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RETAIL BUSINESS INTELLIGENCE ISSUE 02 / FEBRUARY - APRIL 2013

CRACKING CUSTOMER LOYALTY LOYALTY PROGRAMMES LOYALTY PROGRAMMES DRIVING PROFITABILITY GLOBAL LOYALTY TRENDS RETAILERS’ ASSOCIATION REWARDING LOYALTY


DELI EQUIPMENT

DISPLAYS COOKERS GRIDDLES PRESSURE FRYERS BURNERS FRYERS

PROKIT

Main mombasa Road Allbid house, Opp ASL, P.O. Box 49938, 00100. Nairobi. Tel: 020 2133076 / +254 - 727 246 209/+254 - 725 351 079 Email:info@nkc.co.ke web: www.nkc.co.ke


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Contents INSIGHT RETAIL | FEBRUARY - APRIL 2013

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Project Director’s note

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Global Trends

The Ultimate Card Printer

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Retail Training

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One-on-One with Sailesh Savani

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Solution Providers

Loyalty Program

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Health & Safety

Customer Loyalty Tips

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Executive Enfold

Saving Energy with style

27

Association

30

Retail News Wrap

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Cover Story


PROJECT TEAM

RETAIL BUSINESS INTELLIGENCE ISSUE 02 / FEBRUARY - APRIL 2013

CRACKING CUSTOMER LOYALTY LOYALTY PROGRAMMES LOYALTY PROGRAMMES DRIVING PROFITABILITY GLOBAL LOYALTY TRENDS RETAILERS’ ASSOCIATION REWARDING LOYALTY

Special Projects Editor Strategic Associates Contributors Various Design Publisher Insight Retail East Africa Printer Colourprint Limited

© 2013 Insight Retail All material is strictly copyright and all rights were reserved. Reproduction in whole or in part without the written permission of Insight Retail is strictly forbidden. The greatest care has been taken to ensure the accuracy of information in this magazine at the time of going to press, but we accept no responsibility for omissions or errors.The views expressed in the magazine are not necessarily those of Insight Retail or Retail Interchange Centre.

Project Director’s Note

H

appy New Year! Welcome to our second issue of the Insight Retail Magazine, a quarterly publication whose aim is to offer the retail industry and other interested readers with insightful local and global news, trends and solutions on various industry topics.

This issue focuses on loyalty programs whose history dates back to the early and mid-20th century, when a handful of retailers started handing out “trading stamps” to consumers who dutifully filled pages of booklets that could be exchanged for merchandise. Business experts believe that as companies seek to survive, compete and maintain their clientele, focus on customer relationship management (CRM) methods are to be implemented in the most bold or creative ways. One of the CRM tools employed not only globally but also here at home by businesses especially those in the retail sector is the loyalty card which companies have even been able to link into their enterprise resource management (ERM) and CRM databases. Today, many of our wallets are packed with different loyalty cards; at times far outweighing the amount of cash in our pockets. Loyalty cards and rewards programs are an integral part of marketing for an increasing number of retailers nationwide. Though a trend yet to hit Kenya, it is worth noting that loyalty cards are beginning to harness new technologies, such as mobile-phone apps and social networks. This not only helps to streamline and automate the process for consumers, it helps retailers tailor their offers, based on each consumer’s buying habits. Considered as the only point of reference to all stakeholders in the retail industry, we will continue distributing the magazine for free to all retail outlets countrywide as well as other interested players. The soft copy of the magazine is also available through email for registered stakeholders as well as on our website www.insightretails.com/magazines We believe that the magazine and its subsequent will be useful to your organization in one way or the other as you fold up your sleeves to strategize and grow your business in 2013. We welcome your feedback and comments by writing to us on info@insightretails.com Finally, we thank the readers and the general retail industry stakeholders for your continued support. We take this opportunity to wish you a successful business year and encourage each other to uphold peace and unity during the election period. TITUS KORIR Project Director

Retail Interchange Centre Limited P.O. Box 36106 City Square 00200 Nairobi, Kenya Tel: +254 725 350 690 / 0735 350 690 email: info@insightretails.com www. insightretails.com

INSIGHT RETAIL | ISSUE 02

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L OYALT Y C A R DS S O L U TI ONS

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n this era of globalization and intense competition to provide world class goods and services, success in business and being able to survive and compete remains a challenge among many an entrepreneur. Business experts believe that one of the ways that entrepreneurs can raise to the occasion is by investing in various information technology solutions which could help them reduce some of the high operational costs as well as giving them a competitive edge. On the flip side, business owners and managers, especially those drawn from the retail industry are aware that for success, it is vital for them to make sure that customers and clients are always opting for them as their preferred purchase option. To encourage patronage and loyalty, one of the techniques that many of the retail stores have developed and successfully applied among its customers is the use of loyalty programs- tailored marketing plans that reward customers for their participation. Throughout the world, these programs which are best characterized through loyalty cards are also promotional vehicles used by retailers for their corporate image through printed logos and graphics. They are also used to track all purchases, thanks to a chip, a magnetic stripe or a bar code. A loyalty program can range from simple punch cards to store-branded credit cards that reward redeemable points.

Primacy Card Printer

The Ultimate Smart card printer

PRINTING Today, for any customer loyalty program that uses cards, the printing of the cards ought to be a simple and non-tedious process, thanks to the various available up-to date affordable printing technologies. One such technology is through the use of the Primacy card printer which is readily available in Kenya, distributed and sold by Pergamon Limited. The Primacy card printer from French based Evolis, a company that designs, manufactures, and markets a comprehensive range of plastic card printing solutions is a powerful and high performance printer, easy to use which is able to print cards, both single and double sided at a superior quality. When loaded with the Evolis cutting-edge encoding technologies, Primacy turns into the ideal solution to issue cards. It has the capacity to support any requirement in card printing and encoding, a perfect option to deliver various types of cards; transportation passes, payment cards, identification badges, as well as multi-feature cards. The printer has a lower energy consumption level about five times lower than printers on previous generations. Its low sound level allows it to be seamlessly deployed into any working environment. The Evolis premium suite software solution makes the printer user friendly and reliable as its quality standards and expertise in card printer solutions is always up to date and unmatched.

