Market News
Naivas signs up two million clients to loyalty card
Tuesday November 07 2023
IBL Limited, which owns an indirect stake of 37.32 percent in supermarket chain Naivas Limited, is set to invest an additional Sh9 billion. FILE PHOTO | NMG
Supermarket chain Naivas Limited has signed up more than two million customers to its loyalty card programme, underlining its large base of repeat clients that has helped it grow into the largest player in the formal retail market.
The company’s significant shareholder, Mauritius’ IBL Limited, disclosed the uptake of the loyalty programme in a trading update.
At two million repeat customers, Naivas has among the largest client bases in the country. Safaricom has the highest number of customers at more than 30 million.
Read: Naivas founders eye Sh5.8bn as foreigners seize control
Other companies with millions of customers are Kenya Power, Equity Bank Kenya, Kenya Commercial Bank, Co-operative Bank of Kenya and NCBA Bank Kenya.
Businesses with more clients are better placed to grow their revenue and earnings, benefitting from economies of scale. This is especially the case for firms with efficient operations and the ability to price their products or services optimally.
Safaricom is the most profitable company in the country and is followed by the large banks.
Naivas is the most profitable in the supermarket business, with an annual profit of more than Sh2 billion.
Naivas, like other retailers, runs a loyalty programme to retain clients and grow sales. Shoppers earn a point for each Sh100 they spend at any of the retailer’s 100 stores in the country.
They can use the points to pay for their future shopping, with one point redeemed for Sh1.
Naivas made a profit of Sh2.1 billion in the nine months ended March, marking a higher earnings growth from a year earlier according to an earlier disclosure by IBL.
The supermarket operator continues to expand across the country after recently opening its 100th store in Lavington along King’ara Road.
It plans to open two more –one on Mwanzi Road in the capital city while the 102nd unit will be in Kakamega town— by the end of the year.
Its close rivals, Quickmart and Carrefour, have also been expanding in the race for clients.
Quickmart has 59 stores, making it the second biggest retailer in Kenya, while Carrefour, which entered the country seven years ago, has 20 outlets.
The three are racing to tap into the market that was left by the collapse of Tuskys, Nakumatt and Uchumi supermarkets mainly due to large debt and mismanagement.
New entrants like Massmart and Shoprite of South Africa folded their Kenyan operations, after failing to gain traction in the competitive formal retail market.
Read: Naivas headcount crosses 10000 on branch expansion
Well-capitalised retailers are well-positioned to benefit from the growing spend in formal stores, which offer consumers convenience and a wide selection of products under one roof.
Their main competitors are corner shops in the estates which offer relatively low value purchases per customer but have a higher loyalty due to offering credit.
