Mr Willy Kimani — the man who built the Naivas brand when he was its Chief Operating Officer for 13 years — left the supermarket chain in December to make his foray into the digital retail market through a new brand, Jaza Home, in which he is one of the founding directors.
Having worked for dominant supermarket chains, among them Uchumi and Naivas, Mr Kimani took the risk of branching out into a new retail format based on low cost rather than variety of goods, taking competition to traditional supermarkets for which he was a business leader since he left the University of Nairobi, where he used to run a tuck shop targeting students.
The entrepreneur told Nairobi Business Monthly that the dynamic retail market is evolving, and that critical as the sector is to the economy, there are still gaps that the new business model can plug in to offer consumers affordable prices for a limited variety of goods in every product range.
Together with his silent partners — whom he declined to name — he founded Jaza, which derives its name from a Swahili word that loosely means “fill up” through a model known in the retail sector as “discounter.”
A nascent company that is still setting up stores in low- and middle-income neighborhoods like Kayole, Githurai, and Gachie, Jaza offers everyday home products like cooking oil, flour, margarines, scouring powders, and tissue, but eschews high-value household items such as electronics, fridges, and furniture.
“The name Jaza comes from the matatu culture,” he told NBM in an exclusive interview, explaining that it aims to encourage shoppers to fill up their order baskets, just as touts encourage commuters to board minibuses during rush hour.
“We took a lot of time to pick something that is Kenyan,” he said of the start-up’s quest for authentic identity. “Our e-commerce platform is informed by the same idea (being Kenyan). It is a name that someone remembers even after the first sale.”
Although anecdotal evidence in the Nairobi Metropolitan Area, and key urban areas such as Kisumu, Nakuru, Mombasa, Eldoret, and the Mount Kenya Region suggests that the number of supermarket outlets is growing, data indicates that their sizes are shrinking and the big retailers have adopted specialization, with different stores designated for low-scale consumer goods, such as foods, and others stocking more high-value goods, such as furniture and electronics. This means that supermarkets are moving away from the multi-level floor model of yesteryears in their race to manage costs and respond to changing customer needs.
In 2023, for instance, Naivas unveiled new stores in Nairobi, Malindi, and Kisii counties. Quick Mart also opened new stores in Nairobi’s Kileleshwa and Eastlands and in Nyali, Mombasa, as Carrefour set its focus on Eastleigh in Nairobi, each in a bid to protect or grow their market share in a highly competitive segment that is racing to counter disruption from digital platforms such as Jumia, Kapu, Glovo, and now Jaza.
Other new entrants in the battle for the retail sector pie include Panda Mart, a South African player which, in January 2024, unveiled its first outlet valued at $7 million at Garden City Mall, a location that was once occupied by Shoprite and Game before financial headwinds drove them out of town. Panda Mart joins Carrefour at Garden City, upping the competition for footfalls.
Later in the year, a US-based company has signaled intention to enter the Kenyan market, aggregating products from producer saccos — such as those in the milk and grains sector — to offer low prices. The aim is to get saccos to sell their goods in bulk, then encourage their members to buy from the designated outlets at lower cost, giving them the double advantage of low consumer prices and reasonable returns as suppliers.
Meaning that consumers will be spoilt for choice, whether they choose to walk into a physical store or order online for home deliveries.
“Kenya is the largest economy in East and Central Africa and is well-positioned economically,” Panda’s spokesman Lee Jinglin said during the launch of their Garden City branch. “We are committed to becoming a cornerstone of retail excellence across the country.” The taste of the pudding he promised will be in the eating given how rapidly the retail market is changing.
Jaza, the new kid on the block, is, however, not seeking a nationwide footprint just yet. Instead, it is focusing on key estates in Nairobi and its environs, beginning with Buru Buru, Chokaa, Gachie, Githurai, Kayole (Soweto and Mihang’o), and Sunton Kasarani, where it has already set up bases.