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INSIGHT RETAIL | ISSUE 02

Pergamon Limited offers a three year warranty on the printer and the printer head.

Business experts believe that one of the ways that entrepreneurs can raise to the occasion is by investing in various information technology solutions which could help them reduce some of the high operational costs as well as giving them a competitive edge.

COMPLETE IT SOLUTION As a bona-fide supplier of some of the world’s leading brands in office automation, the company offers a wide selection of hardware and software products that will help customers keep up with the fast paced changes of the business world. Its wide range of hardware products include; ETR machines, POS printers, Barcode printers and scanners, Fiscal printers, Bill counters, POS Touch Screens, Currency Detectors, Customer Displays, Telecommunication Systems and Security Systems. Others are Electronic Weighing Scales, card printers and drawers, thermal printers, CCTV cameras and LED Lights. Pergamon Group, the holding company of Pergamon Limited which is incorporated in Kenya has business presence in Kenya, Tanzania, Rwanda, Uganda, and Malawi.


INTERVIEW

One on One with Sailesh Savani

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oyalty programs are one of the ways that retailers generally yearn to introduce and excel in, in their quest to achieve loyalty. Insight Retail Magazine sought the views of Sailesh Savani, Chief Executive Officer/Founder of CompuLynx Limited an expert in loyalty programs in Kenya.

Q: Where is Kenya in terms of embracing loyalty cards? A: The Kenyan retail landscape in particular has quite matured and is at par with many developed economies such as South Africa, USA, UK and Europe. Kenyan retailers are taking cognizance of the fact that recruiting or acquiring a new customer is more expensive than retaining one. With this in mind, most retailers have established card based loyalty programs that act as a key customer retention tool. From a technology stand point, most programs are using a mix of Smart Card and Magnetic Stripe cards for loyal customer identification. The next evolution of loyalty programs are mobile based that will replace cards as identification methods. But it will take one to two years before customers and program owners will feel safe and happy about replacing loyalty cards with mobiles. Q: What other loyalty cards’ opportunities exist in the larger retail sector? I.e. Where else can they be used other than supermarkets? A: The problem with most loyalty programs in the country is that they are all stand-alone programs. Retailers are yet to take advantage of the power of Coalition Programs where non-competing businesses can come together on a single loyalty program platform and enjoy the patronage of a captive customer base thereby creating a “club” of their own and making sure they get maximum share of the customers’ spend within the “club” members’ outlets. This approach would be a win-win for both the coalition program owners as well as customers. This in my view, is the single largest opportunity to grow the network of any existing loyalty program which has more benefits to consumers for the variety of choice and loyalty scheme for instance a retailer can partner with an educational institution, fuel station, restaurant, laundry or even a motor garage where customers could earn points and redeem at any point without restriction on when to redeem. Q: Are we likely to see a shift from the use of cards now clogging our wallets? A: As I have earlier eluded, cards as a medium of customer identification will be here for a couple of years, but as retailers come together to form coalition programs, that will certainly reduce the number of cards a customer has to carry around.

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Q: Comment of the use of mobile apps to replace the “hard copy” loyalty card A: The use of mobile Apps in Kenya will soon be a trend in Kenya thanks to innovation. On the flip side, the challenge associated with this include slower processes for instance if the teller at the till has to manually key in the customer’s data into their system. The use of a mobile App instead of loyalty card if done using the Near Field Communication (NFC) technology encrypting it to the phone is not prone to errors and is among the best however, a retailer will have to invest heavily on the requisite NFC readers and related hardware and software. From a Kenyan perspective, we have heard of mobile solution providers Safaricom and Orange wanting to pilot this technology. Once it is rolled out, it may give room for the shift from cards to mobile Apps especially if the NFC will be encrypted in the new generation SIM cards. Q: In your opinion as a pioneer in this area, what drives the demand for loyalty programs? A: Traditionally, a loyalty program is primarily a customer retention and acquisition tool. However, in the Kenyan context, most loyalty programs are a result of the “Herd Mentality” where most programs are a replica of the other and are established just because the fellow retailer has an ongoing program. The signing up of customers into a loyalty program should be based on customer retention and the value proposition based around the benefits. Q: Where are people going wrong with their programs and what can be changed? A: In my opinion, most retailers do not understand the general loyalty program concept and are busy replicating what the competitor has managed to pull off. Many have no objectives as why they are investing in the program and in the process become frustrated as the return on investment is usually medium to long-term as opposed to short term as many retailers perceive it to be. On the other hand, retailers are mainly worried on the cost of redemption (Points Earned)) and forget that when a customer earns 100 points he has purchased goods worth KShs. 10,000 hence the

retailer has already made his profits on the original sale and should not worry about what he is giving back. Q: In the process of adapting to new technologies of running the loyalty programs, what challenges are likely to come up? A: One is the cost of investing in the program while the other is customer recruitments. A customer’s value proposition should be considered not only for satisfaction (which is almost inevitable); when a customer is delighted in his own way he is likely to be recruited into the program easily with chances of bringing in referrals. In developed countries, referrals also earn points, a system that Kenya is slowly adopting. For instance in the financial sector, some banks have introduced the referral system, one of them being Family Bank’s Pesa Pap where when one refers another customer, he earns some cash out of the referral. Q: Any other global trend/s when it comes to loyalty that needs to be mentioned? A: It is worth noting that a loyalty program is a grassroots requirement critical to any retailer as this is his main way of capturing data about his customers buying patterns and behavior enabling him to run targeted marketing campaigns likely to reap better returns as opposed to a generic marketing campaign sent out to the entire customer base. For smaller retailers, CompuLynx is currently working on a system that will enable hosting a loyalty program on behalf of micro, small and medium (MSME) retailers who find it challenging (lack of capital) to procure and run their own program.


