Kenyan supermarket chain Nakumatt says it has felt no impact from e-commerce, with uptake of online retailers negligible due to the lack of payment solutions.
In an interview with HumanIPO, Atul Shah, Managing Director of Nakumatt Holdings, said that despite Nakumatt’s presence on online retail aggregators the company was seeing little benefit.
“From our analysis, online shopping is yet to take root in East Africa and still commands less than 1 percent of turnover. We therefore cannot attest to having been affected by online shopping,” Shah said.
The managing director attributes this to lack of uptake to shortage of payment solutions, even though East Africa does have the fibre infrastructure necessary to support a move to e-commerce.
“In Africa, we have no doubt that East Africa has one of the most stable internet connections. With multiple fibre optic connections, we have not suffered any form of challenges to e-commerce, which can be attributed to unstable internet connections. The challenge for e-commerce largely stems from lack of local competitive payment gateways,” he said.
However, Nakumatt does have plans to utilise technological innovations as part of its business strategies, even if these are not primarily e-commerce based.
As well as rolling out touch-screen tills across its stores, Nakumatt is also readying to launch EMV MasterCard® PayPassTM Prepaid loyalty cards, to be offered to the chain’s more than one million Nakumatt Smart Card holders. The new cards will allow users to load money for purchases at Point of Sale (POS) terminals, while also offering a range of cash withdrawal and online payment options. Card holders will also earn Nakumatt store points on purchases.
Shah says tech-based offerings are pivotal to driving sales growth, and cutting operational costs.
“I can confirm that the role of technological innovation cannot be understated. Technological solutions such as M-Pesa, prepaid and credit card based payment options are a key driver of our sales growth. More than 30 percent of our customers prefer to settle their bills at the till through mobile money transfer or credit/prepaid card options,” he said.
“From an operational perspective, such technology-based solutions have also helped reduce our cost of hard cash management. This cost is quite prohibitive given the multiple input costs that come with it ranging from enhanced security, insurance covers and cash in transit fees.
“In my view, technology solutions will continue to play a key role in facilitating retail development now and in the future.”
Shah did say sales of electronic goods at Nakumatt were booming. He said the rise in consumer technologies has impacted on the in-store product and service offering of his supermarket chain.
“In East Africa, sales in technology-based devices has been on an upswing,” he said. “We have noticed a tremendous sales increase covering lifestyle products such as home appliances and electronics.
“The demand for such products is driven by globalisation and increased exposure to international trends. For this reason, we are selling more and more LED TV’s, Blu Ray players, DVD players, among other intelligent electronics.”
