South Africa retail giant Shoprite has snapped up the retail space formerly occupied by Nakumatt in Kampala.
Shoprite has been cautious since entering the Ugandan market in 2000, running only two stores till six months ago as the Kenyan retailer battled liquidity problems.
In the past six months, Shoprite has taken up three former Nakumatt stores: In Acacia Mall in Kamwokya, Victoria Mall in Entebbe and the Village Mall at Bugolobi, adding to the first two at Lugogo and on Ben Kiwanuka Street.
Shoprite is Africa’s biggest food retailer, with stores in 15 countries.
Before its collapse last year, Nakumatt operated nine stores in Uganda; seven in Kampala and one each in Entebbe and Mbarara towns.
Analysts say Shoprite’s cautious expansion has served it well in a market that has proved hostile to international retailers.
The first to burn its fingers here was another South African retailer, Cash n’ Carry, which lasted only a few years.
Then came Uchumi from Kenya, expanding rapidly before going bust, followed by Nakumatt, which, like Uchumi, imploded.
Of the three Kenyan chains that expanded westwards across the border, only Tuskys remains standing, with three stores at Ntinda, Kitintale and Makerere.
It had to close its outlets in Nakulabye, Bugolobi and downtown Kampala to survive.
Ibrahim Okumu, an economist, said that the fact that Shoprite is expanding into spaces formerly occupied by Nakumatt is an indication that the collapse of Nakumatt was about its own internal problems and not to do with the Ugandan economy.
“Shoprite are seeing an economy near take-off. Their shareholders in South Africa are looking at making profit,” he said.
Ramathan Ggobi, an economics lecturer at Makerere University, said that Shoprite’s expansion is a sign of a growing retail trade in Uganda, at a time when the shilling is depreciating against the dollar.
Uchumi and Nakumatt’s exit left a big gap in the retail business in Uganda, paving the way for new players.
Before its crash in 2017, Nakumatt was the largest retailer in the region, with 64 stores across Kenya, Uganda and Rwanda.
Shoprite also plans to enter Kenya before year-end. The retailer already operates in Tanzania and has a strong presence in South, Central and West Africa.