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Superstore tycoon welcomes Wal-Mart competition

From David McKenzie (CNN)
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Kenya's stylish supermarkets
  • Atul Shah is the managing director of Nakumatt, a supermarket chain in East Africa
  • The company has 29 stores and plans to expand even further
  • Wal-Mart looks set to join African retail sector
  • Wal-Mart's interest shows there is a growing market in Africa, says Shah

CNN's Marketplace Africa offers viewers a unique window into African business on and off the continent. This week David McKenzie speaks to Atul Shah, founder of the Nakumatt supermarket chain in Kenya.

(CNN) -- It was a trip to the United States in the 1980s that inspired Kenyan entrepreneur Atul Shah to emulate the American superstore experience back in his homeland.

Now, his brightly-lit and spacious Nakumatt supermarkets offer a wide selection of local and imported products that accommodate the needs of Kenya's growing middle class.

The company, one of East Africa's leading supermarket chains, boasts 29 stores and plans to expand even further, having already opened outlets in Rwanda and Uganda.

But with U.S. giant Wal-Mart recently making an offer for a majority stake in South African retail company Massmart Holdings the continent's retailers, including Nakumatt, are bracing themselves for tougher competition.

Shah acknowledges the challenge but says Wal-Mart's interest in Africa validates his own decision to start a retail chain there. "It means that there is a lot of confidence ... that there is a market in Africa," he said.

Marketplace Africa spoke to Shah about his company's future and the importance of the retail sector in Africa.

CNN: Why do you think retail is the future for Africa in business terms?

Atul Shah: Retail is always the leading sector where you can judge a lot of things for how an economy is going.

We are in Africa, where Wal-Mart also is thinking of coming, so from day one we made the right choice of being where we are.
--Atul Shah
  • Kenya
  • Africa
  • Wal-Mart Stores Inc.

New ideas are brought into the country, new demands created for shoppers, for people moving into the country.

Changing lifestyles is what we are known for, and we have changed the lifestyles of many by bringing products from all over the world and giving them an experience which is new, and saying "why can't we do what they are doing in developed worlds?"

CNN: Why did you think that a supermarket idea, or a megamarket as it were, would work in East Africa?

AS: Kenya, whenever we looked at it, there are lots of opportunities around. A lot of Kenyans would travel abroad and bring their needs from either Dubai or London -- wherever they would be traveling.

And a lot of them had not the opportunity to travel. So we think there is a market, there is the money around. There is the knowledge of people here that a lot of products are available outside there and they want the products.

CNN: There's a lot of talk of Wal-Mart buying all or part of Massmart in southern Africa. Do you think a big U.S. company coming in will bring more competition for you in East Africa?

AS: Definitely. A U.S. giant player like Wal-Mart, the world's number one player, coming in to Africa means competition. But it also means that there is a lot of confidence that there is a market in Africa. They would otherwise not be interested in coming here.

CNN: Does it keep you up at night, thinking that Wal-Mart is coming into the market?

AS: It actually encourages me to say, we are in Africa, where Wal-Mart also is thinking of coming, so from day one we made the right choice of being where we are.

Teo Kermeliotis contributed to this report.