Carrefour retail outlet has decided to withdraw from T-Square Mall in the middle-class neighbourhood of Buruburu, just days after receiving a significant fine from the competition watchdog.
The Competition Authority of Kenya (CAK) imposed a hefty Ksh1.1 billion fine in December of the previous year.
The retailer had initially begun preparations to establish its presence in the mall, intending to cater to the middle-income demographic and compete directly with Naivas Supermarket, located only one and a half kilometers away, with a customer base primarily from the Buruburu locality.
Following Carrefour’s departure, Naivas has promptly taken advantage of the situation and is currently preparing the mall for occupation, setting the stage for increased competition with Quickmart Supermarket, situated near the mall.
Quickmart had been enjoying a monopoly in the Buruburu shopping center after the closures of Tuskys and Uchumi, where it currently holds sway.
Tuskys Supermarket originally occupied the mall until its closure, creating an opportunity for competitors to vie for prime retail space.
In December, Kenya’s competition authority imposed a Ksh1.1 billion penalty on Carrefour’s franchise holder, the UAE-based Majid al Futtaim, for the abuse of buyer power.
The Competition Authority of Kenya mandated the supermarket chain to revise all its supplier contracts, eliminating clauses facilitating the abuse of buyer power.
The authority found Carrefour guilty of leveraging its superior bargaining power over an edible oils supplier and a honey manufacturing business.
The roots of Carrefour’s predicament trace back to 2019 when Orchards Limited exposed the retailer’s operating model, revealing its practice of seeking substantial discounts from suppliers.
This revelation prompted the antitrust body to intervene, driven by concerns over Carrefour’s requirement for suppliers to pay a listing fee of Sh50,000 for each product sold at its outlet.
Establishing its first outlet in Kenya in 2016, Carrefour has grown to become one of the country’s largest retailers.
Insights from informed sources indicate that Carrefour’s decision to exit the mall is fueled by the necessity to conserve funds while addressing the substantial fine.