LOYALTY PROGRAMS

The Customer, The Loyalty and The Card

Mr. Trushar Khetia

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n our world of business, customer loyalty cards are not only a fascinating issue but one that every retailer yearns to introduce and excel in, however many a retailer are yet to fully understand what it takes to attain loyalty from their customers. This article seeks to explore this subject coupled with various practical examples from the local retail scene to shed more insight. THE CUSTOMER Retailers need to ask themselves analytical questions such as; what is my customer strategy? Who is my target market? What do they want? What makes them happy? These are questions that not only need to be asked when deciding to pursue a loyalty card program but on a continuous basis using the available data captured while signing up customers to the program. During a recent random meeting with Mr. Atul Shah, the Managing Director of Nakumatt Holdings, despite having being in the industry for quite sometime, he noted that ‘everyday we learn something new’. Though a simple yet powerful statement, I have realized the same applies to our customers. Hence, make it a point to learn something new everyday about your customers; which can easily be done through the loyalty card database captured enabling you develop a shopper centric approach and in turn lead to better decision making.

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THE LOYALTY Once you have fully understood who your customer is, the next step is to explore how to creatively come up with action and innovation that delights your shoppers thereby making them repeat and loyal customers. At this point, quick and brave action from the management enabling you break away from the norm and stand out from the competition is vital. For instance, through the Khetia’s Supermarket Supercard loyalty card customers are able to earn double points on their value added services such as the Gigabite Cafe and Oven Fresh bakery. On the other hand, most retailers in the industry have at one point or another partnered with their suppliers to offer special discounts or extra points to the respective loyalty card holders. Before entering into such partnerships, it is important to find out whether the offer relates to your target shopper, gives them extra value and if they are likely to buy into the offer. Only if the answer is YES, does one go ahead and implement the partnership. Putting the customer first helps you understand what drives them thus offer them solutions that will enable them become a loyal lot, only to you. THE CARD This simply means the technology invested in to run the card. During the recent launch of the ‘Chomoa Coins’ campaign launched by the Central Bank of Kenya and key stakeholders such as the Kenya Bankers Association and the Retail Traders Association of Kenya among others, to promote the re-circulation and use of coins , it was noted that in a bid to curb the challenge of giving customers sweets and other small items in place of coins due to the ongoing coin shortage, retailers such as Uchumi and Tuskys Supermarkets have launched ways of converting their customer’s change into loyalty points. This again is through the use of the loyalty card technology to solve customers’ problems.

Generally, the message to colleagues in the retail industry is that there is need to be creative and innovative through the use of the available latest technology able to help you inch closer to your customer to serve them better. Finally, it is important to note that we are living in a digital era where everything around us is progressing at such a quick pace allowing no room for complacency. The moment you choose to put your feet up and relax, your competitors quickly take advantage of that to outshine you thus, regularly exploring other new forms of loyalty card technology out there while applying global best practices remains vital. Always, keep asking yourself whether whatever you are doing/ practicing can be regularly improved. Similarly, find out from your employees and customers as well what else they would like to see incorporated into the loyalty card scheme. In short, continuous improvement will drive the agenda. Remember, loyalty is not bought but earned. It can only be achieved when one truly has his customer’s interests at heart and mind. Mr. Trushar Khetia is the Commercial Team Leader KDL Group - Khetia’s Supermarket Email: trushark@gmail.com Twitter: @Trushark


L O YA LT Y T I P S

Customer Loyalty

Program Ideas for Your Business USE A SIMPLE POINTS SYSTEM

PARTNERSHIP FOR ALL-INCLUSIVE OFFERS

CUSTOMER RETENTION RATE:

This is the most common loyalty program methodology. Frequent customers earn points, which translate into some type of reward. Whether it is a discount, a freebie, or special customer treatment, customers work toward a certain amount of points to redeem their reward. Although a points system is perhaps the most common form of loyalty programs, it is not applicable to all business types as it is most appropriate for businesses that encourage frequent, short-term purchases.

Strategic partnerships for customer loyalty, also known as coalition programs, can be extremely effective for customer retention and company growth. Again, fully understanding your customers’ every-day lives and their purchase process will help determine which company is a good fit as a partner. This methodology is applicable on a much smaller scale, as long as the businessman understands how individual customers experience one’s products or services and what would fit best for them.

This metric is an indication of how long customers stay with you. With a successful loyalty program, this number should increase over time as the number of loyalty program members grows.

USE A TIER SYSTEM TO REWARD INITIAL LOYALTY AND ENCOURAGE MORE PURCHASES

SCRATCH THE ‘PROGRAM’ COMPLETELY

Finding a balance between attainable and desirable rewards is a challenge for most companies designing loyalty programs. One way to combat this is to implement a tiered system. Offer small rewards as a base offering for being a part of the program, and encourage repeat customers by increasing the value of the rewards as the customer moves up the loyalty ladder. The difference between points and tiered systems is that customers extract short-term versus long-term value from the loyalty program. You may find tiered programs work better for high commitment, higher price-point businesses like airlines, hospitality businesses, or insurance companies.

Considering how many marketers are offering loyalty programs (whether they are effective or not is another story), one innovative idea is to mix the idea all-together. Build loyalty by providing firsttime users’ awesome benefits, hooking them, and offering those benefits with every purchase. MEASURING THE EFFECTIVENESS OF THE PROGRAM

As with any initiative implemented, there needs to be a way to measure marketing success. Customer loyalty programs should increase customer happiness and retention. Different companies and programs call for different analytics.

