Journal Of Business Management And Economics 3 : 5 May (2015).
Contents lists available at www.innovativejournal.in
JOURNAL OF BUSINESS MANAGEMENT AND ECONOMICS
Homepage: http://innovativejournal.in/jbme/index.php/jbme
A Critical Review of Winning Response Strategies to Competition of Major
Supermarkets in Kenya
1
Margaret Kibuchi Mithamo, 2Professor Mwita Marwa, PhD and 3Dr Nicholas Letting, PhD
Dedan Kimathi University of Technology, Nyeri, Kenya, P.O BOX 11934 00100, Nairobi, Kenya
Dedan Kimathi University of Technology, P.O BOX 657-10100, Nyeri, Kenya
Senior Lecturer, Management University of Africa, P.O BOX 29677-00100, Nairobi, Kenya
E-mail: 1 [email protected], [email protected], [email protected]
DOI: http://dx.doi.org/10.15520/jbme.2015.vol3.iss4.97.pp
Abstract: The purpose of the paper is to examine the response strategies major supermarkets have adopted to cope with competition within the
supermarkets sector. The study covered Nairobi, Mombasa Kisumu, Nakuru and Eldoret cities. It aimed at establishing the response strategies
adopted by major supermarkets Nakumatt, Naivas, Tuskys and Uchumi to cope with competition in an effort to maintain competitive advantage.
Increased competition has led supermarkets to initiate response mechanisms to address challenges emanating from changes taking place in the
environment among them competitors (new supermarkets, new entrants into the supermarkets sector like hawkers on the streets, small-micro
traders operating in mini stalls and Dukas/kiosks and other retail outlets; suppliers; customers; regulatory agencies; and demographic, social, and
economic conditions, changing customer needs, technology and controlling operational costs.
The strategies employed by supermarkets focused on specific supermarkets winning strategies such as advertisement, sales promotion,
supermarket atmospherics and reward systems (Loyalty Cards) among others. Primary data was collected using oral interview schedule and
structured questionnaires targeting supermarket managers and operators of Dukas within the supermarkets environment and from the review of
existing literature. Out of the forty two respondents targeted to fill in the supermarkets managers’ questionnaire, 34 filled in and returned the
questionnaire for analysis. This was a response rate of 81%. Nakumatt supermarket chain had the highest proportion of respondents at 26%,
followed by Tusky’s’ at 24%, while Naivas and Uchumi took the 3rd and 4th position respectively with 17% and 14 % response rates. Out of the
a hundred questionnaires administered to Duka owners, eighty six were completed and returned. A response rate of 86% was achieved. The
response rate of the two data collection instruments was very good for informing the research findings.
The findings were presented using cross tabulation tables. The study findings revealed that major supermarkets within the large cities in Kenya
faced various challenges emanating from the environment. Literature reviewed indicated that competition was the greatest challenge that
supermarkets encountered within the retail sector. As a result, the supermarkets have had to adopt winning response strategies unique to the
specific supermarket chains to cope with competition within the supermarkets sector. Some of the response strategies adopted included but were
not limited to price of goods lower than the competitors, promotion, location and communication mix. Supermarkets should therefore implement
winning response strategies which are specific to their supermarkets chain.
Keyword: Competitors, Competitive advantage, Duka, Strategy, Supermarkets
are not limited to information technology (IT), human
resource restructuring, brand image, proximity and price
strategies (Gursoy and Swanger, 2007).
INTRODUCTION
As competitive pressure in an industry escalates, it becomes
increasingly important for firms to make quick responses to
the changing competitive landscape. It is therefore essential
that firms recognize the strategic implications of competing
in the changing environmental context (Tan and Tan, 2005).
Having a strategy is very important. Without a strategy
operational decisions may have a negative impact on the
long term objective of the firm. A genuine strategy is always
needed when the potential actions or responses of opponents
can seriously affect the desired outcome of an organization.
Strategy has many definitions but generally includes; setting
goals, determining actions to achieve the goals and pooling
available resources together to execute the actions. It refers
to a complex web of thoughts, ideas, insights, experiences,
goals, expertise, memories, perceptions, and expectations
that provides general guidance for specific actions in pursuit
of particular ends. An organizations senior management or
leadership determines the strategy. Strategy can present as a
series of activities when an organization adapts to its new
environment or competes or can be intended (Porter 1980).
