Washington Akumu
27 March 2007
Nairobi — Less than two years after it launched its Kenyan branch, high street South African clothes retailer Stuttafords is closing shop. The firm, whose outlet at The Junction, Dagoretti in Nairobi was once cast as one of the upscale mall's anchor tenants is expected to shut its doors at the end of this month, bringing to an abrupt end yet another South African retail adventure in Kenya.
"Stuttafords has requested an early termination of its lease, with effect from March 31 this year. The firm, having changed hands and direction in South Africa, has made a strategic decision to close a number of stores, including the one here in Nairobi," confirmed Ben Woodhams, managing director at Knight Frank, estate agents for The Junction shopping mall.
The closure will invite pallbearers on an investment that industry sources estimate at more than $3 million (Sh210 million, at Sh70 to the dollar), and an operation that in full plumage, had about 30 employees. The current headcount is estimated at just half of this.
While it cut its teeth in South Africa as a departmental store, by the time it came to Kenya, it had long earned its badge as a house of premium clothing brands. It stocks such upscale labels as Levis, Jeep, Puma, Oaktree, Hilfiger, Guess, Carducci, Polo and Nike, among others.
Perhaps the only local firm that plays in the same league is Deacons, which manages a number of stores under the banners of Woolworths, Truworths, IDentity and 4U2.
The first three are South African brands, perhaps testimony of that country's advanced fashion and clothing business, which also includes big names as the Edgars Group. Started way back in 1854 by a family of the same name, Stuttafords has changed hands quite a number of times and has recently been undergoing a tumultuous transition in South Africa, following its latest shift in ownership.
The firm was purchased last year by a consortium comprising some three South African firms-Vestacor, Retail Ventures Group and Ellerine Bros. Previously and since 2000, it was owned 50:50 by AMB Private Equity Partners and the management, the latter having attained its stake through a controversial management buyout that had tied the firm in a legacy of debt.
The firm has also been assailed by serious corporate governance issues that saw its former boss and architect of the 2000 MBO, Charles Fox, forced to step down.
It is the firm's new owners that have decided that the Kenyan shop, among other underperforming units, be folded. They are apparently keen on organic growth, largely within South Africa. Stuttafords also had a presence in Botswana and Namibia, besides its portfolio of about 20 units in South Africa, most of them fixtures at the huge shopping malls that are a common feature in cities there.
Back to Nairobi, the immediate question is what Stuttafords' departure means to the Sh700 million The Junction's overall strategy for attracting maximum "footfall." The positioning of its local shop and a branch of supermarket chain Nakumatt as the "anchor" tenants was a key component of this game-plan.
The "anchor" tenants tag refers to a mall's main shops; the ones that one would ordinarily set out to visit. Once there, the marketing script is that one would get immersed in a total shopping experience that would involve visiting other outlets that were originally not on the itinerary.
A visit to a supermarket, for instance, would escalate into detours to such varied destinations as a cinema hall, a cyber café, a pub, a coffee house, a children's amusement park, a media centre and food court; all located within the same complex.
Death of anchor tenant
It is the whole decentralised shopping concept whose bug has bitten upper and middle class Nairobi in the last five years, evolving an entire urban sub-culture and with it nudging the ascendancy of brands like The Junction, Sarit Centre, Capital Centre, Village Market and Yaya Centre, among others.
But Knight Frank's Mr Woodhams reacted to the imminent departure of an "anchor tenant" by saying that The Junction, which has evolved into one of the major shopping malls in Nairobi, was unlikely to be looking for another retailer to occupy the same space as Stuttafords did, at least in the physical sense of the word. "The centre is 'over-anchored', especially with the internal expansion of Nakumatt .We have a large waiting list of tenants who are extremely keen to move into The Junction and be part of its success, and we feel that once we have selected the best of these, the centre will go from strength to strength," said Mr Woodhams.
The new strategy, according to him, would be to divide up the space left by Stuttafords and allocate it to some "exiting new stores" to complement the mall's existing tenant mix. Stuttafords General Manager Silas Kitinya declined to comment, saying he needed approval from Johannesburg. A questionnaire sent out to him was unanswered by the time we went to press.
It is becoming a fairly familiar script, perhaps only livened up by an ever-changing cast. An ambitious big-time South African retailer hits town and gets down to work, glitz and bang, before it quietly slips out of town, often in the space of just under five years. Down South, where having a presence in the "rest of Africa" is seen as a mark of corporate arrival, such forays northwards are seen as the first step to becoming a classic transnational.
But with a graveyard that is fast threatening to burst at the seams, a lot of head-scratching must be happening in Johannesburg boardrooms. Just what contagious malaise ails South African retailers in Kenya?
Analysts believe that one of the main chinks in the retailers' armour is their tendency to employ a one-size-fits-all strategy for the rest of the continent.
"Their main undoing is their penchant for cut-and-paste. Until they treat each market as a different playground, they are not likely to make much headway, especially in a market as distinct as Kenya," said the manager of a Kenyan retail store, on condition of anonymity.
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