Naivas Supermarkets has diversified to selling alcohol to grow its revenue, breaking a decades-old business practice that gave its rivals a competitive advantage.
The family-run retailer began opening alcohol kiosks within its newly-opened food market stores with the launch of new outlets that offered shoppers a wide variety of products, including fresh produce.
This leaves Tuskys as the only top retailer that does not deal in alcohol in a market that has seen new entrants such as France’s Carrefour and South Africa’s Shoprite sell beer, whisky and wines.
“The decision to set up an alcoholic beverages shop in our outlets was driven by customer demand,” said Willy Kimani, the Naivas chief commercial officer.
“The typical customer wants to meet all their basket requirements in a single location and in order to facilitate customers so that they do not feel they have to move elsewhere for these purchases. We took the decision to set up and run the shops ourselves,” he added.
Naivas, which was founded three decades ago and has 63 stores across Kenya, became one of the top three retailers after the collapse of Nakumatt, which had dominated the sector.
The dissolution of the Nakumatt business has also created an opening for other international retailers, including Carrefour and Shoprite
“We are in a traditionally high-volume, low-margin sector and need to be cognizant of evolving consumer dynamics. Our research tracks different product categories and alcoholic beverages was confirmed to be a necessary one,” said Mr Kimani
Alcohol sales in supermarkets and corner shops have increased more than five-fold in the wake of the coronavirus that led the government to order a closure of bars to curb the spread of the infectious disease that has infected 262 people and killed 13 in Kenya.
The coronavirus pandemic has meant that Kenyans have been forced to stay indoors to try to contain its spread.
And many people are buying more alcohol to drink at home as a result.
The International Finance Corporation (IFC) is set to acquire a Sh1.5 billion stake in the retailer.
The global financier is part of a consortium of investors, including PE fund Amethis Finance, which will provide billions of shillings to Naivas, which is controlled by the Mukuha family. Naivas said the investments will help it to expand its operations.