- Posted by: Julien Garcier
- Categories: Kenya, Retail, SagaRetail, Uganda
Kenyan supermarket chain Tuskys plans to grow its store network by franchising its banner to independent retailers and opening more outlets in Shell service stations. Already the largest grocery retailer in East Africa (at least in terms of store numbers) since the precipitous decline of Nakumatt, Tuskys currently operates more than 70 outlets in Kenya and Uganda.
According to Tuskys CEO David Githua, “We will roll out a lot of stores, especially smaller-format franchise outlets, across East Africa. We have two branches being tested locally … we are allowing our partners to use the Tuskys brand, IT, human resources, and supplier management systems.”
The retailer is also searching for a strategic investor in preparation for a listing on the Nairobi Stock Exchange, where it recently entered an incubation programme. Githua recently estimated that an IPO was at least 18 months away. He added that Tuskys needed to “improve its internal governance structure. We need to ensure that our structure can withstand public scrutiny upon listing. Our goal is to present a well-capitalised company to investors, as we wouldn’t want to be confronted by the suggestion that we are only listing for money.”
In the meantime, Tuskys faces another challenge: Last month, it halted sales of red meat in its supermarkets after government testing (sparked by an investigation conducted by a TV programme) found excessive levels of the preservative sodium metabisulfite in samples taken from its buthercies.
The Sagaci Research View: Over recent years, Tuskys’ growth strategy has been long on talk and short on action. It unveiled its first outlet in a Shell service station as long ago as 2015, promising 150 in total, but just a handful have since opened. Similarly, Githua has spoken of plans to franchise the brand for a number of years with little visible result, and late last year he confidently predicted that Tuskys would be “on the NSE by the third quarter of 2019.”
In this context, a degree of skepticism is warranted. Moreover, it will be difficult for Tuskys to go public while the long-running ownership dispute between the seven children of its late founder Joram Kamau continues to fester.
For a more in-depth assessment of Tuskys’ development, operations, performance, and prospects, take a look at our Tuskys Reserach Report 2019