Why Kenya is becoming a haven for foreign supermarkets

Foreign supermarkets are increasingly tapping into Kenya's growing retail market as they seek to expand their operations, at a time when troubled local supermarket chains are closing stores.

The country has in the past months seen three major international supermarkets set up operations, with another lining up to enter the market.

Zimbabwe-based Choppies supermarket, French retailer Carrefour and South Africa's Game are the three outlets that have already set shop in Kenya.

Choppies entered the Kenyan market slightly over a year ago after buying seven branches of Ukwala,a local supermarket.

On the other hand, Carrefour, the second-largest supermarket in the world in terms of revenues, set up two outlets in high-end malls in Nairobi namely, The Hub in Karen and Two Rivers Mall in Runda.

The supermarket has further accepted to take up space vacated at a mall in middle-income neighborhood by struggling Kenyan retail outlet Nakumatt supermarket, therefore, expanding its reach.

Game, a South African retail outlet, also has a store at Garden City Mall which is located in a middle-income suburb.

South Africa's retail giant Shoprite has also expressed interest in setting shop in the country, having announced last week that it would take space once occupied by Nakumatt at a mall in Nairobi.

The entrance of these supermarkets into Kenya is a game changer in the country's retail chain business, in the hope that they'll bank on their big international names to grow their customer bases.

Kenyans have indeed embraced the foreign supermarkets alongside the local ones, with the big players taking the battle to the home-grown outlets with good bargains.

The aggressive entrance of foreign supermarkets into the East African nation is happening as local outlets face turbulence that has led to closure of several branches for most of the businesses.

The biggest casualty is cash strapped Nakumatt, which is under pressure from auctioneers owing to unpaid rent and failure to pay suppliers.

The retailer has closed up to six of its branches in major towns across Kenya and others in the neighboring Uganda and is now banking on a deal with a rival for survival.

Nakumatt, which for several years dominated Kenya's retail market and spread to Uganda and Rwanda, has left a huge gap in the country's sector, which the foreign supermarkets are currently scrambling to fill amid rise in development of malls.

Also troubled are Tuskys, which early this year shut down two of its branches in Nairobi over failure to break even and differences with landlords, and Naivas which last week shut two branches in the capital over low sales at the locations.