It is a detailed plan for achieving success, the bundle of
decisions and activities that we choose on how to achieve
organizational long-term goals. These strategies include but
OBJECTIVE OF THE STUDY
The objective of this study was to;Analyse strategic responses major supermarkets have
adopted to cope with competition in the largest cities in
Kenya.
BACKGROUND INFORMATION
This study was guided by Porter’s Theory of competitive
advantage (1980), competitive on the Edge Theory and
Strategy as a Theory.
PORTER’S
THEORY
ADVANTAGE
OF
COMPETITIVE
Porter’s theory of competitive advantage (1980) identifies
five competitive forces namely; potential competitors,
buyers, substitutes, suppliers and Industry competitors that
define the rules of competition in an industry. The author
notes that, the goal of competitive strategy for a business
9
Margaret Kibuchi Mithamo et al, Journal of Business Management and Economics, 3 (5), May, 2015,
advantage. A theory answers the questions, what causes
what and why? It’s a statement based on assumptions about
how the world works. Based on the law of gravity, for
example, we can predict what will happen if you drop
something out of the window, without your having to do it
to find out.
unit in an industry is to find a position where the company
can best defend itself against these competitive forces, or
can influence them in its favour. Therefore, the essence of
formulating competitive strategies is to relate a company to
its environment. Knowledge of these underlying sources of
competition pressure highlights the critical strengths and
weaknesses of the company, animates its positioning in its
industry, clarifies the areas where strategic changes yield the
greatest pay off and highlights the areas where industry
trends promise to hold the greatest significance as either
opportunities or threats. All the five forces jointly determine
the intensity of industry competition and profitability, and
the strongest force become crucial from the point of strategy
formulation.
Based on the managers’ assumptions about competitive
conditions; the relative value of the firm’s resources and
capabilities as compared to those of their collaborators and
competitors predictions about the actions that competitors
may initiate, and the development of trends in the external
environment, managers’ express their theory of how to gain
and sustain competitive advantage in the strategy they set
for the firm. A firm can gain competitive advantage by
leveraging its internal resources, capabilities, and
relationships to exploit opportunities in its external
environment. Take the case of Uchumi supermarket a public
limited company incorporated in 1975 under the companies
Act (Cap 486 of the Laws of Kenya) for example. In the
early 1976, the supermarket chain was a trend setter in low
pricing to the advantage of all consumers and had opened up
three branches. Uchumi maintained high standards in quality
of goods and services. In 1990’s, the chain spearheaded the
hypermarket concept which has been a great success.
Having revolutionized the retail food sector by offering a
variety of products and introducing the concept of self
service, it must have been the right business strategy at the
right time (IDE-JETRO, 2013).
Competition moves by one firm have noticeable effects on
its competitors and thus may incite retaliation or efforts to
counter the move. Rivalry among existing competitors takes
the form of jockeying for position using tactics like price
competition,
advertising
battles,
product/services
introductions and increased customer service. Competition
in an industry, therefore, is rooted in its underlying
economic structure and goes beyond the behaviour of
current competitors. However, Porter notes that a firm is not
a prisoner of industry structure and it can influence the five
forces through their own strategies by critically analysing
and identifying key driving factors that define the industry.
For
competitiveness
and
sustainable
advantage,
organizations should endeavour to create value for
customers which are only possible by responding with faster
answers to the challenges of the ever changing business
environment driven majorly by technological changes.
Porter however, does not include technology and
government as forces that may influence competition in an
industry. He states that the two aspects can be understood in
isolation of the five forces.
Strategy as a theory of how to compete provides managers
with a blue print on how to navigate the competitive
territory. The more accurate the map is laid out by the blue
print, the better strategic decisions managers can make. In
the competitive environments, managers test their theories
in the marketplace as Uchumi did to emerge the most
competitive supermarket at the time. Positive feedback
validates managers’ strategic assumptions; Negative
feedback on the other hand allows managers to adjust their
assumptions as it happened to Uchumi chain of
supermarkets after a period of success in the market arena.
In the early years of 2000’s, Uchumi started to experience
financial and operational difficulties occasioned by a suboptimal expansion strategy coupled with weak internal
control systems. This resulted in a marked decline of the
company’s resources which culminated in its inability to
meet its obligations on an on-going basis. Initial
restructuring of Uchumi did not restore the deteriorating
performance of the company and as a result, on 31st May,
2006, the Board of Directors resolved that the company
ceases operations. On 2nd June, 2006, the Debenture
Holders placed the company under receivership. The Capital
Markets Authority (CMA) also suspended the company’s
listing on the Nairobi Stock Exchange (NSE) at around the
same time.
