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South Africa’s Massmart Opt For Greenfield Expansion Into Kenya

South Africa’s Massmart Opt For Greenfield Expansion Into Kenya

For years South Africa’s Massmart has been searching for a Kenyan-based retailer to buy, as it expands its business in to East Africa, with little success. Reports now indicate that it has abandoned  this strategy and will be opening it first store in a new mall in Nairobi before the end of May.

Massmart’s pursuit to buy a controlling stake in Kenya’s fourth largest supermarket chain Naivas turned sour after member of the family-owned company started wrangling over ownership and the decision to sell  shares to the South African investor.

Kenya has witnessed a proliferation of malls across major cities as a growing number of middle class demand better services and develop a keener taste for foreign goods. A terrorist attack on one of the country’s mall in 2013 however shook investors resolve to build more shopping centers.

The country’s retail industry is overrun by local companies including Nakumatt, Tuskys, Naivas and Uchumi.

After being frustrated by the Naivas deal, Massmart went ahead and booked a space in Actis’s – London-based private equity firm – funded mall called Garden City, located along Thika Highway, which is quickly becoming a prime location for such shopping centers in Nairobi due to its proximity to affluent estates.

Garden City, which is set to open on May 28, is going to be East Africa’s largest mall so far, with a retail space covering 50,000 square meters.

Massmart, listed on the Johannesburg Stock Exchange, has 376 stores in at least 14 African countries.

Southern Africa retailers including Botswana’s Choppies and South Africa’s Woolworth have been on an aggressive regional expansion as the market back home gets saturated and economic growth slows down.

Other Companies from South Africa have, however, found it difficult to break into the Kenyan market, prompting the exit of big brands like Cinema company Nu Metro, fast foods giant Nandos, household goods outlet Supreme Furniture and magazines publisher Media24, a subsidiary of Naspers.