The move to set up shop in Gachie, for example, was informed by the desire to give value to underserved customers in a neighborhood that is growing but is yet to attract the attention of big players who have already set up shop in nearby Rwaka and Kitusuru.
According to Mr Kimani, Jaza will be operating economical stores managed by a lean team of no more than 15 workers in every branch. So far, it has employed about 100 people, including at its headquarters and warehouse on Mombasa Road. “Our model is different. As a true discounter, we work with very few suppliers, so you won’t find one or two products from one supplier. We embrace few stocking units (referring to products) thus guaranteeing quality, and we are not very heavy on price. What we are coming to do is offer people best price every day.”
Under this model, the platform offers at most three products from every range, one of which is from its own line. The company, for instance, packages sugar, sauces, scouring powders, soaps, and detergents and tissue paper under its own brand in a bid to lower costs for consumers.
“We are trying to sort out the macroeconomic challenges, thus saving people money,” Mr Kimani said. “Prices have gone up more than 20 percent, inflation has also gone up by seven percent, and that, coupled with the dollar rise (Kenyan shilling is currently trading at over Sh160 against the US dollar) and more taxation which is currently happening, and workers have been laid off.”
From his analysis, although the market is depressed, this remains the best time to invest. “There is blood in the streets,” he said of the prevailing market trends, echoing the famous words of Baron Rothschild, the British banker, who once said that the best time to buy (or invest) is when there is blood on the streets and everyone else is selling.
“We have set up Jaza at the right time and are going for that customer, the ordinary citizen. That’s why we will continue to open stores in suburbs,” Mr Kimani said of Jaza’s model. According to analysis by the Kenya Retail Report 2023 titled Retail Expansion with Focus into Untapped Markets, Kenya’s retail sector is looking up, having registered increased market activities in 2023 as evidenced by the aggressive expansion by both local and international retailers.
In November 2023, Retail Trade Association of Kenya chief executive Wambui Mbarire noted that the unprecedented growth shown by the retail companies paints a picture of an industry that defies the tough economic environment. “Some of the retailers are already adapting to changes as they are moving away from business hubs and relocating to residential areas, closer to the clients who are now diversifying from stock shopping to cut on expenditures.”
Indeed, this is the model that Jaza is riding on by moving closer to residential areas and attracting customers who buy one item per trip but make many trips per day or week as and when they need to replenish their household consumer goods.
At the height of the Covid-19 pandemic, many urban consumers faced challenges with their shopping. During the two years of Covid, retailers had to adapt to new ways of processing customer orders. That meant they had to invest in technology that allowed them to ‘know your customers’.
According to Mr Kimani, operating on a legacy knowledge will do retailers more harm than good. To him, a retailer ought to know what a customer purchased last and have efficient systems in place to ensure that when the customer makes a return trip, their shopping patterns can be predicted and the items of their choice available.
“Our stock levels are based on repeat purchases,” he told NBM.
Jaza’s target customers don’t use high-end Android phones with large memory and space to accommodate mobile apps. To get around this challenge, the start-up has invested in a WhatsApp-linked e-commerce platform that picks orders from customers, thereby finding a solution to the ‘last mile’ challenge. The solution is backed by a USSD support system that enables payment for the goods ordered.
“We are a disruptive company, with an innovative option for customers who can’t visit our physical shops. The solution is – take an image of a stock and send us the details via WhatsApp, and it will be delivered to your doorstep,” Mr Kimani said.
With change in consumer behavior, inflation pressures, higher taxation, and supply chain disruptions, thriving in the current retail space means that players must raise their game and adopt strategic approaches to meeting customer needs. “We are offering what wholesalers offer,” Mr Kimani said. “You are able to tear a box and pick one or two items at the bulk price and that makes it proper discounting. That is what we call proper hard discounting.”
The key, he said, is to offer prices that are lower than those of mainstream players. That means they have to limit their offers per product range and leverage on price rather than variety.
– Victor Adar
This article was first published in the February 2024 issue of Nairobi Business Monthly.
