Competitive strategies adopted by Nakumatt holdings limited to gain competitive advantage
Abstract
Competitive strategy in business is central for survival and growth. How well a business
is able to build and sustain its advantage is a question of strategy and how competitive
those strategies are based on internal as well as market dynamics. In Kenya, the retail
business has in the last ten years experienced exponential growth. This sector has entered
a phase of cut-throat competition with new entrants coming on board and multi-billion
shilling expansion plans by key supermarkets including Nakumatt, Uchumi, Tuskys and
Naivas. Nakumatt Holdings Limited leads the pack with a turnover of KES.38 billion
and a profit of to KES.312 million in the year to June 2012 compared to its Nairobi
Securities Exchange listed rival Uchumi Supermarkets which achieved a profit of
KES.273 million on revenues of KES.14 billion for the year ended June 30, 2012. This
research project is a case study undertaken to establish the competitive strategies that
Nakumatt Holdings limited has adopted in Kenya and how such strategies has given it
competitive advantage in this highly competitive market. This study involved collecting
primary data from face to face interviews with five senior managers in the retailer using
an interview guide and secondary data collected from newspapers, the internet and
review of internal documents. Content analysis was used to analyze the data in line with
emerging themes. The study established that strategy has a central place in Nakumatt’s
growth with numerous strategies having been adopted. These are customer-orientation,
differentiation of service, strategic mall location, technology leverage, aggressive branch
expansion, innovation and learning orientation, strategic partnerships, branding and brand
positioning, staff development, vertical integration, departmental store model and
centralized quality control and management system. The study established that though
some of these strategies are not unique to the retailer, they have succeeded in giving it
competitive advantage over competitors. The studyconcluded that Nakumatt has not only
used the Resource-based view of competitive advantage but has also used the Porters
Model of creating competitive advantage by taking offensive and defensive actions to
create a defendable position in the industry and to successfully generate a superior return
on investment for its shareholders. The retailer has differentiated its service and shopping
experience creating a regional and global brand. The study recommends that Nakumatt
and the whole retail sub-sector at large should enhance and innovate on the above
mentioned strategies for growth and competitive advantage with insights for policy
markers on what would make the retail sub-sector boom and possible areas of incentives.
Publisher
University of Nairobi