Another South African company exits the Kenyan market

In a tale as old as time, a South African company has tried this Kenyan market and seen that the small coins available here are not worth all the effort

[SIZE=6]South Africa retail store Game to exit Kenyan market[/SIZE]
Shoppers at Game store in the Garden City Mall on Thika Superhighway. PHOTO | FILE

South African retail giant Massmart that operates the Game Stores has revealed its plan to sell its three stores in Kenya, marking the latest of a string of retreats from East Africa by a Southern African firm.

The Johannesburg Stock Exchange-listed retailer announced on Friday it had put up 14 Game stores in East and West Africa for sale, citing a need to focus on its “core strengths” as the group’s losses narrowed during the half year ended June 2021.

Massmart chief executive Mitchell Slape said the chain had begun a formal sales process to divest in five Game stores in Nigeria, four in Ghana, three in Kenya, one in Uganda, and one in Tanzania.

“We have reached the conclusion that the performance and complexity in running the 14 stores in five markets in the East and West Africa is something frankly that we needed to address,” said Slape during the group’s virtual financial results presentation on Friday.

The exit plan ends a five-year stint for the Sandton-headquartered retailer in Kenya and further extends the poor run by South African retailers and companies who have faced headwinds trying to crack the local market.

Mr Slape said the company was in advanced discussions with potential purchasers to take over its Game stores in Kenya, adding that the country alongside other regional markets remain a difficult business environment.

He did not disclose the details, including the value of the transactions and the identity of the potential buyers, which he noted are still subject to negotiations.

Massmart senior vice-president in charge of corporate affairs, Brian Leroni, told the Business Daily that the interest of workers and suppliers would be safeguarded in the exit plan.

“We are still in the early stages of this process and are therefore not in a position to comment definitively about a specific way forward,” he said.

“Please be assured though that we will act with integrity and in a responsible manner that is respectful of our commitments to our staff, business partners and customers.”

Local Massmart representatives said they were unaware of the expected transition.

“Please reach out to them. When we have the information locally it will be published,” said a representative at the Games Stores in Nairobi via telephone Tuesday afternoon.

Massmart, majority-owned by American super chain Walmart, made its debut in Kenya with Game Stores in 2015 with its first store at the Garden City Mall, to cash in on the growing demand for retail outlets in the country. It subsequently opened two other stores at the Waterfront in Karen and the Mega City Mall in Kisumu.

Game stores are fashioned as discount shops that sell fast-moving consumer goods (FMCG) and non-perishable groceries through over 100 outlets in over a dozen African countries.

Companies from South Africa have found it difficult to crack the Kenyan market, prompting the exit of big brands like cinema company Nu Metro, fast foods giant Nandos, household goods outlet Supreme Furniture, and magazines publisher Media24, a subsidiary of the JSE-listed Naspers.

Massmart opted to set up its branded stores in Kenya in 2015 after the collapse of its bid to acquire a majority stake in Naivas Supermarkets.

The retail giant had been angling to set up shop in Kenya through acquiring Naivas but ran into headwinds when one of the family members moved to court to oppose the impending sale.

Massmart’s planned exit follows previous similar exits of South African retailers Shoprite and their Southern Africa peer Botswana-based Choppies, which had entered the market by acquiring a majority stake in a struggling local retailer in 2016.

Never move from your stable job to a new south african company. Those companies leave shop as soon as they make their first loss. very impatient

So they should not mind a few years of loses like we don’t mind at KQ?

They come here with superiority complex. Thinking that they have brought quality products to bonobos. Only to find akina @patel have been doing that for the last 100 years…
Out of frustrations they hurriedly close shop:

  1. Metro cash and carry
  2. Chicken licken
  3. Choppies
  4. Dilpack Industries
  5. Game

Most companies allow for a few years of losses as they gain foothold and establish market. It is normal to have losses the first few years for a company, infact very few companies make profit within the first 2-3 years. SA ones do not give time for this.

Yet local supermarkets like quickmart are spreading like wildfire. In my opinion, South Africans are too stubborn to adapt to local requirements for survival. They try to replicate a blueprint that has worked in their country here and it always proves to be a financially fatal decision. Meanwhile, shiny eyes and Indians have been establishing successful supermarkets since the dawn of time.

That’s the thing, some people come from countries where you don’t need to deal with bonobo tendencies to make a business work. It shouldn’t be a point of pride that the only way to succeed in the Kenyan market is to adapt to bonobo behaviors of bribery, corruption etc. We should be taking these exits as a massive indictment of our business environment and lost opportunity for foreign inflows

That is what I thought. The SA investors have no time for our local bullshit.

I agree. Even in the 90s it was the same story with S.A furniture companies. Even S.A farmers.

The discovered the Kenyans love the low quality - look-alike furniture churned out by local fundis

I will give you information which you can decide to use as you wish. Kenya is a poor country. Watu Kenya ni maskini. Hawana purchasing power. What is keeping supposedly successful retailers in business are proceeds of crime and illicit in flows packaged as offshore investors. Students of economics will have a hard time explaining the current outburst and expansion of supermarkets. Few are genuinely making money. Most are just fronts. Ask yourself, what phenomenal growth in disposable income have we observed over the last 10 years to warrant the building of malls and opening of supermarkets in every corner? Hint; nani ananunuanga mafuta kwa hizi petrol stations zimepangana back to back hata kwa misitu?

Spend some money and develop brands that are solve Kenyan problems.

Lool! South Africans are just as corrupt as we are, if not more. Last I checked, MTN is on constant bribe mode in Nigeria and no one knows how it even entered the Syrian and Iranian markets over a decade ago.
If it is bonobo tendencies, how come American, British, German, Scandinavian brands are doing well in Kenya, but South African ones never do??
The thing is that South African companies come into the market with the attitude that they know the customer better than the customer themselves. You only need to start with DStv to see that attitude when you complain about repeats. The height of arrogance and false assumptions. They also are a high cost country now, so the strategy that Carrefour uses, where it makes some of its own things in the UAE and France and end up still being cheap after being subjected to our taxes at customs does not work for South African goods in the Kenyan context. They end up more expensive than ours. However that strategy has worked in Nigeria where import taxes are low.

Acha propaganda kijana!
Kenya ranked Africa’s second biggest market for retail investors - Business Daily

It is one of the biggest markets coz of weak or non implementation of financial laws. Hakuna mtu anakuuliza umetoa wapi pesa unawekeza. So proceeds of crime are spirited out and brought back as external investment.

That’s not how it works kijana… basic economics 101!

You need to ask yourself where this money is ending up. Wachana na theories za textbook. The bulk of the money is ending up in real estate and recently, in the retail sector. No?

I will miss their quality products,kwanza the Addis plastic products

Our purchasing power bado iko shiiini

kenpoly upped their game