COMPETITIVE ON THE EDGE THEORY
Whalley (2010) on the other hand posits that strategies
based on flexibility, experimentation and continuous
change, and learning can be more important than rigorous
analysis and planning. The author further argues that, firms
develop a ‘semi-coherent strategic direction’ which requires
them to create and maintain balance between order and
chaos. By competing at the ‘edge of chaos’, a firm creates
an organization that can change and produce a continuous
flow of competitive advantages, that form a ‘semi-coherent’
direction. Firms should not just react to change, but must be
good in anticipating and leading in change. This theory was
also good for this study because of the dynamic nature of the
business environment occasioned by changes in
technological advancements and globalization. However, the
theory has not factored in technology and globalization but
argues that, in successful businesses, change is time-paced
or triggered by the passage of time rather than events.
By deteriorating in performance, it can be construed to mean
that Uchumi management competing strategy was greatly
compromised by various internal and external
environmental factors which were not the right ones at the
time. Never the less, competitors also learned from the
Uchumi supermarkets debacle as also did Uchumi. In the
Uchumi case, the management and stakeholders reviewed
STRATEGY AS A THEORY
The term “firm” in this theoretical framework was also
taken to mean supermarkets among other firms and was thus
used interchangeably. A firm’s strategy is perceived as a
managers’ theory about how to gain and sustain competitive
10
Margaret Kibuchi Mithamo et al, Journal of Business Management and Economics, 3 (5), May, 2015,
service is sold at different prices at the same moment of time
(IMF, 2004). Consumers are increasingly confronted with
intense market place competition. Saturation, over storing
and a rapid proliferation of new formats have changed
competitive dynamics in retail markets. Low prices
produced by price warfare may change consumer’s
perceptions of all prices. Consumers’ concept of ‘low’ price
conforms to the context. Consumers might be persuaded to
switch to the new low price stores unless loyalty keeps them
from it. Even if price is the only one aspect of the
determinant mix, the various theories of search behaviour
and choice still do not explain how consumers use price in
the decision process, especially when they do not know the
price at all or where their guess is considerably outside of an
acceptable range of price knowledge (Von, 2002).
their strategies. As a result, the company was revived and
commenced operations in July, 2006 under Specialized
Receiver Manager (SRM) and interim management
following a framework agreement between the Government
of Kenya, suppliers and debenture holders. In 2008, the
company returned a profit of KSHS 106 million against a
loss of KSHS 257 million the previous year marking a
turnaround of KSHS 356 million. Presently, Uchumi is one
of the largest commercial retailing companies in the country,
operating over 16 branches - three in Karatina, Meru and
Eldoret, one in Kampala and another in Uganda and the rest
located in Nairobi. Retailers in Kenya are fast expanding as
competition heats up. The major supermarkets such as
Nakumatt, Uchumi, Tuskys and now Naivas have in the past
few months been racing to open new outlets at strategic
positions among other strategies (IDE-JETRO, 2013).
Rampant price communications cause consumers to place
relatively more importance on price than on other attributes
for determining store patronage. Expanded variation of one
attribute among stores increases that attribute’s impact on
market share. This reinforces customers expectation that
attribute reweighting will occur when price variation
increases as in price warfare scenario. Customers expect
price to increase in importance for store choice. For
consumers to perform inter-store price comparisons, they
usually require that they retain price information in memory
for later recall. Reardon (2003) further advances that since
supermarkets in Kenya operate in a very competitive
environment as it is with the rest of the world, various
strategies among them, availability of a wide range of
quality products and services, manager’s strategic decisions
and imaging are among factors that make the retail
environment competitive. The author also observes that
import licensing removal and price, trade and domestic
liberalization including liberalization and stabilizing policies
have several effects to supermarkets growth and
development and has made entry to markets easier.
Strategies put in place by a firm can develop valuable
resources and skills to yield position advantages and obtain
positive outcome in terms of market share and profitability.
The competitive advantage arising from strategies comes
from systematic differences across firms to the extent to
which they can control resources necessary for
implementing the strategies. Gursoy and Swanger (2007)
explored the influence of business strategies (sales, research
and development distribution, customer services, marketing,
human resources, accounting, and IT) on financial success
of business firms. The results showed that these strategies
have a positive influence on financial performance. The
business operators can niche to the factors to enhance
financial success.
