The Death Of Shopping In Africa?

The sun was unusually hot as guests enjoyed a sumptuous lunch in Diani, the sprawling coastal town in Mombasa, known for its beaches and coral reefs. Lunch time in Diani in February could almost be a scene from paradise—the wide blue Indian Ocean lapping against a pristine beach; European tourists, escaping freezing temperatures back home, sunbathing lazily.
The guests from Nairobi clearly knew their way around. Dressed in smart casuals and resisting the urge to pull off their shirts to catch a welcome breeze, they sighed with relief as they walked into the air-conditioned five-star hotel.
Among them was Atul Shah, the managing director of Nakumatt Holdings, the family-owned company that runs Kenya’s largest retail chain. With a number of his managers, he was on a mission: to supervise construction of a new Nakumatt store in Diani. They talked politics and did the sums for the new investment.
When his phone rang Atul Shah, like businessmen do, excused himself and stepped a few yards away. From a distance, witnesses say, you could see his face turn ashen and panic set in on what was to be his worst day. The caller with bad news was the manager of the downtown branch in the heart of Nairobi.
“It sounded like a dream,” says Shah. “Then I saw it on TV.”
<div id="attachment_524" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-524" class="size-large wp-image-524" src="/wp-content/uploads/2017/04/RTR242EP-1024x608.jpg" alt="" width="474" height="281" />Kenya&#8217;s President Mwai Kibaki (C) and Police Commissioner Hussein Ali walk past the burnt-down Nakumatt supermarket in downtown Nairobi, January 30, 2009. At least 22 people died and more than two dozen more were missing after a fire destroyed a supermarket in downtown Nairobi two days ago. REUTERS/Stringer (KENYA)</div>
It was a day that would haunt the owner of Nakumatt for the rest of his life. With 36 stores spread across the region, Nakumatt is the big brother of retail in East Africa. The majority of its stores, 30, are in Kenya, three are in Uganda, two in Rwanda and one in Tanzania, giving it a 15% market share of a crowded retail market where the big five supermarkets control over 80%. In the world of retail where numbers count for much, big is beautiful. Nakumatt has taken this maxim seriously and dotted the big towns with its elephant symbols. Nairobi is Nakumatt’s hub, with more than 10 stores tapping billions of shillings in disposable income from the rising middle class.
On this day, January 28, 2009, as workers broke for lunch, one of its city center branches went up in flames, turning stock and assets, worth Ksh250 million, to ashes. Eighteen shoppers and staff, perished in the inferno.
Shah went into crisis mode. He cancelled his three-day tour of Mombasa to fly back to Nairobi to handle the disaster, but all planes were fully booked that day. He had to manage the situation on the phone, with eyes glued to a TV, until the following day.
“We had lots of communication with my managers in Nairobi. We were all confused and focus was on rescue efforts to save lives. We knew we would overcome the fire but the loss of human lives is what broke us down. We had to do whatever it takes to minimize deaths.”
The blaze took fire fighters from the Nairobi City Council four days to contain. The flames were fed by exploding gas tanks.
“The first day was total confusion. On the second day we established a disaster team to manage the situation. The government also created its own team. We worked together well to make sure the families of those people who perished were taken care of. I was part of the team and was on the ground for four days,” says Shah.
The loss was even more painful as it came just a month after the retail chain’s other branch was flattened by bulldozers to clear the way for the construction of the Thika super highway through Nairobi. In the process, the company was caught unaware and lost most of its stock to looters.
Shah sets his loss from the fire at Ksh400-250 million in stock and Ksh150 million in furniture and other assets. To make matters worse, the supermarket management was accused of locking shoppers in the supermarket in the shop when the fire alarm went off to prevent them from running away with unpaid goods, but Atul denies this charge.
“There were all manner of accusations from sabotage to arson. But it emerged it was Kenya Power to blame because it had had power outages. It’s unfortunate that it’s us who were affected,” Shah said.
What most of the accusers did not know is that Nakumatt had three fire marshals at the branch, one of whom sadly died in the fire as he tried to rescue customers. When the fire broke out, the man in his thirties swung into action to do what he was trained to do. He lunged into the smoke to rescue one person; a second time to save another soul; the third time the brave fire marshal did not return.
“It surprised us because the fire happened just two weeks after we had undergone a thorough fire audit by the Nairobi City Council. The company has since then enhanced its fire safety by training staff on emergency response and employing experts to beef up its compliance above the industry benchmarks. The quick-spreading fire was blamed on the presence of LPG gas cylinders and now the government has decreed all supermarkets not to stock cooking gas on their premises.”
Shah says Nakumatt spent Ksh40-50 million in managing the situation, including financing forensic tests to identify those who died in the fire and compensating those who lost their loved ones.
To make a bad situation worse, Kenyans looking to make a quick buck faked the deaths of their relatives in the fire. Nakumatt’s forensic analysis has already discovered three fake claims and has flagged two more for investigation.
“Some people claimed they lost relatives who had come to shop but produced death certificates of people who died a long time ago. Only 18 have been found to be genuine.”
The disaster did not end with the clearing of the ashes. The fire scared many shoppers and it took them months to come back to Nakumatt.
These were sad days for the company founded in 1978 by Shah’s father in the Rift Valley town of Nakuru. From a single shop dealing in mattresses; Nakumatt, short for Nakuru Mattresses, now has an annual turnover of $500 million. The first supermarket opened in 1982 and the company employs 5,100 workers.
Despite the setbacks, Shah is still betting on finding new markets.
“The retail market has opportunities. Organized retail is growing and especially with government recognition, the market space is expanding.”
In his office, on the wall facing him is a quote by Haku Shah, his father, which says: “In a day when you don’t come across any problem, you can be sure that you are traveling on the wrong path.”
These words sustained Shah through his worst day—January 28, 2009—a tragic day that will haunt him for the rest of his life.

Tag: Nakumatt

FORBES AFRICA SOCIAL MEDIA

The Death Of Shopping In Africa?

Trial By Fire