This archive report was first published on 29 October 2019.
Published on October 29, 2019, a survey by Financial Standard revealed a fierce pricing war among retailers in Kenya, with suppliers at the heart of it.
Foreign-owned retailers such as Walmart, Carrefour, and Shoprite have altered the supplier payment terms, pushing for friendlier pricing and negotiating with suppliers. This has left locally-owned retailers struggling to match their prices.
Tuskys, the largest locally-owned retailer, has taken note of the development and is seeking to raise Sh1 billion from the market to boost its working capital. The funds will be used to address the supplier payment period, which is a major challenge for the company.
According to a confidential source, Tuskys is planning to issue a convertible bond to raise the funds. This will provide the lender with an opportunity to convert a loan to a share at a later time, subject to certain conditions.
Carrefour, a French-owned retailer, has confirmed that it offers prompt payment terms to its suppliers, which enables it to offer deep discounts to customers.
“The payment terms are a business-to-business agreement that is formalised, agreed and signed by both parties…the payment term depends on the nature of the supply,” Carrefour said.
