Nakumatt needs no introduction to the citizens of Kenya. Following its inception in 1991 by Atul Shah, the super market chain grew in to a giant player as Managing Director Atul’s son Neel Shah, explains: “These days you have to be near your customers” This applies physically by placing the stores in convenient locations, and in terms of offering the right products and the services. The first 4,000 square foot store started as Nakumatt Mega in Nairobi, and is now the biggest of all Nakumatt branches, having expanded to 150,000 square feet.

At a time when business has been suffering globally, Nakumatt has been doing well. In the last year its turnover has increased by 15 percent, and the economic environment has been favourable. 2010 has been a feel-good year according to Shah, “We had good rains so agriculture has boomed; we have a new constitution; there is a feeling of stability. Kenyans are feeling confident and spending money. Our basket value has gone up by about eight percent.”

Stores for more
Nakumatt has responded with its own mini-boom. Since 1 January, 2010, it has opened eleven new stores, nine in Kenya and two in Uganda, bringing the total branches in the region to 32. As part of this expansion it has moved into three towns where previously there was no Nakumatt: Nanyuki, Kakamega, and Diani to the south of Mombasa, and added a second store at Eldoret.

In Nairobi, Nakumatt pushed ahead a concept that will be a key part of its strategy going forward when it opened four CBD (central business district) branches. “These are smaller convenience stores of around 10 to 25,000 square feet, smaller than our normal branches and catering for the working population in the city. We took over locations of an existing chain, refurbished them and relaunched them as Nakumatt.”

These CBD stores are the only ones that are not new premises – outside Nairobi they are all either newly built or sited in new shopping malls, says Neel Shah. So why such a bold move at this time? “We had been holding back for a couple of years, but then our shareholders put in about Kshs 550 million ($7.5 million) to fund a major expansion.” This was supplemented by SACE, an Italian government sponsored programme to promote exports, offering Nakumatt a €6 million facility. “We buy the bulk of our refrigeration equipment and shelving from Italy: this loan, repayable over five years, accelerated our expansion plans because it enabled us to finance them at much cheaper interest than would have been available in Kenya.”

East African expansion
The programme is far from over. Nakumatt is already present in the Uganda market and has signed up for two new shopping mall locations in Kampala: these will be opening in the next 18 months, says Shah. “All the East African economies are growing strongly; with elections coming up in Uganda in February, the country is gaining in stability and confidence and we expect huge growth there especially once the oil starts to flow!”

In Rwanda too, Nakumatt has signed up to one new location in the prestigious Kigali Towers in the city centre, and is looking at more locations in this fast-growing country. However the most ambitious single programme is directed towards a country that has known stability ever since it became independent, and which is poised for real growth in the next decade. 2011 will see the opening of the first Nakumatt in Kenya’s southern neighbour Tanzania, at the northern town of Moshi.

Later in the year a major branch will be inaugurated on a prime location in the smart Oyster Bay district. “We are also finalising a location in Arusha,” Shah adds. “Tanzania is a new market for us and it will be an important focus next year. It is a fast-growing economy, but formal retail has not yet developed there to the extent it has in Kenya and even Uganda.”

The home territory will not be neglected, and Neel Shah is very excited by the potential for consolidating the Nakumatt brand there. “We are expanding into new towns. In 2011 we will open our first branches in Malindi and Nakuru, our home town.” Nakumatt stands for Nakuru Mattresses, which was Atul Shah’s original business. “We closed that operation when we moved to Nairobi in 1987, so it is exciting to be going back,” says Neel.

Most innovative
You can still buy a mattress from Nakumatt though half of the turnover now comes from food product sales. The larger stores stock furniture, electronics and household appliances, toys, sports equipment and even hardware. “Our position since from the outset has been that you can furnish your entire house at Nakumatt: we have worked towards that and are well profiled, though we are looking to expand each and every one of these categories.”

Some changes are planned, some are forced upon us. The recent Alcohol Bill in Kenya aims to curb irresponsible and under-age drinking and drink advertising. One of its provisions states that alcohol may no longer be sold on open shelves so all the Kenya stores are being modified to provide secure areas not accessible to anyone under 18. “We are taking the opportunity to improve the ambience of those sections, make them more appealing and maybe increase the variety of drinks offered in them.”

Nakumatt Mega is open round the clock, and the 24-hour concept has been expanded to seven others. People spend more at night when they are not so rushed, and women in particular like to be able to come shopping with their husbands and children. “The freezers are running anyway, says Shah, so the extra cost is not great, and the shift pattern suits staff better.” In 2008 Planet Retail named Nakumatt as runner up in the ‘Most Innovative New Concepts’ category in the Planet Retail Innovation Awards, second only to Wal-Mart. Nakumatt was the only African retailer to win a retail global award and was recognised for its regional expansion strategy showcased by the opening of Nakumatt City Centre in Kigali, Rwanda, another 24-hour store.

This year the Financial Times of London named Atul Shah as one of the top 50 emerging market business leaders and the company was recognised as the most respected company in East Africa in a Pricewaterhouse Cooper survey. Global accolades for a regional company rapidly leaving its competitors playing catch-up.