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Saturday, September 19, 2020

Why it will take a rare miracle for Tuskys to survive

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Tuskys Mattresses Limited : This feature was written and published by economic analyst Ephraim Njega: It will take a rare miracle for Tuskys Supermarket to come back from the dead. Everything is following the Nakumatt and Uchumi Script.

Remember when the two supermarkets were collapsing they would plant news in the media claiming they were back or that they are about to rope in some investor or that they have signed a deal with suppliers etc. These shenanigans don’t help a thing. When you are in such doldrums, the media is the last thing you want trailing you.

Video: Tuskys employees in physical fight with auctioneers

The following are the reasons why when a supermarket is collapsing it is so hard to revive it.

  1. Suppliers are to a retailer what depositors are to a bank. Once you lose their confidence you start having empty shelves
  2. Once customers see your naked shelves they vote with their feet. Bringing them back will be a huge struggle
  3. Banks cut funding. Supermarkets rely on liquidity from banks to smoothen their cash flow cycles. Without cash flow financing the situation deteriorates
  4. The piling debts cripples the chain and dims any chance of resuscitation. Creditors soon swoop in carting anything they can lay their hands on and branch after branch is raided and shut down
  5. A steady stream of negative news in the media ensures any hope of revival is even less likely

The Tuskys model of having supermarkets near bus stops has been overtaken by events. Shoppers are nowadays preferring to buy in their locality or even from wholesale shops. If the government implements its plans to stop matatus from getting into Nairobi CBD it will make things worse for this business model.

Tuskys should probably borrow from the revival of Uchumi after the 2006 collapse. They need to shutdown all the branches and take a breather as they strategise a comeback.

This is however easier said than done because they do not own the premises they operate in like Uchumi did. They however could look for funding to extend leases of prime locations before the shutdown. Tuskys Mattresses Limited .

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