ability of Tuskys to carry the weight of such a huge chain store that needs Sh77 billion to recapitalize or is it just a fight for scraps?
Nakumat MD Mr Shah had earlier fallen to his knees asking the government for a bailout but the government refused or say it does not have that money. A bailout of Sh77 billion for one company is out of question for a country whose total revenues are just over a trillion shillings. Kenya is also grappling with way smaller issues such as nurses and lecturer’s whose demands are less than Sh10 billion.
State owned Uchumi which should qualify for such an injection has been swinging on the death rope for sometime now hoping to get a cash rescue.
Nakumatt will use Tuskys’ supply chain as the two retailers look into ways of aligning their operations including management changes that will give Tuskys considerable decision-making rights in Nakumatt.
The emergence of both Nakumat and Tuskys into big retail players in the region underscores the ability of family managed businesses to scale quickly to become key players in a country’s economy given the right environment but also puts focus on management of family businesses.
The failure of Nakumat and Uchumi has also spawned discontent in the mouths of managers in key malls such as Sarit, Garden city, TRM, Westgate and several others which have relied on them over the years to drive traffic in their malls as key tenants.
The duo has in the past presented a formidable front that has seen the foray of foreign stores such as Shoprite into Kenya end up in failure repeatedly but as of now foreign retailers such as Game and Carrefour perhaps have a better chance to assume and cement their anchor tenancy in more malls with their relatively expensive shelf prices being a key issue.
The supermarkets have contracted as rapidly as they expanded putting to doubt the decision to expand with multiple stores even in the neighbouring countries. It seems that trouble started way earlier at the privately owned Nakumatt but the situation only became apparent due to employee unrest and scanty shelves.
Industrialization Cabinet Secretary Adan Mohammed had, last week, suggested talks were at an advanced stage for a rescue plan for Nakumatt and Uchumi.