Tuskys to lay off staff after sales drop

Supermarket chain Tuskys plans to lay off staff in the wake a drop in sales and customer traffic, reflecting a difficult operating environment for retailers.

Tuskys notified the affected employees this week saying it was reorganising its departments in a move meant to cushion it from further losses.

In a letter to Kenya Union of Commercial Food and Allied Workers (Kucfaw) on Wednesday, the supermarket said it has been forced to declare redundancies in order to stay afloat. It is not immediately clear how many employees will be affected by the lay-offs set for March but six unionised workers will be sacked.

“It has become apparent that the company’s performance in the last two years has been on the decline. As such the company has embarked on a process of restructuring its operations to ensure viability,” said Tuskys Human Resource manager Francis Kimani.

“This has been orchestrated by a drop in sales and in customer numbers even as the Kenyan retail sector continues to experience growth with entry of big multinational players.”

Tuskys woes follow the collapse of the once biggest local retailers Nakumatt and Uchumi that went under owing to massive debts, partly attributed to mismanagement.

However, the decline in Tuskys sales also reflects a tough economic environment that has seen food inflation rise to a 27-month high to stand at 9.3 percent in December 2019.

Overall inflation in January this year stood at 5.78 percent further eroding the purchasing power of the millions of households who depend on monthly wages to meet their daily needs.

Recent studies note that local shopping baskets are shrinking and that Kenyans are making less trips to retailers per year when compared to peers across Africa.

A household survey by research consultancy firm Kantar Group, shows that Kenyans are trimming their shopping budgets and favouring discounted goods in big packs to save on money and reduce trips to supermarkets.

Kantar says that an average Kenyan household spend on consumer products dropped by three percent last year, with higher prices pushing consumers to rethink ways of making ends meet by turning on credit purchases or favouring secondhand goods.

Tuskys has also been facing growing competition from local retailers Naivas and Quickmart, which are currently well-backed by private equity funds, and international players like the Game, Shoprite and Carrefour who enjoy support from parent firms. These brands have also come with refreshed and attractive store formats they are using to attract new customers.