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The changing face of Uganda’s supermarkets
The modern day supermarkets are more organised. FILE PHOTO
Kampala
Previously, most Ugandans bought household items from the small shop next door. The supermarkets, which were mainly owned by the Indians, were few and perceived to be for the affluent in society. The opening of Shoprite in early 2000, however, changed the face of the supermarket business in Uganda as more and more foreign chain supermarkets have continued to open shop.
These include: Game, Uchumi, Nakumatt, Shoprite Checkers and of recent Tuskys.
As a result, local supermarket owners have changed strategy to match the competition.
Capital Shoppers, which set off as a shop along Duster Street I near Nakasero Market currently boasts of two modern state-of-the-art branches one along Nakawa-Bunya Road and the other at the old shop location. They are also constructing a third branch in Ntinda.
Quality Supermarket is the other local chain with outlets in Ntinda, Old Kampala, and in Lubowa Estates along Entebbe Road. Standard and Ken Joy supermarkets are the other home-grown outfits that are in this business. For now though, local supermarket owners have of late started giving in to competition.
Early this month, Nakumatt Holdings officially took over operations of two Payless Supermarkets in Bukoto and Bugolobi – both Kampala suburbs. Although these are relatively small compared to the main Nakumatt Supermarket at Oasis Mall, management said they are trying to bring their services closer to the people. “These small branches will just keep our name in these locations as we plan to set up bigger stores in the same areas,” Mr Joshua Ng’ang’a, the country manger of Nakumatt Uganda, said.
Although there is still scanty information as to why the management of Payless Supermarket sold off their business (at Shs1.34 billion), information around the business circles indicates that the competition was too stiff.
This is the second take over after another Kenyan-based chain supermarket, Tusky’s, bought off Good Price and Half Price supermarkets, which had expanded to many Kampala suburbs.
Uchumi Supermarket, the first Kenyan chain store to open shop in Uganda in 2002 is also planning to expand in the coming year. “In our strategy, in a years’ time, we will expand countrywide into several branches within Kampala and in the countryside towns of Gulu, Arua and Mbarara,” Mr Jeff Nchaga, the country manager, told Business Power last week.
“We will in the first quarter of 2011 open our second branch along Ggaba Road.”
The growth in the supermarket business has been fuelled by the changing lifestyle of Ugandans and increasing purchasing power. “Successful local Supermarkets have removed the phobia that they are for the rich because now we trust the products which we buy from Supermarkets more than in our village retail shops,” Ms Allen Kizito, a customer found shopping at Good Price Nakivubo said.
Dr Maggie Kigozi, the executive director of Uganda Investment Authority - a government agency promoting investments and economic development, said: “Ugandans now have more capacity to buy, so retail shops are cropping up everywhere and have changed the style of other retail shops into getting more organised.” According to Uganda Revenue Authority, the sector contributes tremendously towards tax in their respective classifications.
Mr Paul Kyeyune, the URA public and corporate affairs manager, said: “Supermarkets’ contribute to the wholesale and retail trade sector not as individual chains.” According to the URA records, both the wholesale and retail trade sector contributed nearly Shs1.19 trillion in 2009/10 up from the Shs1.14 trillion from the previous year.
Given the regional integration that has ushered in the Common Market arrangement where member states are supposed to open their borders to free movement of trade and establish businesses, experts say this could be one of the reasons that are fuelling expansion.
Kenyan investments in Uganda have placed it among the top Foreign Direct Investments into the country; currently ranked at number five according to Uganda Investment Authority records. However, consumers will benefit from the competition with better variety, competitive prices, quality and choice as the providers will strive to excel and attract consumer loyalty.
Mr Henry Richard Kimera, the president Consumer Education Trust (Consent) said: “The takeover of Payless by Nakumatt is a positive move to the chain customers who should now expect variety in services,” Mr Kimera said. He appealed to Nakumatt to look into the supply policy of Payless taking in locally produced products to sustain and support local farmers and producers of consumer goods. “It is healthy competition for the sector provided the strong ones don’t end up dominating the sector and abusing their dominance,” Mr Kimera added.