NEGATIVE CHURN:

Churn is the rate at which customers leave your company; negative churn, therefore, is a measurement of customers who do the opposite -- upgrade, or purchase additional services. These help to offset the natural churn that goes on in most businesses. Depending on the nature of your business and loyalty program, especially if one opts for a tiered loyalty program, this is an important metric to track.


ENERGY TIPS

Saving energy with style

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enya’s power supply interruptions have become almost a norm irrespective of which town one operates or resides in. The interruptions have led to a love-hate relationship between most power consumers and the main electricity supplier. The never ending at times abrupt power interruptions coupled with fluctuating high prices especially among the business community have resulted to many investing in alternative power solutions to boost what is supplied from the national electricity grid while at the same time invest in mechanisms aimed at preventing losses which may occur due to the sudden power outages. One such company providing businesses large or small as well as residential areas with cost effective, power controls and environmentally clean energy solutions is Powerpoint Systems East Africa (EA) Limited. Incorporated in 2002, Stanley Ngatia, the company’s General Manager explains that Powerpoint Systems EA aims at providing renewable energy and power control solutions to the vast majority who are not connected to the grid or are keen on reducing their electricity consumption costs or protect their electrical equipment against unexpected power surges. “The pace of change in the energy sector is rapid and even more far reaching change may be on the way with climate change and depletion of natural resources,” he adds. This has led to focus on renewable energy solutions which Powerpoint Systems EA is committed to be a top supplier in the region. Most of the solar lighting installations; domestic or for corporate organization have been done in some of the remotely located areas where access to power mains is limited. The solar hot water system is the company’s specialization which Mr. Ngatia further notes that they have embarked on sensitizing prospective buyers on the beauty of the system which greatly helps in reducing electricity costs by tapping on to the power of the Sun; nature’s free gift. Furthermore, individuals and businesses where grid power interruptions are common and inconveniencing to critical operations can also consider investing in a power back up solution (PBS) that uses electricity to charge batteries and then provides instantaneous transfer of power on to the electrical load/equipment as soon as it senses power failure from the main electricity. When the AC power becomes available again, the PBS automatically switches back to the charging mode. PBS is an easier way to hold on to power compared to the generator. An inverter charger based PBS essentially incorporates an inverter charger, batteries, cables and accessories. The inverter charger provides mains-level power by converting the battery voltage from DC to AC and re-charges the batteries after the mains returns. The size (power rating) of the inverter must be sufficient to power all the equipment that is required to be on at the same time. The batteries store the electrical energy, which will be converted to mains-level

power when the regular mains power has failed. The amount of energy stored in the batteries will determine the length of time that the power backup system can provide you with power backup. The cabling and accessories enable the power backup system to be linked to the existing electrical system in a safe way. In particular, the sizes (ratings) of the cabling and switches must be such that they match the power going through them. “Our PBS clientele is one that is highly aware and knowledgeable about the benefits of this kind of system,” he notes. Many of the potential users have no interest or lack information on how to incorporate a PBS to avoid any

sort of interferences. Adding, “There is a misconception that only generators are the only alternative power failure/blackouts solutions”. Powerpoint Systems EA is able to tailor make a PBS based on one’s business. Mr. Ngatia notes that PBS is only costly at the initial stage and once installed the running costs are nothing to go by. Additionally, it is silent (no noise pollution), environment friendly (no air pollution) and goes on automatically. PBS solution works also in retail industry. i.e. in POS set up and selected lighting, which can substitute power interruptions.


RETAIL DISTRIBUTION

Transforming your Business for Profit

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or any retailer whose inventory does not match the tallies, sales go unrecorded as the staff spend far too much time chasing mistakes instead of tending to customers, something is seriously wrong in the business. These and other related challenges suggest that it is time the business did away with its cash registers and stepped up to a pointofsale (POS) system. Retailers who have invested in a POS system will probably talk of how it has transformed their businesses in terms of speed and accuracy thus it’s a worthwhile purchase.

and ensuring that the Products are customized to suit the intended market segment. Being a stockiest, the orders are always in bulk to ensure product availability at all times. With the retail industry as one of the predominant users of POS terminals, the local demand for the XPOS Product remains overwhelming. In addition, the need for entrepreneurs to automate their businesses creates the demand both for the POS products and solutions. Value resellers and solution providers also play a big role in creating opportunities and increasing sales. Lynx Distribution enroll Resellers to a Partner Program where we Provide sales Training, Product Support, Project Price discounts, and engage in joint marketing activities which accelerate resellers business.

On the other hand, choosing a POS for your business can be a bit confusing based on the features that the various systems in the market possess. Like any other investment aimed at enhancing efficiency in one’s business, research is necessary to make that sound decision. Typically, a retail POS system includes a computer, monitor, cash drawer, receipt printer, customer display and a barcode scanner. A majority of them will also have a debit/credit card reader. Most POS monitors use touchscreen technology for ease of use while the computer is built-in to the monitor chassis for what is referred to as an all-in-one unit.

Besides POS, Lynx Distribution stocks other vertically related products such as Data card and Industrial/Desktop Label printers which not only target the retail space but banking, agriculture, self service Kiosks, Hospitality, manufacturing sectors and those in the export business. Thanks to an outsourced fully-fledged service center capable of handling all after sale services for all products, resellers and end customers can bring faulty products for repairs or replacements. Sometimes resellers may not have the bandwidth to handle support issues directly with the consumer thus the company’s program provides the option for its customers to communicate with the service center directly for assistance at the shortest time possible however, proof of purchase before any assistance is offered is required.

