As Uchumi Supermarkets Came Crushing Down Recently, I Couldn't Help Remembering The Smiling Son Of A Dukawalla, The Genius Who Built Up The Supermarket Chain. There Are Many Lessons To Be Learnt Here
I was recently asked by this naïve young girl who has recently completed high school how a business like Uchumi can actually collapse. To her, Uchumi going down was akin to the Central Banking collapsing, it just doesn’t happen.
I then realized that many Kenyans are thinking just the way my young friend was.
My mind went back to my friend Suresh Shah son of a dukawala and born in Mariakani (near Mombasa) who is a chemical engineer by training but was Uchumi’s most successful managing director.
Suresh got his degree from a world famous technical university but couldn’t find a job in Nairobi in the mid 70s, so when an opening with ICDC as a management trainee came up, he grabbed it and never looked back. He cut his teeth doing a painful restructuring at ART (African Retail Traders) that saw him shut down a number of outlets. Then fate landed the then troubled Uchumi Supermarkets in his hands. His instructions were actually to shut it down in an orderly manner.
The supermarket had been launched in Kenya with the help of Italians and was therefore packed with Italian products that nobody wanted. To discover this, Suresh sat in the supermarkets daily for about 30 days (from opening to shut down time) to study the trade. (A fascinating lesson for MDs who want to fully understand their business).
The only thing Shah ended up shutting down in his amazing turnaround achievement at Uchumi were a full Butcher unit in the Industrial area which was bleeding badly. That helped focus the business on the retail trade. He also fired a few employees who were rampant thieves.
Maybe one day Shah’s remarkable feat will be recognized more widely because when he took over Uchumi as MD it was technically bankrupt already. He kept it going by working out a simple and yet elaborate system of turning over cash as many times as possible before having to finally pay a supplier. It involved persuading suppliers to take payments after 45 days and then he used the cash generated from their supplies to make as much additional profits as possible before payment became due.
At the height of Uchumi’s glory, the supermarket chain was a heavy investor in short term treasury bills.
Then there’s the story of the Ngong Road branch of Uchumi. Initially it is said that Suresh almost had a seizure when he was given a quote of what a structure was going to cost on the then vacant lot that the chain had just acquired after Shah noted the heavy affluent traffic on Ngong Road and saw it as an opportunity Uchumi could use. So what did he decide to do? He opted to build a warehouse supported by steel structures on the four corners. Unfortunately the guy hired to excavate the ground did not believe the instructions to dig so close and went ahead and dug according to their own specifications. Shah found a way to use the extra depth and the underground car park was born.
Everybody complained about the ugly ceiling of a warehouse not being appropriate for Uchumi’s stature. They were wrong, shoppers don’t spend their time staring at the roof in a supermarket and anyway the extra high roof without a ceiling saved a fortune in possible air-conditioning facilities. In the end the building cost only a small fraction of what it would have actually cost had conventional thinking been used. That was the genius of Shah. No doubt this stuff was in his bones having been the son of a dukawalla (Asian small trader)
It is now clear that those who took over from Shah despised what they perceived to be his penny-pinching ways. The result is the catastrophe we now have in our hands where over 1,000 families are in serious trouble as their bread winners lose a regular source of income.
Maybe you should find a way to come back Suresh, and help sort out this mess.
Well an MBA is no substitute for common sense
ReplyDeleteA very well written and insightful post.Are you going to tell us Kirubi's role in this mess?
ReplyDeleteThere comes a time when when the truth has to come out. It may take decades or even a century, but finally one day, the truth comes out. The lesson here is that usually the truth about a person comes out in their lifetime.
ReplyDeleteThe time has come for Kenyans to start making a clear distinction in corporate Kenya between persons who have made their money in dubious thieving ways or those who have inherited it from persons who have made it in that way... And the emerging corporate crowd of person who have just worked hard and smart and fate has been on their side.
I recognize the fact that if this distinction were to be made we would lose 95% or more of the corporate crowd we have come to respect and trust. But then look at the mess at Uchumi. See the next post for details on Chris Kirubi's role in the collapse of Uchumi.
That was such a brilliant story!! So where's Suresh now?
ReplyDeleteHe's running his own consumer products company that manufuctures stuff like the popular Quencher orange juice. Finally puitting his chemical engineering know-how into practice.
ReplyDeleteActually Quencher was launched on the Uchumi shelves when he was MD. There are those who would call it a conflict of interest. I am not one of them. And neither is it possible to find a perfect person under the sun.
An excellent recap of Suresh Shah's time at Uchumi. I count him as a friend who is not only smart but very hardworking! I have to link your blog to my recap of the happenings at Uchumi in the SS days.
ReplyDeleteI don't understand commentators who think having "excess" cash & making hay while the sun shines - in this case oodles of interest income - is a "bad" decision! Well, this cash & no debt was exactly what the smart guys did in the high interest rate days. Look at the "smart" banks like Barclays & StanChart.
Suresh would be invaluable as a "booster" if he was brought on board during the restructuring of Uchumi.
I love the way the story of Suresh has been told on this blog. This is the kind of stuff we need to read in our papers and magazines... we need to hear acurately told "rags to riches" "hardwork and street smarts pay" stories rather than the never ending political rhetoric that we are exposed to.
ReplyDeleteNo Doubt Suresh shah did a good job at uchumi. The profits the company churned out those days were incredible. However, most of their gains came from investments in governmnet securities. That may have been a highly pritable strategy at the time but it surely wasn't a sustainable one.
ReplyDeleteIt is true Suresh was a no nonsense person in the business and would expect the old managers still in employment at uchumi to borrow heavily from his ways of running the show.
ReplyDeleteCongratulations Suresh Raichand for the mark you left in Kenyans hearts.
It sure appears to me that one needs a briliant mind like the one Suresh has.He might not have been greedy for money as Kirubi and thus was drive by the love to use his brains.I would like to meet him and give him apart.Why did he leave Uchumi?
ReplyDeleteCiano(Mr. Intergrity)anatosha. He has returned Uchumi back to its feet and he is yet to do more. He is not only my role model, even though I have not met him yet. But we still need more people of integrity like Him to make Uchumi yetu(All Of Kenya meet its 2030 goals adn if possible be one of the G8 or should I say now G9 and make Uchumi not to be an endagered spiecies.
ReplyDeleteMR.Suresh and Ciano and all that made their efforts and strategies suceed, thank you!and to those that hoped for their downfall and remain their winers yet they determined the down fall of this worndorful institution/organization,its not too late to change with the changing time. YES WE CAN!!!!!!!!!!
Have a lovely day! wont you!
Excellent post. I am going through many of these issues as well..
ReplyDelete