Kipng’etich: Why I left Equity Bank for Uchumi Supermarkets

By: BRIAN NGUGI

Two-and-a-half months after he was appointed the CEO of struggling retailer, Uchumi Supermarkets, Dr Julius Kipng’etich, has broken his silence on why he left his lucrative post of Chief Operations Officer at tier-one lender Equity Bank.

Dr Kipng’etich joined Equity in 2004 as board member and served as the Chief Operating Officer of the bank from 2012 until his appointment as Uchumi chief executive 70 days ago.

“People are telling me ‘Uchumi is too small for you’. Why should they think that is the case?” posed Mr Kipng’etich while breaking into laughter during an interview with Smart Company last week where he revealed a comprehensive turnaround plan that he is rolling out to steer the retailer back to profitability.

He went on: “This (Uchumi) is a huge brand. It is not the size of the company that matters; it is the aspirations of this company and doing something good for Kenya. Remember I was in the team that drafted the Vision 2030 pillar. In the economic pillar, retail and wholesale is there and we say we need to modernise this sector in Kenya. Now an opportunity presented itself. Once I do it I can go to bigger things.”

SAVING UCHUMI

The avowed believer of using science in leadership and management now has his sights set on bringing Uchumi from the woods.

Beyond the business element of delivering value for its shareholders, Dr Kipng’etich says the fight for Uchumi’s survival is as personal for him as it is for the staff, which the retailer has retained after a purge that saw 1,200 workers sent home recently.

The former Kenya Wildlife Service boss says he wants to turn Uchumi into “the Equity Bank of the retail market in Kenya” in reference to the banking revolution triggered by the lender in the 90s when it targeted the unbanked poor, prompting major banks to follow suit. “For me, personally, Uchumi is a national brand. It reflects the aspirations of the people of Kenya. We want to revive Uchumi and Kenyans will be proud.”

Dr Kipng’etich is already taking the bull by the horns and making some tough decisions.

FINANCIAL BLEEDING

The retailer recently made shock exits from neighbouring Uganda and Tanzania to stem what Dr Kipng’etich said was excessive financial bleeding.

Earlier on, the retailer had closed two of its outlets in Kenya — one in Rongai and the other in Syokimau.

As of June this year, Uchumi had 37 outlets with 4,500 workers spread across East Africa, with a majority of them in Kenya. The retailer now has 24 branches across the country.

The chief executive has defended the drastic decisions made, saying they were long overdue.

“We needed to reorganise. There was no need of draining more money. Our strategy was to stop the bleeding. The outlets were just not viable,” he said.

Estimates provided by the retailer show that Sh2.4 billion in cash was injected every year into the branches despite returning losses for five years in a row.

As part of the turnaround push, Dr Kipng’etich says his focus has been to stabilise the operations of the retailer and help pull it from the red.

Uchumi recently put on sale some of its property on Ngong Road and the chief executive says some of the proceeds will help it stabilise the business.

“Our plan is to stabilise, optimise then grow,” he says.

CIANO’S EXIT

In June, Uchumi Supermarkets board sacked former CEO Jonathan Ciano and chief finance officer Chadwick Okumu following massive supply problems.

And as the retailer awaits to release its half-year results later this month, Dr Kipng’etich says things are looking up.

At the time, suppliers had boycotted delivering goods to the retail chain over non-payment of dues amounting to over Sh1 billion.

At the moment, the retailer has made efforts to mend the broken relationship as part of the turnaround efforts.

“They are trooping back because we are making a point to pay up on time and keep our word. Perhaps we have the best record of paying up in the sector today on a comparative basis,” he adds.

He says as part of the new strategy, Uchumi Supermarkets managers and individual employees have been tasked with new sales and productivity targets.

A software monitoring the firm’s daylong sales’ trend has been deployed too.

“We have a system to monitor what is happening in terms of sales on a minute-by-minute basis. Those are some of the things we did when he came,” he told Smart Company.

RETAIL SCHOOL

He says the company is also keen on improve the retail knowledge of its staff by among others considering a future plan to open a retail school to sharpen their skills.

“We don’t have money to outsource the training for customer care. So, currently we are doing it internally,” he says.

The once-vibrant retailer has plans to expand the food cafes within its outlets to tap into the huge demand in this segment.

In afterthought, however, Dr Kipng’etich blames the previous management for lack of a plan to support the expansion of the retailer.

“Uchumi came down because of a management issue,” says Dr Kipng’etich.

He also blamed uncontrolled expansion spearheaded by former CEO Jonathan Ciano for the retailer’s plunge into troubles.

COMPETITION

Dr Kipng’etich who is an avid golfer, mountain climber and classical music enthusiast projects that Uchumi Supermarkets will put smiles on the faces of its shareholders again.

“I believe that by the next three years Uchumi can fly again. That’s a guarantee,” he noted.

To thrive again, however, Uchumi will have to deal with rising competition say from Nakumatt, which is the Kenyan market’s largest supermarket in terms of sales and network size.

Other rivals include Tuskys and Naivas, which are also seeking to expand despite being entangled in family feuds.

French retailer Carrefour has said it will inaugurate its first Kenyan store this year through its Dubai-based franchise Majid al Futtaim when a new mall — Nairobi’s Two Rivers — opens in 2016.

In June, South Africa’s Massmart launched its first Game branded shop in the Garden City Mall. Botswana supermarket, Choppies, has also announced it has signed a deal to buy 10 outlets from Ukwala Supermarkets.

SOURCE: DAILY NATION