Three of the six branches there have now been shut over non-performance and tight competition from the seemingly saturated retail market and informal traders.
“I think the best you can call it, is branch rationalisation. The earlier problem with Uchumi was that there were many stores that were not profitable and we are now evaluating one by one. So anything that doesn’t work, we either relocate, close or downsize it. This is what is going on now,” Uchumi CEO Julius Kipng’etich told Capital FM Business on Wednesday.
Kabalagala and Nateete had at least 180 employees who, according to the CEO, will not be absorbed as remaining branches have the required staff compliment to handle operations.
“There are two types of employees, the contracted suppliers there and the ones under me. On the contracted suppliers, the person who contracted will deal with them and the one under me I will deal with them as per their contract agreements,” Kipng’etich explained.
Gulu, Garden City and Mbale branches continue with normal operations.
Last year, Uchumi closed down Freedom City Mall outlet where the management indicated that it had not performed to expectations mainly due to its poor location.
The new CEO has been in the office for only four weeks and maintains that he has to stabilise Uchumi within three months before moving to the next step.
“We are going to stabilise as well as shrink it to the right size. Right sizing is in terms of ensuring the businesses are in the right place and make sure you pay less rent where we are also negotiation some rent costs downwards,” Kipng’etich said.
In Kenya, the company has already closed the Syokimau Railway Station and Maua branch, in Meru.
The closures do not come as a surprise after last month’s announcement by Kipng’etich that the management was re-looking at the markets it operates in, with likelihood of closure of non-profitable outlets.
The optimistic CEO assures that Kenyans should expect Uchumi to start recording growth in the next six months to one year.