- Posted by: Julien Garcier
- Categories: Kenya, Retail, SagaRetail
Having acquired a majority stake in Tumaini Self Service Ltd. earlier this year, Sokoni Retail Kenya, which is controlled by private equity firm Adenia Partners, has now finalised a deal to take a majority stake in rival supermarket chain Quickmart from its founding family.
The new entity will be called Quickmart, and all Tumaini stores will be converted to the Quickmart banner during the coming 12 months. Terms of the deal, which has been approved by the Competition Authority of Kenya, have not been disclosed.
With Tumaini currently operating 13 stores and Quickmart 11, the merger will create the third-largest player in Kenyan grocery retail (at least in terms of store numbers), behind Tuskys and Naivas, both of which have more than 50 outlets.
“The merger will bring together two emerging retail chains undergoing rapid growth. The combined company will create a network of 30 stores by the end of 2019, all located in convenient neighbourhood locations,” according to a joint statement.
The Sagaci Research View: With both Quickmart and Tumaini operating neighbourhood stores but with relatively little overlap in terms of geography, they appear to be a good fit. Choppies imminent exit from the Kenyan market may provide the enlarged Quickmart with new growth opportunities, but Tuskys’ renewed focus on franchising represents a potential threat.
However, as many neighbourhoods in Kenya (particularly outside of the capital) remain underserved by modern retail formats, there should be plenty of room for both to expand. The burgeoning market for smaller supermarkets located in residential areas is currently being ignored by international players Carrefour and Shoprite, with most of their outlets to be found in shopping malls.
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