A POS system software mainly handles a myriad of customer based functions such as sales, returns, exchanges, layaways, gift cards, gift registries, customer loyalty programs and quantity discounts amongst other functions. Thus, for any entrepreneur thinking of purchasing a POS, it is important to consider the needs of your business, current and in the future by ensuring that you find a solution that works best. Do not forget to seek expert advice from a software provider for guidelines to get the value on your investment. LynxDistribution Limited stocks and Distributes a wide range of originally manufactured and branded Point of Sale equipment through its channel partner Program. These include XPOS barcode scanners, XPOS thermal receipt printers, XPOS Cash drawers, Touch POS CPUs, electronic tax registers, Industrial label Printers and Data Card printers. Lynx Distribution sources the products from different certified manufacturers from Korea, Europe & Taiwan The company does not compromise on the manufacturing standards

Do not forget to seek expert advice from a software provider for guidelines to get the value on your investment.

Lynx Distribution keeps abreast and invests in newer technologies, ensures maximum compatibility of POS hardware thereby maximizing on quality and local support. Secondly, the advantage of dealing with multinational recognized suppliers is that they will assist us in ensuring that the distributors and resellers are also up to date with any technological advancement through workshops trainings and Project consultation in Partnership with Lynx. Imran Aminmohamed, GM Lynx Distribution Ltd e-mail: sales@lynxdistribution.com

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DELI - COVER STORY

u l o S t e k r a m r e p u S y t i l a u Q TECHNOCHILL Commercial refrigeration solution

SUPERMARKET SHELVING I SUPERMARKET REFRIGERATION I

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SUPERMARKET


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Smith Shelving International

Shelving Refrigeration Trolleys

SUPERMARKET TROLLEYS I

T REFRIGERATION I

SUPERMARKET SHELVING I

Main mombasa Road Allbid house, Opp ASL, P.O. Box 49938, 00100. Nairobi. Tel: 020 2133076 / +254 - 727 246 209/+254 - 725 351 079 Email:info@nkc.co.ke web: www.nkc.co.ke


Using Customer Loyalty to Drive Profitability L

oyalty Programs are about developing sustainable, mutually beneficial relationships. Price incentives can generate a short-term sales uplift but will not engender long-term loyalty. Since the days before organised retail arrived (courtesy of the Roman Empire and their revolutionary coin based currency) the importance of knowing who your best customers were and being able to extend discounts or other value additions to those customers has been well understood by traders across all global economies. Access to this key customer information, and the ability to react to it, is even more important in the today’s ultra competitive retail environment, however due to the huge increase in numbers of customers being served retailers now need formal systems to manage the collection and analysis of this data. Unlike financial services companies such as banks or insurance firms, retail customers are able to transact with businesses completely anonymously, hence the huge rise in retail loyalty programs across around the world in recent years. These programs enable retailers to understand who their customers are and to communicate directly with them to deliver targeted promotions and drive higher brand engagement.

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For too long, the simple accumulation of points by members has been seen as a sufficient deterrent to brand defection, but as shoppers become savvier and hold multiple cards, program managers will have to work much harder to hang onto their ‘loyal’ followers.

That is not to say that they have all been a successful undertaking... As with most things, the costs associated with implementing a program have been coming down whilst the sophistication of loyalty systems has been rising which has led to programs appearing in almost every sector, in every market around the globe. Many have seen great success but others have struggled because operators thought ‘we need a loyalty programme’ but then did not know how to use it. The industry in Kenya has gained significant traction in recent years primarily in the supermarket arena where all the main players have been running programs for some time now. These programs have been successful to a degree but are yet to fully harness the opportunities that they present. For too long, the simple accumulation of points by members has been seen as a sufficient deterrent to brand defection, but as shoppers become savvier and hold multiple cards, program managers will have to work much harder to hang onto their ‘loyal’ followers. These managers are now fighting for the limited space in consumer wallets, combine this with the inevitable ‘plastic fatigue’ that comes with


COVER STORY

Programs numerous programmes in the same space and those cards which do not offer real value to consumers will be the first to get lost in a drawer somewhere around the house. It is critical for programme managers to develop closer, more perceptive relationships with programme members by using the data collected to provide relevant offers and promotions that will give members perceived value time and again. THE RISE OF THE COALITION Customer loyalty programs (especially in the Kenyan market) have long been the preserve of large retailers due to the perceived high cost of program implementation and management. This has been especially true of stand-alone programs where a single brand awards points to its customers with those points only redeemable for goods or services from that same brand. However, in recent times a new breed of loyalty program is emerging in markets around the world as a viable solution for both large and smaller retailers alike - the Coalition Loyalty Program. The coalition structure spreads the fixed costs associated with implementation and program management across a number of different program partners who award a single point currency to program members. The cost of card production and issuance are borne by the program manager, program partners are able to access a much larger pool of potential customers and there is no need to have a dedicated internal department to manage the program.

In addition, program members see much greater value with coalition programs as they are able to earn points at a much faster rate with numerous different partners, and they then have much greater choice on where to redeem those points. Coalition programs have been hugely successful all over the world. Reward and Recognition (R&R) Limited, aims to create a more rewarding relationship between program partners and their customers in East Africa with the R&R Program. The company has already established a number of key partnerships with companies such as Sarova Hotels, Uchumi Supermarkets, Safaricom, Airtel, Healthy U, Kenya International Sports, Mimosa Pharmacies, and Whiterose Drycleaners. The objective is to reach out to more of the Kenyan population by getting as many companies across the country as possible participating in program. REVOLUTIONISE THE INDUSTRY R&R has invested heavily in a world class loyalty program management system which gives its partners easy access to insights about their customers purchasing behaviour. The system can also manage endless types of campaigns to incentivise sales at partner outlets, and of course the program provides a direct channel to thousands of consumers who can be told about these campaigns. The R&R Program represents a cost effective, turn-key solution to customer loyalty. The ultimate goal is to create a promotional currency which can be earned or redeemed for any consumer good or service‌from air miles to

airtime and everything in between. The partners who participate in the program stand to see fantastic value addition through incremental revenue gains, meaningful consumer insights, and a direct link to consumers fitting their target profile. 3 REASONS TO LAUNCH A CUSTOMER LOYALTY PROGRAM IN 2013 1. 80% of your revenue is generated by only 20% of your customers 2. Attracting new customers will cost you business 5 times more than keeping an existing 3. A 5% increase in customer retention can increase a company’s profitability by 75% These statistics illustrate the point that it is absolutely imperative that you are able to identify who your best customers are and do everything you can to retain them.

