Sunday, October 21, 2012

Bigger challenge than Kilimanjaro? Atul Haku Shah hopes to rule Africa's supermarket


When Atul Shah travelled to the US for a year in 1983 he was just 17. But he had no interest in a formalhigher education in America and didn't head for a fancy B-School. Instead, he spent the 12 months studying the retail sector and working in supermarkets. He was developing a business strategy for his own family business back in Kenya.
"My parents had immigrated to Kenya from Jamnagarin Gujarat in the 1940s, long before I was born. My father had then set up a small retail business in Nakuru, a city near Nairobi," says Shah. Even as a student in secondary school, he was passionate about the retail business and worked part-time in the family store.

The trip to the US was to get a better understanding of big retail formats and hone his skills. "The sheer size of the retail industry in America was an eye-opener and I was convinced that we could start a retail revolution back in Africa too," says Shah.

Retail Spread

His father Nemchand had acquired a small retail business called Nakuru Mattresses in 1978, which had then evolved into Nakumatt, the family retail store mainly selling mattresses.
Today his group, Nakumatt Holdings, is the largest retailer across East Africa, and the Nakumatt Mega network has spread to 27 locations in Kenya and has expanded to Uganda, Rwanda, Burundi, Tanzania and South Sudan.
While, over the years, the product offerings had expanded into various other things such as FMCG and consumer durables, it was Atul, after his return from the US, who is credited with starting the retail revolution in East Africa with the first superstore in Nairobi in 1992 called Nakumatt Mega.

Today his group, Nakumatt Holdings, is the largest retailer across East Africa, and the Nakumatt Mega network has spread to 27 locations in Kenya and has expanded to Uganda, Rwanda, Burundi, Tanzania and South Sudan.

In 2008, Nakumatt opened its first store outside Kenya in Kigali (Rwanda). And in June 2009, the first Nakumatt store in Uganda opened in central Kampala. Uganda is one of the big markets for Shah and in November 2010, Nakumatt acquired Payless Supermarket, a supermarket chain in Uganda.

Anchored in Africa

"There is a huge business opportunity in Africa in formal retailing formats, which I plan to tap in the years to come. In Kenya, too, the retail revolution is catching on and we are identifying smaller towns to set up supermarkets, hypermarkets and convenience stores," says Shah.

And though he is quite happy being referred to as theKishore Biyani of East Africa, after India's retail king and Future Group CEO, he has no plans to either enter the Indian retail space or even tap the Indian stock market.

"We are currently a family-run business, with my two sons Neel and Ankoor too having joined the company. When we look at tapping the market, it will be in Africa," says Shah.

The company has an annual turnover of $450 million. It also runs a loyalty programme across the countries it is present in called Nakumatt SmartCard which has a membership base of 500,000. "We are firmly committed to Africa and serve over 200,000 customers daily in the region with a range of over 75,000 products. For me, the future is definitely here in Africa and I hope to have a much bigger footprint in other parts of this continent too in the next five years," says Shah.

Foreign Money, Local Sourcing

He has been closely watching the developments on the policy front, over foreign direct investment in the retail sector in India, to compare with his own experience of having developed deep relationships with the agricultural sector in East Africa. "About 50% of our products come from the agricultural sector and we source most of it locally. Though we don't directly reach out to farmers, we have deep relationships with the farming community through our suppliers in this region," he says. The group now directly employs over 5,500 people locally.

Shah, who has an extended family in Gujarat, likes to visit India occasionally. But his life and work is in East Africa which he considers his only home. Atul Shah, who is called Haku Shah by family and friends, recently climbed to the top of Kilimanjaro, Africa's tallest mountain, as part of a charitable initiative by his company. Taking the retail revolution into the interior parts of East Africa is proving no less a challenge.

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