Wong (2001) investigated some business competitive
strategies applied in Hong Kong and Singapore. Their
results showed that some of these strategies are meeting
customer expectations, differentiating market offerings,
building service delivery systems, mobilizing people and
partner, levering information technology to deliver value,
defining service standards and performance, cost
competitiveness, reliance on local and expatriate staff and
delivering services across the countries. The authors further
suggested that these firms can increase value of these
strategies by improving the leverage of services and
technology provided to customers.
Location as a response strategy to competition is yet another
winning strategy supermarkets employ to cope with
competition. According to Thompkins and White (2006),
location strategy consists of strategic decisions that are
impacted by manufacturing location and facilities or support
functions for each company area, handling of materials,
information systems, the acquisitions and the series of
logistic activities. Location has a connection backward to
suppliers or forward to customers. It contributes to improved
performance of the supply chain, being basic to developing
core competencies. Location explains up to 70% of the
variations in the choice of grocery store based on industry
research in the US. Even though location is critical as a first
in a consumer decision process that requires search or the
retail options and formats available that best match the
consumers’ needs, the case may be different for the scenario
of supermarkets in Kenya as consumers have different
perceptions towards the supermarkets.
RESPONSE STRATEGIES TO COMPETITION
According to Lagat (2011), supermarkets in Kenya have
adopted different strategies to competition. Some of these
strategies are increasing the number of products on offer,
setting up satellite branches in the residential areas, opening
outlets on high demand areas (prime areas), pricing of goods
and services lower than competitors, communication mix
and offering loyalty programs to build customer loyalty.
Other strategic responses that supermarkets in Kenya largely
apply include competitive hiring of management staff,
aggressive marketing and advertising to fend off
competition and upgrading of Information Technology (IT)
systems in the supermarket for efficiency and improved
customer service.
In addition, other factors that have contributed to the rapid
expansion of supermarkets in the country for maximum
profits are the high human traffic of the emerging middle
class and other populations, who form the bulk of the target
market. The emerging middle class in the country look out
for convenience and the wide range of products and services
Pricing as a strategic response to competition is a strategy
commonly used by supermarkets to shake off competition.
Price variation occurs when exactly the same good or
11
Margaret Kibuchi Mithamo et al, Journal of Business Management and Economics, 3 (5), May, 2015,
number of supermarkets in any given market arena, their
size in terms of the variety of goods and services offered,
population size and promotional activities by the various
supermarkets like aggressive advertising among other
factors.
from the retail outlets (Makau and Onyango, 2010). The
authors have also recorded that most of the supermarkets
have further considered position and location next to bus,
train and matatu termini of the retail stores for higher market
share due for customers’ ease of accessibility to the retail
outlets. They report that most of this target group uses
public transport for various reasons which range from some
not owning personal vehicles to others who own vehicles
preferring to use public means to cut down on cost of
parking fee and congestion of the parking space whose
availability can also be very far off from the retail outlet at
times. Others still worry about insecurity of their vehicles.
Communication mix is also a response strategy employed by
major
supermarkets
to
fight
off
competition.
Communication relationships usually begin with a shopping
experience, and continuing shopping maintains it. Loyal
consumers are able to generate 79 percent of store sales. In
this case the most important part of the customer retention
strategy is to ensure that shopping is sufficiently
pleasurable. According to Maggi (2003) industry
communication takes the form of sales promotion, free gifts,
and quick counter processing. In totality these aspects affect
communication to other parties feeding the supermarket
such as suppliers. This is because procurement in this sector
has unique characteristic involving perishable products such
as food which need immediate delivery and sale which
depends on good communication.
Promotion is yet another strategic response to competition
used by supermarket retailers to counter competition in a bid
to stay relevant in the supermarkets sector market arena.
Promotions are marketing events limited in duration and
implemented to directly influence the purchasing actions of
customers with underlying intention of achieving the
objectives set out in the marketing strategy for the retailer
and or manufacture. The use of promotions in retailing has
increased rapidly in recent times, yet more often than not
promotions are being implemented with an inadequate
understanding of which mechanisms are most effective, for
which products and for which shoppers segments as
observed by (Felgate, 2012). The use of promotions in the
UK has increased significantly over the past decade,
particularly in grocery retailing where competition between
retailers has intensified. This has resulted in both UK
supermarkets and branded suppliers becoming increasingly
dependent on promotional activity to drive sales growth.
