The leading retailer Choppies says it will operate 40 stores in Kenya in the next five years. Currently, the group operates 107 retail outlets in Southern Africa, comprising 68 stores in Botswana, 26 stores in South Africa and 13 stores in Zimbabwe.
Kenya has the highest formal retail penetration outside of Southern Africa at 30 percent and is dominated by local players.
In June 2015, Choppies signed an agreement with Ukwala, a local retailer, to purchase 10 stores at an approximate value of US$10 million. The Choppies group has revealed that approval from the Competition Authority of Kenya has been received. “The acquisition provides an excellent footprint for expansion across Kenya and East Africa,” Choppies directors said, further stating that Ukwala also operates in white goods and apparel segments with Fast Moving Consumer Goods (FMCG) responsible for only 50 percent to 60 percent of sales. “This provides further opportunities for growth,” they noted.
The Johannesburg Stock Exchange listed retailer said the Ukwala transaction is in line with its plans to have a footprint across the African continent where it intends to operate 200 stores in six countries by December 2016.
In the 2015 annual report, Chief Executive Officer (CEO) Ramachandran Ottapathu stated that the transaction is in line with their strategy to expand into new markets in sub-Saharan Africa and gives Choppies an immediate footprint of established stores as well as a platform for growth in Kenya. “Three of the supermarkets are located in Nairobi, two in Nakuru and five in the port city of Kisumu, the third largest city in Kenya,” he said.
In the report, Choppies said it expanded its footprint with a number of store roll-outs in existing markets. In Botswana, it said it strengthened its position as the largest retailer by increasing stores from 69 to 73. In South Africa, with a net increase of 10 stores, Choppies said it achieved an EBITDA break-even position. “The Zimbabwean expansion focused on the Harare area and other major towns other than Bulawayo,” the directors said, adding that the expansion was supported by the new distribution centre in Harare. “Seven new stores were added to take the in-country store footprint to 20.”