Innovation and technology have been instrumental to the growth of Nakumatt, one of East Africa’s largest supermarket chains.

AFKInsider spoke with Thiagarajan Ramamurthy, Nakumatt’s regional director of strategy and operations, about the company’s growth and its role in helping Kenya move toward an economy of cashless transactions.

It has taken more than two decades to grow the Atul Shah family-owned Nakumatt Holdings from its humble beginnings in 1992 to 44 stores in East Africa.

Now Nakumatt employs 5,500 people and is served by hundreds of suppliers. Expansion is key for Nakumatt if it’s going to succeed in warding off potential competition from West and South African chains.

Walmart, the world’s largest supermarket chain, entered the continent through the purchase of Massmart in South Africa and is making inroads into East Africa.

Ramamurthy, or TRM, as he is popularly known, oversees the chain’s expansion and human resources.

AFKI: Tell us about Nakumatt Holdings.

Ramamurthy: Nakumatt Holdings was established as Nakumatt in 1992. Our branch network now includes 44 Nakumatt stores across East Africa and one Clarks Footwear store, One Skechers Lifestyle store and a new fully-fledged, children’s toy retailing store branded as Kids & Co by Nakumatt.

Thanks to Nakumatt’s rich heritage and passion for retail excellence, Nakumatt stores countrywide have carved out a niche as the ideal shopping and entertainment centers for the whole family.

Given the role that the retail sector is currently playing in the East African economy, Nakumatt is committed to enhancing economic development by adopting excellent retail management standards. Ours is a model for emerging markets formal retail development.

AFKI: How large is your customer base in Kenya and which other countries have you expanded to?

Ramamurthy: Nakumatt has stores spread out across the region. We have 34 in Kenya, seven in Uganda, one in Tanzania and two in Rwanda.

With this East African reach, we have managed to achieve an annual turnover of $750 million.

Data wise, we currently have daily customer traffic of just about 300,000 providing more than 150,000 daily transactions.

Our stock variety comprises of over 300,000 store-keeping units (SKU). This covers local categories such as fresh produce, oils and fats, soaps and detergents, breakfast cereals, confectioneries, household goods among hundreds of other items.

The imported category includes lifestyle products – furniture as well as branded food and general products, apparels.

AFKI: What is the Nakumatt global card all about?

Ramamurthy: The Nakumatt Global Prepaid MasterCard was unveiled last October. Its main purpose is to provide a replacement upgrade for our popular Nakumatt SmartCard Loyalty Card. This new card is the result of a partnership between MasterCard, Kenya Commercial Bank and Diamond Trust Bank.

In essence, the Nakumatt Global Card is a prepaid loyalty card exclusively available for our smart shoppers.

It is EMV-compliant (Europay, MasterCard and Visa) and provides a range of enhanced benefits and security features and our loyal customers accumulate smart points for all purchases made across Nakumatt outlets. They also earn smart points for purchases made with the card at any of the over 35.9-million acceptance points, including 2.1 million ATMs where MasterCard is accepted worldwide.

The card also has multicurrency capability, which allows consumers to upload the prepaid card with any of eight currencies (including) the Kenya shilling, U.S. dollar, Euro, British pound, Indian rupee, South African rand and the Australian dollar.

AFKI: Is this a conscious effort by Nakumatt to get into financial services?

Ramamurthy: Cardholders can load money for purchases at point-of-sale terminals, make cash withdrawals and online purchases as well as save on the costs incurred in multi-currency transactions.

As one of our financial products and services, the Nakumatt Global Card sets the stage for further product launches in this space. Indeed, plans are underway to revamp the Nakumatt range of financial products and services.

This revamp project is part of a wider strategy to provide convenient retail financial solutions such as utility bill settlements, insurance products, cash back, FOREX trade and money transfer services at Nakumatt tills as customers pay for their shopping.

As you may be aware, at Nakumatt, we have managed to integrate a most advanced payment gateway switch linking us with other financial service providers to facilitate the robust delivery of a number of financial services and products.

To this extent, the transformation of the Nakumatt Smart Card to a prepaid MasterCard card confirms our readiness to facilitate a general evolution of the local retail financial services, subject to regulatory approvals.

The launch of the new Nakumatt Global Prepaid MasterCard card will also effectively complement efforts to sustain a shift to cashless transactions.

AFKI: Kenya is morphing into a cashless society. Where does the new card place Nakumatt?

Ramamurthy: As a unique product, the new card features MasterCard contactless technology, which offers consumers a tap-and-go option ideal for environments where speed and convenience matter most.

Although new to Kenya, contactless payment technology is touted as the answer to those seeking fast yet secure modes of payment, and is supported by multi-level security protection.

Since Nakumatt launched its smart cards 11 years ago, the number of customers with cards has grown to over one million. This number is expected to grow significantly with the launch of the new cards as more people seek financial solutions that allow them to carry out their day-to-day transactions while offering them value and rewards for loyalty.

AFKI: What was the value of the investment used when launching the card? Was that cost split between the two partners equally?

Ramamurthy: The project was a multimillion-dollar venture rolled out with a mutually agreed investment outlay.

AFKI: How many customers have enrolled for this card so far? Has this met your targets and how many more do you hope to have on board by the end of 2014?

Ramamurthy: By the end of this year, we have an ambitious target to sign up at least 2 million cardholders. As you may be aware, the recarding process for the existing 1 million Nakumatt Smart Card holders is ongoing with an average replacement rate of between 80,000 to 100,000 cardholders every month.

The Nakumatt Global MasterCard Prepaid card is now available to customers in Kenya, but in time will offer the benefits of cashless transactions to customers in Uganda, Tanzania and Rwanda.

AFKI: How does this deal benefit East African customers who have traveled abroad or visit an establishment in Africa that accepts MasterCard.

Ramamurthy: The Nakumatt Global MasterCard Prepaid is one-of-a-kind – a prepaid debit card combined into a loyalty card, with access to more than 33 million retailers and businesses across 210 countries where MasterCard is accepted.

The card also has multi-currency capability, which allows consumers to upload the prepaid card with any of eight currencies I mentioned earlier. As a result, cardholders can load money for purchases at point-of-sale terminals, make cash withdrawls and online purchases and, while at it, save on the costs incurred in multi-currency transactions.

For their shopping transactions worldwide, the cardholders earn Nakumatt loyalty points on purchases they make at any purchase points where MasterCard is accepted, and the points earned will only be redeemable at Nakumatt stores.

The Nakumatt Global MasterCard Prepaid card also features PayPass technology, which is ideal for quick payment environments where speed and convenience matter most.

AFKI: What is unique about the African shopper that enticed MasterCard to collaborate with Nakumatt?

Ramamurthy: MasterCard is committed to working closely with various Kenyan stakeholders in the payments industry to develop systems that deliver the wide suite of advantages that electronic payments offer to consumers over cash. This is by focusing on solutions that help reduce costs, gain efficiencies, curtail fraud and corruption and advance social progress.

The Nakumatt Global Prepaid MasterCard card is a great win for this market and a proof that MasterCard’s vision of a world beyond cash is not only possible but is actually happening.

Today, 85 percent of the world’s transactions are still carried out in cash and check. In Kenya, this figure stands at over 98 percent, and we believe that the launch of this card will be a notable victory for the push for increased cashless transactions.