THE CAPITAL POINT |THE STATE OF UCHUMI SUPERMARKET| CEO, UCHUMI|MR

Full Summary of the Interview: The State of Uchumi Supermarket – CEO Mohamed Mohamed

The CEO of Uchumi Supermarkets, Mr. Mohamed Mohamed, recently appeared on The Capital Point to provide an in-depth analysis of the current state of the retail chain and outline the company’s ambitious turnaround strategy. The conversation shed light on Uchumi’s challenges, its plans for revival, and its place in Kenya’s evolving retail landscape.

Current State of Uchumi Supermarkets

Mr. Mohamed began by acknowledging the financial and operational difficulties facing Uchumi. He explained that the company is currently undergoing a transitional phase, primarily driven by the implementation of a Company Voluntary Arrangement (CVA) under the Insolvency Act of 2015. The CVA, which allows the company to restructure its debts while continuing operations, was presented to creditors earlier this year. Mohamed expressed optimism as the majority of trade creditors have already approved the plan, which includes a 30% debt reduction and a phased repayment of the remaining 70% over a 4-5 year period, subject to Uchumi’s cash flows.

The CEO highlighted that while Uchumi has faced challenges from creditors and other stakeholders, significant progress has been made in securing critical agreements and stay orders to maintain operations at key locations. These steps are vital for ensuring that Uchumi can focus on profitable ventures while managing outstanding debts.

Turnaround Strategy

The centerpiece of Uchumi’s recovery is its comprehensive turnaround strategy. Mohamed elaborated on several initiatives aimed at revitalizing the business:

1. Branch Optimization and Franchising: Uchumi has streamlined its operations by retaining only the profitable branches, including key locations such as Ngong Road, Adams Arcade, Meru, and Eldoret. Additionally, the company is exploring a franchising model that allows other retailers to operate under the Uchumi brand while Uchumi focuses on brand management and supply chain efficiencies. This model offers a potential revenue stream through royalties and partnerships with smaller retailers.
2. Diversification into Convenience Stores and E-Commerce: Recognizing the growing consumer demand for convenience, Uchumi plans to introduce express shops and convenience stores to target localized markets. The company is also revisiting its e-commerce platform to provide modern shopping solutions, which it views as critical to competing in the evolving retail landscape.
3. Asset Optimization: Mohamed discussed plans to utilize existing assets more efficiently. For instance, the company aims to generate revenue through alternative business models while maintaining its core retail operations. He clarified that while Uchumi is not selling off key assets, it is exploring strategic resolutions for properties like the Kasarani land to address financial issues.
4. Brand Rejuvenation and Customer Trust: Restoring customer trust is central to Uchumi’s strategy. Mohamed emphasized the importance of fully stocking shelves, offering competitive prices, and supporting local farmers to regain the loyalty of Kenyan consumers. The company is also considering a rebranding effort to refresh its image, though such plans are still in the exploratory phase.

Addressing Competition

The interview touched on the intense competition in Kenya’s retail sector, particularly from international players who have entered the market with efficient operations and modern business models. Mohamed noted that while these competitors have advantages, Uchumi aims to carve its niche by focusing on supermarkets and convenience stores rather than hypermarkets, aligning with current consumer trends. He also highlighted the need for local players to improve their efficiencies to compete effectively.

Governance and Transparency

Uchumi’s commitment to corporate governance and transparency was another key focus of the discussion. The CEO acknowledged past lapses in reporting to the Capital Markets Authority (CMA) and reassured stakeholders that a corporate governance team is now in place to address these issues. He stressed that Uchumi is open to scrutiny and is actively updating regulatory bodies on its progress.

Financial Challenges and Funding Plans

Financial restructuring remains a critical component of Uchumi’s recovery. Mohamed stated that the company’s debt currently stands at approximately KES 7 billion, including obligations to trade and secured creditors. Despite these challenges, he expressed confidence in Uchumi’s ability to attract external funding and investments once the CVA is fully implemented. Potential strategies include partnerships, raising capital, or even mergers with international retail players.

The Future of Uchumi

Looking ahead, Mohamed outlined a vision of rebuilding Uchumi into a force to reckon with in the Kenyan retail market. The focus will be on leveraging the strength of its iconic brand, fostering innovation, and maintaining strong relationships with stakeholders. He expressed gratitude to Uchumi’s loyal employees, whose dedication has been instrumental in navigating the company through this turbulent period.

In his closing remarks, Mohamed emphasized that Uchumi remains a Kenyan heritage brand with deep economic contributions to the country, particularly in promoting local products and suppliers. While acknowledging the uphill battle, he reaffirmed his commitment to seeing Uchumi not just survive but thrive in the coming years.

Conclusion

This interview provided valuable insights into the challenges and opportunities that lie ahead for Uchumi Supermarkets. With a clear roadmap, a focus on innovation, and the determination to rebuild trust, Uchumi’s leadership appears poised to lead the company into a new era of growth and stability. The journey will undoubtedly be watched closely by stakeholders and the wider Kenyan retail community.