Strategic responses to changes in external environment by supermarkets in Kenya

Abstract

The purpose of this study was to establish the strategic responses applied by supermarkets in Kenya. The study was guided by the following objectives: to determine the challenges facing Supermarkets in Kenya that emanate from the external environment and to establish strategic responses employed by supermarkets in Kenya to effectively deal with challenges that emanate from the external environment. The study is expected to benefit the management of the retail supermarkets, other institutions and also enrich the body of knowledge where the findings can be used as a basis of further analysis and research in scholarship. This research problem was solved through the use of a survey design. This enabled an analysis of the strategic responses employed by the mainstream supermarkets in Nairobi to counter threats emanating from the external environment. The target population of this study was all the 22 mainstream supermarkets in Nairobi. No sampling was done and all supermarkets were included in the survey. This resulted to a total of 22 questionnaires being distributed to all the targeted supermarkets. Data collection was through questionnaire which was administered to a senior administrator of each supermarket. The data and information obtained through the questionnaire were coded and all the data entered into statistical package for social sciences and analyzed based on descriptive statistics. The descriptive statistics that were used included mean scores, percentages and ratios and correlations. The results from the analysis were then presented using tables, pie charts and bar graphs for easier interpretation. Study findings indicate that economic environment is the most challenging followed by technological environment. Political and social environments were of little threat. Major challenges mentioned include competition, changing customer needs, turbulent economic conditions, technology and controlling operational costs. On strategic responses, specific strategic responses included increasing the number of products on offer, starting satellite branches in the residential areas, opening outlets on high demand areas (prime areas) and offering loyalty programs to build customer loyalty. Other strategic responses that supermarkets largely applied include competitive hiring of management staff, aggressive marketing and advertising to fend off competition and upgrading of IT systems in the supermarket for efficiency and improved customer service. The following recommendations are made. First, supermarkets should combine retail market analysis with competitive analysis to understand the dynamics of retail markets and to analyze strategic options. Secondly, supermarkets should follow best practices such as having a visible and effective communication process spearheaded by an experienced person that ensures that information on strategic responses is timely communicated across the organization. Another improvement would be to embrace technology in the planning models which can enhance inclusivity of the process where many stakeholders are consulted and incorporated in the process. Lastly, the study recommends that the government through its finance docket should check on inflation, depreciating shilling, interest rates and other forces in the economic environment which were mentioned as major forces threatening the retail industry.