Hence, price promotions often result in large sales effects
for a promoted item, but this influence does not necessarily
mean that the sales increase is truly beneficial for retailers.
Therefore, deep price cuts should result in more additional
purchases and consumer stockpiling than lower price
reductions, because deep price cuts induce non-loyal
consumers to switch stores and loyal consumers to engage in
heavier stockpiling and consumption. Though promotions
are driving sales in UK supermarkets, the case may be
different in Kenya because of income levels and cultural upbringing and geo-demographic factors.
According to Parker and Donald (2011), effective customer
service satisfies customers and in turn increases loyalty.
Some of the retailers have employed customer service
strategies in their stores. Customer service is further
extended by effective channel aimed at achieving customer
service in retail whereby favourable relationships between
employees and customers are created first hand. This is done
by placing eye-catching display up front to make customers
slow down and not hurry on through the store. Some stores
attain these through store layout displays placed at
entrances, where shoppers can stop to touch, smell or try
slowing them so that they can settle down for customer
shopping.
Strengths, Weaknesses, Opportunities and Threats Analysis
is yet another response strategy to competition employed by
supermarkets. Porter (1980) argues that, for a firm to fully
understand its competitors and the competitive environment,
it is imperative that the firm compare its Strengths,
Weaknesses, Opportunities and Threats (SWOT) to its
competitors SWOT after assessing the competition and the
industry. The strengths and weaknesses are internal factors,
whereas opportunities and threats are external factors of an
environment. A SWOT analysis should be as high-level or
detailed as necessary to understand and bring to light the
challenges and appropriate steps for the firm to undertake in
creating strategic initiatives. Most business leaders ensure
that a SWOT analysis is performed on the firm at regular
intervals and that input on the SWOT is gathered from many
areas of the organization, as well as from the customer for
success in the competitive market arena.
Supermarkets today face increasing competition prompting
them to focus on improved customer service and promotion
strategies to improve their shares of consumer purchases and
wallets. Supermarket services are likely to directly expand
demand for all items sold by attracting more consumers
(Shilpa, 2009). On the cost side, the process of enhancing
store quality through services generates an increase in costs.
Borges (2008) argues that improved customer service allows
the identification of customers’ needs and puts more
emphasis on superior customer value. It also gives
opportune answers to the needs or requirements of
customers thus consequently obtaining satisfaction and
loyalty. In addition to equipping the organization to cope
with the outside world of customers and competitors, it is
also necessary to train and motivate all staff within the
organization to provide appropriate level of service to
customers. Close relationship between customers and
supermarket employees is not always in the best interest of
the supermarket cautions (Shilpa, 2009). The stiff
competition for scarce resources also depends on the
STUDY FINDINGS
The study findings indicated that major supermarkets within
the large cities in Kenya have adopted various response
strategies to cope with competition within the supermarkets
sector. Cross Tabulation statistical method of data analysis
was employed to analyse study responses. The computed
responses are summarized in Table A.1:
12
Margaret Kibuchi Mithamo et al, Journal of Business Management and Economics, 3 (5), May, 2015,
Table A.1: below presents the findings of the cross
tabulation results between major supermarkets and Price of
Goods Lower than Competitors.
RELATIONSHIP
BETWEEN
MAJOR
SUPERMARKETS AND PRICE OF GOODS LOWER
THAN COMPETITORS
Table A.1: Cross Tabulation results between Major Supermarkets and Price of Goods Lower than Competitors
Major
Supermarket
Response Strategy adopted - Price of goods lower than Competitor
Never
Sometimes
Almost Every Time Every time
45.5%
27.3%
27.3%
20.0%
80.0%
77.8%
22.2%
50.0%
50.0%
3.4%
55.2%
17.2%
24.1%
Nakumatt
Uchumi
Tusky’s
Naivas
Total
Total
100.0%
100.0%
100.0%
100.0%
100.0%
consumers to switch to the new low price stores. Price may
start a price war and lead price sensitive customers to wait
for further falling of prices for various commodities within
which time they may make purchases in other store formats
perceived to have lower prices. Customers are often allied
to store outlets that offer discounts on a variety of products
(Jason and Marguerite, 2006). Thus price should be
considered along all income groups who are considered
supermarkets target customers.
