Strathmore University

Faculty of Information Technology

Bachelor of Business Information
Technology

UCHUMI SUPERMARKET
SWOT analysis and Marketing Mix
28th February 2011

Betsy Muriithi
051024
 [Principles of Marketing Assignment One]

INTRODUCTION

Uchumi is a public limited company incorporated in 1975. Its main objective

is to have an enterprise for equitable distribution of essential commodities,
affordable prices whilst creating an outlet for local manufacturers.

Some of Uchumi’s founding shareholders are:

 Industrial Commercial and Development Corporation

 Kenya Wine Agencies Limited

 Kenya National Trading Corporation

MILESTONES:

 In 1976, the first branches were opened.

 Uchumi became a trendsetter in low pricing to the advantage of all

customers while at the same time maintaining a high standard in
quality of goods and services.

 In 1990’s Uchumi spearheaded the hyper markets concept in Kenya.

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  Uchumi places emphasis on the value of continuous training and
concern with staff customer relation which has been the key ingredient
of Uchumi’s runway success.

DOWNFALL:

In the year 2000, Uchumi started to experience financial and operational

difficulties occasioned by a sub optimal expansion strategy coupled with
weak internal control system. Therefore as a result on 31st may 2006, the
board of directors resolved that the company ceases operations and on 2nd
June in the same year, the debentures holders placed the company under
receivership and the capital market authority suspended the company
listings on the Nairobi Stock Exchange.

Following an agreement between the government of Kenya and debenture

holders, the company was revived and commenced operation from 15th July
under specialized receiver manager and interim manager. Uchumi
announced that it was out of receivership this year on 1st February.

Uc

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 SWOT ANALYSIS

Strengths Weaknesses
♣ Online shopping cart that enables ♣ The slump they underwent prior to
customers to shop via the internet and 2006, they were overtaken by
with the growth of ICT would prove Nakumatt and Tuskys and thus they
highly beneficial. rank third in number of outlets and
♣ Good customer service through sales volumes.
their The Uchumi U Club loyalty ♣ The near collapse two years ago caused
scheme that aids them by creating an by, among other things, an expansion
avenue to help them understand their programme financed by short-term
customers more and their preferences.
capital may have put potential
♣ They are a local retail brand investors at bay.
therefore most customers being
♣ They do not offer a wide range of
Kenyan are ready to support it.
products as compared to their close
♣ Established name brand that is competitor Nakumatt.
identified with reasonable to cheap
pricing and bargain pricing. ♣ They have avoided market
segmentation which could prove useful
♣ The organization deals in all types when it comes to differentiating prices.
of goods from clothes to electrical
items, from jewellery to garden
equipment and therefore caters to a
wide range of individuals and needs.
♣ Suppliers attest that their
professionalism is unique. Thus they
have a high reputation
♣ Customers can redeem their points
which they earn from using their Uchumi
cards any time they want but not at
designated periods.
♣ They have an unrivalled focus on
customer service.

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Opportunities Threats
♣ The market for modern trade ♣ Competition from competitors like
(supermarkets) is increasing. With so Nakumatt that have a higher market
much potential sites for new branches share and Tuskys.
in different parts of the country and
♣ Competition from other smaller shops.
regionally in East Africa and Southern
Sudan, the graph can only curve ♣ Mismanagement which once led to
upwards their shortfall.
♣ They have on-going projects locally
and also regionally (in Kampala and
Tanzania) thus increasing their
market share.
♣ There is also the promising growth of
the economy, estimated at 6% this
financial year which will mean growth
in employment and thus more
disposable income.
♣ They could also offer 24hr services to

Therefore from above:

• They have partnered with mobile operator Yu to provide a service

which allows customers of the retail chain to pay for goods at the till
through yu-Cash. The partnership allows Uchumi Supermarkets to
carry out yu-Cash registrations and cash-in-cash-out transactions in all
their outlets. The only retailer that does this.

• Uchumi is set to issue 86 million more ordinary shares, as they prepare

to re-list at the Nairobi Stock Exchange.

• They have on-going projects: locally in; Nakuru, Taj Mall in Embakasi,
Nyali in Mombasa, Kiambu Road. Regionally they are about to open in;
Dar-Es-Salaam, Kampala (a second hyper) and Gulu also in Uganda.

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 1 MARKETING MIX

1.1 PRODUCT

The product in this case is in terms of Uchumi branches. Meru branch

is the most successful branch and marketing has played a big role
through;

• Road shows – they carry out joint road shows with their suppliers
e.g. KBL, UNILVER, COCA COLA, where they traverse the Meru
town and county connecting with the ‘mwananchi’. This has
really put excitement and trust towards Uchumi Supermarkets to
the extent they now control over 60% of supermarket business in
the town.

• Use of the popular local media like The Meru Eye, Wembe
Newspapers and MUUGA FM. These have a wide audience and
coverage thus very effective channels of communicating their
messages (price offers and services/products offered) and brand
building.

