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.