Inside the Sh7bn turnaround plan for Uchumi supermarket

Staff at Uchumi Capital Centre, Mombasa Road, restock the firm’s shelves this week. The new management has promised customers a wider array of products. photo | SALATON NJAU

What you need to know:

  • Uchumi has sought the services of a professional company to advice on settlement of its debts and future cash flow projections.

There is a sense of urgency in which the newly appointed acting chief executive officer of Uchumi Supermarkets, Mr Mohamed Mohamed, answers our questions about the troubled retail chain.

His answers reveal a mind that has figured out a strategy and timelines on how the household name will earn the respect of shoppers, employees, suppliers and shareholders.

In an exclusive interview with the Sunday Nation in Industrial Area, Nairobi, the first with a media house since his appointment this month, Mr Mohamed fingers out easily what ails the retailer as well as the remedies.

As we sit down in his new office, we realise that he settling down fast. The office though has only the bare essentials — a large desk, chairs, two phones and shelves.

Last week, he was elevated from chief finance officer, where he had served since last year. He is working alongside Mr Dickson Andrew, the chief operating officer as the recruitment for the next CEO continues.

During that time, the government provided the much needed Sh700 million rescue package that is helping the retail chain restock its 20 outlets across the country.
The retailer is also banking on sale of its Sh3 billion Kasarani land to fuel its comeback.

“We have a willing buyer and we are closing in on the Sh3 billion land deal, hoping it will help us bounce back,” Mr Dixon said on Thursday.

“We hope to settle our liabilities and also use the money to refurbish our stores in order to improve the retail environment.”

Mr Mohamed is clear on how the restocking will take place. “It’s Christmas time and it’s common sense that most people from the city will travel home. As we restock, we must, therefore, take cognisance of the fact that our upcountry outlets will see more traffic during Christmas than those in the city,” he says.

Mr Mohamed was instrumental, alongside the immediate former chief executive Julius Kipng’etich, in laying out the grand comeback plan for the chain.

“He laid the foundation. He left the plane on the runway and we are ready for takeoff,” said Mr Mohamed.

During his reign, Mr Kipng’etich saw the government commit Sh1.8 billion, with the second tranche of Sh700 million released this week. The first Sh500 million was released in January and the remaining Sh600 million will be used to offset debts in Tanzania and Uganda.

Mr Kipng’etich also helped negotiate for a strategic fancier, who is expected to inject Sh3.5 billion. He also initiated the search for a buyer for the 20-acre Kasarani plot.

Mr Mohamed says all the money, not less than Sh7 billion, is expected in the first quarter of 2018 and will settle all the debts the retail chain has with suppliers and landlords.

“It will take time for all the variables to click for us to say we are on a sure footing. But finally, there is light at the end of the tunnel.  We intend to ensure we are paying our suppliers and rent on time,” he says.

Mr Mohamed estimates that by the end of the week, 80 per cent of the stocks will be in place in all strategic supermarkets, with 90 per cent of suppliers who provide 80 per cent of total earnings finally coming back.

Uchumi has about 200 key daily essential products suppliers who will now be paid accumulated debts. They have agreed to resume business with the chain.

Mr Mohamed says that in three to six months, when the strategic investor and the proceeds of the sale of the Kasarani plot will be in, the company will start planning for the future, with the lessons from the past as a guide.

But he is cagey on how Uchumi should align itself with the market, owing to the current stiff competition.

“The concept of retail shopping is changing. Nowadays you have online shopping. The malls concept is changing. We also have neighbourhood shopping. The retail business is still growing and it has different concepts. We will review all the concepts and adopt the best,” he says.

The retailer has sought the services of a professional company to advice on settlement of its debts and future cash flow projections.

But to achieve this, the Nairobi School and Moi University alumni is worried by the state of the retail market.

“We are the only multibillion shilling industry that is un-regulated. Banks have the Central Bank, insurance companies have the Insurance Regulatory Authority, and so on. There is a need for a legal framework on how to regulate retail supermarkets. As it is, a supermarket can just collapse — catching the government, employees and the economy unawares,” he notes.

Mr Mohamed is a finance and accounting professional with over 20 years experience. He has financial management knowledge across multi-sector industries relating to ICT, telecommunications, retail and supply chains. He is seasoned in financial accounting, ICT, operations, HR, and commercial/marketing operations.

As the interview ends, incessant phone calls come in. The 43-year-old wonders whether the calls are over yet another media interview, or over a problem calling for his attention within the supermarket chain.