INSIGHT RETAIL | ISSUE 02

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GLOBAL TRENDS

Loyalty Marketing: Global Trends

GAMIFICATION “Gamification is the use of game-thinking and game mechanics in non-game contexts in order to engage users and solve problems.” Businesses large and small have been quick to adopt loyalty programs that offer a free or discounted products based on frequent purchases -- the “buy 10, get one free” approach. As the loyalty space becomes more crowded however businesses are beginning to incorporate gaming features such as challenges and quests to differentiate their program and foster deeper engagement between the business and the customer. A particularly beneficial angle of this new trend is that “gamified” loyalty program can also generate new business when existing customers get their friends playing, too. Gamification represents an innovative new tool for loyalty marketers to improve their business impact and keep costs down. Increasingly companies with a strategic mindset are recognizing the potential impact of gamification on the ROI of their loyalty programs. MOBILE The implementation of mobile loyalty programs is still low in many industries, but some companies such as Starbucks in the US have shown that mobile loyalty apps have the potential to deliver customer satisfaction and significantly boost profits. Plastic cards have long defined loyalty card programs, but their low-tech capabilities have made them a less attractive solution. Starbucks is now able to reach its loyalty program members before, during, and after every transaction with its mobile app, which is extremely valuable. Over the past few years a number of factors have lead to the growth in mobile loyalty programs:

• Post-PC growth: the growth of mobile and

tablet devices and various other form factors has allowed retailers to create a closed loop ecosystems using affordable consumer hardware

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INSIGHT RETAIL | ISSUE 02

• Increased adoption of QR codes at point-of-

sale: In addition to the use of QR codes and other 2D barcodes for marketing purposes, retail locations such as Starbucks and Target have installed laser imaging scanners, creating a closed loop between mobile phone and retail point of sale

• Increase in the amount of available location

data: Companies such as Foursquare have collected an incredible amount of location data and allowed merchants to create their own offers without the need for any specific technology.

As the migration from basic mobile devices to smartphones continues apace both around the world and within the East African region expect to see more and more mobile based programs being implemented. SOCIAL MEDIA Rewarding customers is a common occurrence these days. Discounts for repeat purchases, gift cards with purchase and upgrades are all ways that merchants establish loyal customers. Rewards programs do establish brand loyalty providing that the product or service that is being provided meets the customer’s needs. Social media platforms are expanding at an exponential rate. Platforms such as Foursquare and Gowalla offer badges that some merchants allow for redemption. For example when a Foursquare user signs in at a leading Nairobi restaurant, they may receive a Badge and if customers become the Mayor of that restaurant location they will unlock special features that will net them some discounts as a reward for their frequent visits.

Gamification is the use of gamethinking and game mechanics in non-game contexts in order to engage users and solve problems.

Here are some of the reasons why social media is making such an impact on loyalty marketing:

• It’s fast. There is little lag time between the implementation of a loyalty program, such as providing discounted or free products, and seeing the results of the program.

• Huge networking opportunity.

Consumers who use social networking sites are likely to share locations, likes and tips to friends who will also continue to share their feelings about a product.

• It’s convenient. Business

brands can set up a loyalty program and post it online and through social media sites to drive traffic to their online store, brick and mortar shop or site. The social media infrastructure built to host, promote and develop brand loyalty.

It is widely recognized that the global loyalty marketing industry is going through a period of major transition, primarily driven by the fast pace of technological development and greater access to powerful data analytics. With the introduction of technologies such as Near Field Communications (NFC) in the next generation of mobile handsets this sector is sure to have a bright and innovative future.


R E TA I L T R A I N I N G

Improving performance and self-fulfillment among employees I bought a tray of eggs at my favourite supermarket, but when I got home, I found that some were broken!” “The prices written on the shelves are different from the prices at the counter. It spoils my budget, and I hate arguing with the cashier.” These are just two examples of bad shopping experiences in Kenya. The typical Kenyan consumer is extremely discerning and aspirational. Many consumers are widely travelled either physically or through media, with experience in the developed markets’ retail scene. They expect the same level of service. As a supermarket, it’s not enough to have aggressive campaigns aimed at winning the customer. Supermarkets also need to avoid mediocre consumer services and also realize they are competing against the world. The target customer for retail stores in Kenya is a sophisticated consumer that is aware of available shopping alternatives. They are no longer interested in just the price. They are looking out for value additions that make their shopping experience different and worthwhile. “Customers expect local supermarkets to meet international standards. Thanks to factors like technology, the modern day customer has been exposed to what is happening in other developed markets. They expect nothing less from the local supermarket,” explains Jasper Ouma, the Chief Trainer and Retail Specialist, at Distribution Management Systems (DMS) Limited. For supermarkets to meet and exceed some of these standards, they need to invest in the training and

development of their staff at all levels. Jasper describes this process as a formal, continuous effort which supermarkets can use to improve the performance and self-fulfillment of their employees. The process involves various methods and programs, all available at DMS. “One of the training programs we run for the retail sector is Advance Retail Store Management. The principal objectives of this program are increasing sales and becoming more profitable, competitive and future oriented,” Jasper explains. The program equips supermarket staff to give customers a positive shopping experience. These skills will enable staff to offer Customers: a clean supermarket environment, orderly set up, friendly, well groomed staff, clear signage, as well as an efficient check out. Other trainings are based on four levels; floor staff, floor supervisors, managers, and head office staff. The bulk of supermarket employees are floor attendants who deal directly with customers. Although many of these employees are hired through direct referrals, Jasper explains that they need further training. They need to develop communication skills, customer service, integrity, honesty, and professionalism and to enjoy their work.