Cross tabulation result in Table A.1: shows the relationship
between major supermarkets and price of goods lower than
the competitors. This response strategy has been adopted
sometimes by the majority of the supermarkets with Uchumi
adopting it 80%, Tusky’s 77% and Nakumatt 45.5%
sometimes respectively. As compared to the other three
major supermarkets, Naivas uses this strategy every time,
50% and is therefore a winning strategy for the supermarket.
Naivas has been a market leader in offering lower prices for
its merchandize in the supermarkets sector for a long time. It
is also said to be the fastest growing retail outlet in the
sector (GAIN, 2008).
RELATIONSHIP
BETWEEN
MAJOR
SUPERMARKETS AND SALES PROMOTION
Table A.:2 below present the findings of the cross tabulation
results between major supermarkets and Sales Promotion.
Low prices produced by price warfare may change
consumer’s perceptions of all prices. This may persuade
Table A.2: Cross Tabulation Results between major supermarkets and Sales promotion
Major
Supermarket
Nakumatt
Uchumi
Tusky’s
Naivas
Total
Response Strategy adopted - Sales Promotion
Almost Never
20.0%
22.2%
Sometimes
18.2%
60.0%
44.4%
10.3%
31.0%
Almost Every Time
18.2%
22.2%
25.0%
17.2%
Cross tabulation result in Table A.2: show the relationship
between major supermarkets and sales promotion. The
results indicated that Naivas and Nakumatt supermarkets use
sales promotion every time 75.0% and 63.6% respectively
while Tusky’s and Uchumi use it sometimes 60% and
44.4% respectively. Generally, sales promotion is used
every time 41.4% by all supermarkets although at different
levels.
Total
Every time
63.6%
20.0%
11.1%
75.0%
41.4%
100.0%
100.0%
100.0%
100.0%
100.0%
customer satisfaction and loyalty. Sales promotions inform
customers about both existing and new products and
services and their benefits in a business entity. They
generate psychological needs in consumers which encourage
decisions to purchase the product or service. Sales
promotions communicate product information between the
consumer and the supermarket, stimulates consumer
demand, builds brand image and counters competitors.
When done appropriately, sales promotions sway the
supermarket towards an attractive market position and
business efficiency.
The increasing competition within the supermarkets sector
environment has prompted the retailers to focus on
improved customer service and promotion strategies. This
strategy is seen as likely to directly expand demand for all
items sold by attracting more consumers to a business entity.
Improved customer service allows the identification of
customers’ needs. It puts emphasis on superior customer
value and gives opportune answers to the needs and
requirements of customers. This consequently brings about
RELATIONSHIP
BETWEEN
MAJOR
SUPERMARKETS AND COMMUNICATION MIX
The Table A.3: below presents the findings of the cross
tabulation results between major supermarkets and
marketing mix.
Table A. 3: Cross Tabulation Results between Major Supermarkets and Communication Mix
Major
Supermarket
Nakumatt
Uchumi
Tusky’s
Naivas
Total
Response Strategy adopted - Communication Mix
Never
Almost Never
20.0%
33.3%
20.0%
13.8%
3.4%
Sometimes
18.2%
40.0%
11.1%
17.2%
13
Almost Every Time
45.5%
20.0%
33.3%
25.0%
34.5%
Total
Every time
36.4%
22.2%
75.0%
31.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Margaret Kibuchi Mithamo et al, Journal of Business Management and Economics, 3 (5), May, 2015,
Table A.3: shows cross tabulation between major
supermarkets and Communication Mix. The Table indicates
that the four major supermarkets in Table 3 use
communication mix almost every time although at different
levels with Nakumatt taking a lead in that category with its
use 45.5%, followed by Tusky’s 33.3% and Uchumi 20.0%
in that order. Comparatively, Naivas supermarket uses
communication mix all the time, 75.0%. This strategy is a
superior strategy for Naivas supermarket more than it is for
the other three major supermarkets.
customers. Thus, consumers shopping experiences should be
as satisfying as possible as a retention strategy.
Maggi (2003) posits that industry communication consists of
among other things sales promotion and assistance from the
supermarkets attendants who push trolleys full of assorted
goods for consumers to their vehicles at the parking area.
