UGANDA, Kampala | Real Muloodi News | Carrefour Supermarket, a French-based retail chain, entered Uganda cautiously in 2019 with two stores located on Kampala’s outskirts.
The retail space in Uganda was characterised by volatility worsened by increasing product prices and a dampened spending appetite.
However, within two years, two foreign-owned retail giants, Shoprite and Game, exited due to sluggish growth in Uganda’s shopping culture.
Carrefour took this opportunity to expand beyond its set targets by growing its operations in Kampala, opening five more stores between October 2021 and January 2022.
In a space of two years, Carrefour has scaled up to a total of seven stores, which is above the five it had planned to have established within the first three years of operation.
All seven stores were acquisitions, two of which were acquired from Nakumatt, which closed due to sustained financial bleeding in 2015, while five were acquired from Shoprite, which chose to cut short its losses in August 2021.
Carrefour’s expansion was perhaps informed by market sentiments that predicted recovery and growth in the retail sector.
A report by Knight Frank for the period ended December 2021 indicated that supermarkets recorded a 3 per cent decline in turnover, which was lower compared to a 20 per cent decline registered in 2020.
The report also noted that the highlight of 2021 was the expansion of Carrefour, which subsequently returned hope among suppliers.
Carrefour’s expansion comes at a time when the retail sector in Uganda has been experiencing volatility worsened by high input costs and inflation.
In the last three years, some product prices have almost doubled while others have registered increases of above 40 per cent. This has had a serious impact on retailers’ bottom lines, yet operating expenses have not made the situation any better.
According to official inflation data from the Uganda Bureau of Statistics (UBOS), most businesses have experienced cost increases of above 10 per cent over the last two years.
Yet, there has been subdued sales growth, whose recovery from the impact of Covid-19-related restrictions has been dampened by inflation and high input costs.
Carrefour’s investment appetite was informed by the desire to build a sustainable business whose return on investment was expected in 10 or 20 years.
Frank Moreau, the Carrefour country manager for Uganda and Kenya, said while announcing the launch of the retailer’s first store at Oasis Mall, “We have a business model on the middle term and long term to be sure that what we are going to invest in will have a return within 10 to 20 years.” This is still the position of business soldiers, amid numerous challenges.
Carrefour’s expansion has come at a time when other large retailers are cautious about spending.
However, Carrefour’s cautious approach has paid off, with the retail chain expanding beyond its set targets.
Moreover, Carrefour has acquired strategic spaces, following Shoprite’s exit. The expansion is perhaps informed by market sentiments that have predicted recovery and growth in the retail sector.
Carrefour Supermarket has and continues to play an active role in Uganda’s evolving retail business. Moreau, who is now the regional director of Carrefour East Africa at Majid Al Futtaim Retail, says Carrefour looks forward to contributing and serving its customers for more years.
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