HR MANAGEMENT

That way, duties can be allocated based on the talents and abilities of each employee. Another common practice is to send employees back home when they report to work late. This form of discipline is intended to motivate them and enforce punctuality. Unfortunately, when they lose a day of work and are not compensated for their transport, it lowers their morale and affects their performance,” Jasper says. “They should also be trained in financial management to help them manage and plan for their earnings.” Succession planning is another vital area in the supermarket business. Jasper advises that the pioneer talented retailers who have over the years grown with the business should slowly find ways of grooming their successors. “Groom your future team for internal positions, but be sure to expose them to the outside world through exchange programmes,” he adds. “Developing your staff benefits your business and ensures longevity.”

Jasper notes that certain tasks and assignments are unpleasant to supermarket staff. When they are assigned these duties by the supervisors, the staff feels they are being punished or disciplined. “It is important to have a solid human resource management plan.

Mr. Jasper Ouma is the Chief Trainer, Distribution Management Systems Ltd. Email: jasper@dms-train.com

DMS RETAIL INHOUSE TRAININGS DISTRIBUTION MANAGEMENT SYSTEMS LTD Retail Management Consultants & Trainers

Two pillar training philosophy Pillar One: Basic skills and work requirements for shop floor staff Pillar Two: Retail outlet management tools for supervisors and managers

CONTENT OF TRAINING Ø Personal Empowerment Ø Customer Service Ø Retail Management Ø Communication Ø Stocks, shrinkage and other losses Ø Other relevant subjects 1) BENEFICIARIES Ø ALL STAFF IN THE RETAIL OUTLETS

DIT APPROVED TRAINING PROVIDER (DIT/TRN/792)

2) METHODOLOGY Ø Interactive lectures Ø Case studies Ø Role Plays Ø Group Discussions Ø Field Visits where possible Ø Exercises

3) CLIENT TO PROVIDE Ø Venue Ø Catering 4) TRAINING GROUPS Ø We propose to train in groups of 25 to 30 with least interference to daily supermarket operations. 5) TIMING OF TRAINING Ø CLIENT TO DECIDE 6) PROPOSED TRAINING BUDGET Ø Training fees per group of 25 for 2 days will be ksh 140,000/- plus VAT

nt cou s i d ial Spec if you ugh ro k th ine boo Magaz the

Ø Training of Supervisors and Mangers for 4 days will be Kshs 280,000/- plus VAT Ø DIT REIMBURSEMENT 200% OF LAST YEAR'S CONTRIBUTION 7) SUPERMARKETS CUSTOMER PROFILE: Ø Khetia Supermarkets All branches Ø Woolmatt All branches Ø Transmatt All branches Ø Naivas All branches Ø Rivanas All branches Ø Yatin Supermarkets

DISTRIBUTION MANAGEMENT SYSTEMS LTD GILFILLANRD HOUSE, KENYATTA AVENUE 3 FLOOR, ROOM 314 P.O. BOX 1009 – 00517, NAIROBI – KENYA Tel: 0203567644; Cell: 0722726055/0732726055 Office contact: SUSAN - 0714801072 EMAIL: jasper@dms-train.com, WEB PAGE: www.dms-train.com PLEASE CALL OR EMAIL FOR MORE DETAILS AND A CUSTOMIZED TRAINING

PERSONALIZED, PRINCIPLED & PROFESSIONAL, RETAIL TRAINING SOLUTIONS


C O M PA N Y P R O F I L E

Custom Software solution provider

V

ortex Solutions Limited is a company that is industry-driven offering consultancy services in the software industry. The company is more specifically involved with Custom Software development. Paul Okinyo, the Managing Director spoke to Insight Retail Magazine about the company.

What kind of products/services do you deal with? Our Products include: • Retail Information Management System • Customer Loyalty Points system • Store Checkout customer Change / Coins Management system • Customer SMS Messaging System • Business Intelligence System (BI) • Human Resource, Payroll System and Biometric Based Time and attendance. • Smart Card Based Health Information System • Smart Cards and Biometric Fingerprint Systems. Who is your target market? Vortex targets small, medium and large enterprises. What products and services can a retailer large or small acquire from you? a. Retail Information Management System which runs on a multi store setup and has data centrally managed at the Headquarters. This solution effectively manages the sales and Inventory through an elaborate POS and an Inventory system. b. Customer Loyalty Points System which uses smartcards as a customer touch point for security, rewarding your customers and therefore creating loyalty to your brand. c. Store Checkout customer Change / Coins Management system The retail industry is currently facing a big problem with customer change during checkout. Customers are being forced to accept sweets, matchboxes and so on as change. They cannot use this when they come to shop during the next visit. Now what if the customer

can have virtual change which they can use anytime in the retail stores? d. Customer SMS Messaging System Communicating with customers is critical in enhancing brand loyalty. Make your customers feel special by sending them automatic birthday messages, promotions and offers existing in stores and any new products and service available. e. Business Intelligence (BI) System helps the enterprise understand the business and assist in making crucial business growth decisions. f. Human Resource, Payroll System and Biometric Based Time and attendance, an integrated Human Resource, Payroll and Biometric based time and attendance system for managing employees. Comment on the E-Coin development and its benefits? This solution was inspired by the frustrations shoppers are forced to take sweets, match boxes and other small items as change. We then designed the system to tackle this issue and are currently piloting with one of our clients. The solution benefits both the retailer and the customer. The retailer will eventually need to have less and less coins in the stores depending on the penetration and adoption of the solution. At the same time, the retailer will have less and eventually eliminate the expenses they use to search for and acquire coins to be used for change at check out.