The supermarket communication trickles down to various
other supermarkets stakeholders such as suppliers who
deliver procured products in time due to good
communication. It is of outmost importance for the
supermarkets retailers therefore to adopt the changing
consumer buying behaviour and provide the most sought out
gratifying shopping experience to consumers who seek
value, convenience and variety.
Industry communication may take the form of sales
promotion, free gifts, and quick counter processing. The
strategy may see a large number of customers shift interest
to other outlets involved in communication mix sometimes
for long periods of time or during the specific seasons of the
strategy use. Communication relationships start with a
shopping experience. Continued shopping maintains the
relationship. According to Rintamaki, Kanto, Kuusela, and
Spencer, (2005), 79% of store sales are generated by loyal
RELATIONSHIP
BETWEEN
SUPERMARKETS AND LOCATION
MAJOR
Table A.4: below gives details of the cross tabulation results
between major supermarkets and Location.
Table A.4: Cross Tabulation Results between major supermarkets and Location
Major Supermarket
Nakumatt
Uchumi
Tusky’s
Naivas
Total
Response Strategy adopted - Location
Never
9.1%
Almost Never
9.1%
Sometimes
9.1%
20.0%
11.1%
40.0%
20.0%
22.2%
22.2%
10.3%
10.3%
13.8%
24.1%
Cross tabulation result in Table A.4: show the relationship
between major supermarkets and Location. The results
indicated that Naivas supermarket uses location as a
response strategy to competition every time 100 %. Tusky’s
uses it every time at 44.4% although indicated by a smaller
percentage than Naivas. Nakumatt uses this response
strategy almost every time 45.5% while Uchumi, 40.0%
almost never uses it. Location may place a business near its
customers and suppliers and may also play a significant role
in an entity’s success towards gaining competitive
advantage over its rivals by way of easy and less costly
access to business raw materials and low distribution costs
when delivering the product to the customer.
Almost Every Time
45.5%
Total
Every time
27.3%
100.0%
20.0%
44.4%
100.0%
41.4%
100.0%
100.0%
100.0%
100.0%
shift which is the principle to retain a successful action.
Loosing actions or not very superior response strategies
should be employed with caution and those with low
response levels to competition replaced. This will be in
keeping with the more consistent and winning strategies. In
their attempt to adopt winning strategies to cope with
competition within the supermarkets sector, the marketers
must consider the four “Ps” of marketing to gain a strategic
position in the development and eventual implementation of
winning strategies to engage competition in retail.
The four Ps stand for:a. Product: This must be of high quality and should be
timely in its delivery. The objective of the marketer
should be to provide the customers with what they
want, when they want it and at a value.
b. Price: Price often dictates choice of store outlets a
consumer will do their purchases. Price is often based
on various things among them customer preference,
quality of product and service and performance. Most
customers are willing to pay a price if they believe the
product or service surpass their expectations.
c. Place: considers the point or location of collection and
the time of collection of a product or service.
Marketers should avail their merchandize in easy to
access market places and when required. Most
customers will travel long distances to purchase a
particular item because they are certain to get it there
than in any other place.
d. Promotion: - This may be through advertisement both
print and mass media. Communicating availability of
ones products and services to niche markets through
A store choice decision can be conceptualized as a problem
of deciding where and when to go shopping by consumers.
Kotler and Armstrong (2008), further states that a retail
location is considered as an important element of the retail
mix because of the time and expense needed to find an
appropriate location for the business. The retail location
should have good entry and exit, ample parking and other
support facilities like banks. Supermarket location affects
timing of shopping trips because the customers may go
shopping in smaller more convenient outlets for short fill-ins
and only go to larger retail stores for their regular shopping
trips.
CONCLUSION
Supermarkets should consistently employ superior or
winning strategies that have shown positive returns and
success. They should the learning rule; - win–stay; lose–
14
Margaret Kibuchi Mithamo et al, Journal of Business Management and Economics, 3 (5), May, 2015,
various modes of delivery is a strategy that bears good
results for most marketers.
Market for High-Value Food Workshop ERS/USDA. .
Washinngton
The role played by the supermarkets sector cannot be
underscored. Wholesale and retail is among the top five
sectors that have driven the Kenyan economy in the last five
years. The retail sector, within which supermarkets belong,
has created employment to thousands of Kenyans. The
supermarkets sector also contributes in the Gross Domestic
Product of the country. These contributions beg for the
government to be concerned with the sector growth and thus
provide a level playing ground for all supermarkets sector
players.
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