• Pricing – they aim to be the fairest and to remain most

competitive.

• Bill boards/Street banners – This directional signage help locate

their shops and thus increase footfall (customer numbers).

Their shops are classified into three categories to suit their consumers;

• Hypers – over 30.000 sq.ft.

• Supermarkets – medium size

• Convenient shops – mainly in the residential estates.

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 1.2 PRICE

They carry out regular market/price intelligence surveys to ensure they are
abreast of the market dynamics in pricing. Suppliers are critical in pricing
because some have recommended retail prices (RRP). Pricing is also guided
by our gross margins benchmarks to ensure they are making profits. They
also have adapted promotional pricing especially during major holidays
where they offer regular promotions.

Uchumi maintains to be the fairest in terms of pricing their products thus

their slogan ‘The Home of Value’.

1.3 PLACE

Viability of a location is heavily influenced by;

• Population of the location. The existence of middle class is key as

they constitute a population with disposable income to spend.

• Accessibility such as infrastructure (roads and electricity). In

towns, they are now locating shops in residential estates with the
aim of making it convenient to customers who then travel
shorter distances.

• Security is important. Therefore, areas like Kayole and Dandora

are not attractive though they have the population.

They have avoided segmentation. The stock keeping and variety is

guided by customers’ demands (buying habits/sales trends) as
opposed to profiling customers. For instance, Ngong Hyper will cater to
the affluent of Ngong Road and the slum dwellers of Kibera.

1.4 PROMOTION

They are satisfied with the results of advertising as it has led to a

strong brand, goodwill from customers (seen in the increasing
customer numbers) and sales growth.

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They utilize;

 radios (local vernacular FMs)

 online presence(websites/portals)
 street banners
 TV is very effective in projecting major retail promotions like
Christmas bonanzas
 Business and social magazines like True Love, KIMs
Management, Business Mirror, Parents etc.
 Newspapers. The dailies are effective on special product offers
where they announce discounts and price cuts.
 Their own shop floors - (space selling, LCDs, in-house radio, point
of sale-till branding etc.)

They mainly use the same media as their competitors. They believe
that their competitors are doing well. However, they avoid copying or
‘following’ competition.The price offers they place in The STANDARD &
DAILY NATION mid and end month are aimed at reminding shoppers
Uchumi (Their Home of Value) has deals always!

Their calendar is guided by events and occasions that influence retail

business like ‘back-to-school’ when schools are opening, IDD-UR-FITR,
Valentine’s Day, Mother’s Day, Easter (situations that call for catering
to exigencies of the time) and the festive period (November to end
December) which is the busiest in the annual retail calendar and they
carry out heavy advertising campaigns in form of Christmas
promotions and season offers.

They also reach target consumers by:

• Road shows. Helps connect with the ‘ground’ where they directly
meet their customers.

• Magazines like Insyder and popular radio shoes are strategies

targeted at the youth to capture their attention

• Activities in the stores. Every day they get thousands of

shoppers coming into their shops and thus their outlets are

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 equivalent to a walking billboard (they allow direct contact with
buyers).

• In-built corporate social responsibility (CSR) element. Resonates

well with customers that they make it their policy to treat the
less fortunate members of the society as key stakeholders in
their business.

• Involving suppliers (other key brands). The synergy creates

interest and networking leading to higher success.

• Rewarding such that there is a motivation to participate say in

raffles. The key tenet of reward based promotions is to ensure
you keep the promise. Kenyans have come to know Uchumi
keeps its promise, winners have never been disappointed and
the draws are always conducted in the manner authorized by
Betting Control and Licensing Board (BCLB).

• Loyalty Schemes. The Uchumi U Club loyalty scheme is aimed at

creating an avenue to help them understand their customers
more, respond to their customers’ salient needs and cater for
their customers’ tastes. The customer relationship management
is its best attribute as it provides or captures trends and provides
information that helps serve customers better in terms of
product assortment and timing trends. They have a pool of about
300,000 customers who they use to gauge their service levels,
and also seek ways and opinions to improve business.

• The fact people earn points every time they shop (a point – a
shilling for every Kshs. 100/= spent), using the Uchumi card
makes them stick with Uchumi so as to grow the points. Their
best strategy, unlike competition, is that customers can redeem
their points any time they want but not at designated periods.
This has created a pool of loyal shoppers.

2 REFERENCES

 MWANIKI WAHOME (2011). Uchumi chain to issue 86m extra shares.

Daily Nation,
http://www.nation.co.ke/business/news/Uchumi+chain+to+issue+86m+e
xtra+shares/

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 Uchumi Takes Up Yu-Cash,
http://www.capitalfm.co.ke/business/Kenyabusiness/Uchumi-takes-
up-yuCash/

 MWANIKI WAHOME (2011). Uchumi to Open More Branches in the

Region. Daily Nation, http://www.nation.co.ke/business/news/Uchumi to
open more branches in the region/

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