To the customer, the solution is perfect in that, the customer will stop being forced to take matchboxes, sweets and the like every time they are shopping and there are no coins for change. The virtual coins accumulated by the customer will be spent at the retailer’s outlets immediately when required by the customer for shopping. You also develop mobile applications? How has been the demand/take up of mobile applications in Kenya? Which are some of the notable Apps in the market worth mentioning that you have developed? So far, we only develop mobile applications for our clients who want to complement their ERP or back end software solutions to be portable on mobile. We have not developed applications for the mobile app stores yet.


LABELS

We have developed for Changamka Microhealth Ltd. which is in partnership with Britam and Safaricom a mobile application that compliments their ERP and which enables them to register medical members using a mobile phone while on the field and the data captured is instantly fed into their back end ERP when done eliminating need for photocopies of documents or go to a photo studio to capture the member photo. The mobile phone does all that in less than five minutes using a phone camera. We have also developed a medical member verification mobile application for Medilink Africa. When a Medilink member arrives at a health provider; to verify membership, the health provider simply enters the Medical Member number and information required is displayed on the mobile phone. This is easier than calling the insurance or the back and forth telephone conversation about the member. Some data is also captured at the health provider and saved to the medical insurance ERP when the visit is completed. In the developed world, mobile Apps have in a way been used to replace the bulky loyalty cards that people carry around, are we likely to see this kind of technology in Kenya? Yes, we will but not in the near future. Try imagining your mobile being your loyalty information holder. What will happen at the store checkout? The process is bound to be longer and prone to errors if the account number is wrongly entered. This will however work well and more efficiently when all of us have Near Field Communication (NFC) capable mobile phones. This will then be able to exchange data with the Retail POS easily and fast. The current mobile penetration, mobile loyalty can work well in a less busy POS check out enterprises like restaurants.

Asset tagging and tracking 1) Do you know the Number of Assets in your Organisation? 2) Is your Asset Register up to date? 3) Do you possess a virtual copy of your Asset Register in case of a disaster within the firm? If your answer is NO or NOT SURE, then you need; 1) Asset Tags 2) Asset Auditing & 3) Asset Management Software. Why do you need Asset Tags & Automation? Asset tags are an extremely valuable resource for entities with physical assets that must be inventoried, monitored and tracked. With them, the burden of physical record-keeping is drastically reduced, leaving less or no room for human error while vastly improving the accuracy of your documentation. • Physical asset monitoring. Track your company’s physical assets and resources with ease. • Automate Asset Register. Combined with an asset tracking software application, asset ID labels streamline the otherwise stressful task of manual updating of the asset register. With every scan, your records are up-to-date and accurate—pull up the current status, plan re-orders and schedule deliveries with a few clicks.

• Precise maintenance management. Many organizations rely on physical assets to perform services. Automate your maintenance management control processes and maintain accurate records on repairs, replacement scheduling and standard maintenance and calibration. • Loss prevention. Asset tags are extremely useful for deterring theft. TamperEvident Polyester Labels, for instance, can quickly alert inventory control managers of attempts at theft and unauthorized transfers. With Automated Asset Management you are able to monitor Asset Valuation, Depreciation and Disposal record among others. Asset Tags is applicable for all industries; Retail, Healthcare, Education, Government / NGOs Defense, Manufacturing, Telecommunications and Financial Institutions (Banks/MFIs) For further details contact Retail Consultancy Tel. +254.725 350 690 or +254.735.350 690 E. info@insightretails.com

HEAD OFFICE NAIROBI Interlabels Africa Limited Maasai Road, off Mombasa Road, P.O. Box 65, Viwandani 00507, Nairobi, Kenya. Tel: +254 20 2471001/3/6, +254 725 374336, Fax: +254 20 2471006 MOMBASA OFFICE Sarmala Street, Off Miji Kenda Rd, Opp Brahma Samaj, P.O. Box 90252, Mombasa 80100, Kenya. Tel: +254 41 2005482, +254 770 063087, +254 733 544663, +254 735 570111, +254 725 374335

sales@interlabelsafrica.com | www.interlabelsafrica.com


H E ALTH T IPS

Health and safety in the retail industry

A

large number of those employed in the retail industry are faced with various health hazards. Retail jobs require repetitive motions, heavy lifting, long periods of standing and other hazards that can result in injury. Retail workers need to be aware of the risks they face on the job and how to avoid them. INDOOR AIR QUALITY AND POLLUTION Most retail stores are in “closed” buildings, where windows do not open easily while the doorway exits are often in remote areas. Indoor air pollution is caused by the build-up of vapors, particles, molds, fungus and bacteria in building air. The indoor sources of these pollutants can be human waste, cigarette smoke, fuel-fired furnaces, building materials, furnishings, cleaning products, store consumer products, asbestos and pesticides. Molds, spores, fungus and bacteria can accumulate in standing water, wet furnishings, furnace water, and air ducts. Meat wrappers can be harmed by the vapors of burning plastic wrap. Polluted outdoor air can be drawn into a building via the air intakes. Gases and particles from truck exhaust, as well as other pollutants from the area are common indoor air pollutants. If unchecked, these pollutions can cause severe respiratory ailments. All workplaces where these risks are present need an effective mechanical ventilation system which may include a series of fans, ducts, heating or cooling coils, vents, and hoods. A single air handling unit may handle several zones with different requirements within the store. A mechanical system must bring in fresh outdoor air, mix it with the air that is already circulating inside the store and distribute the conditioned air to all areas, including stock rooms, via ducts. ERGONOMICS The basic idea of ergonomics (the study of workplace design) is to design the workplace to fit the worker and not change the worker to fit into

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a poorly designed workplace. Work stations must be adjustable to be able to accommodate the wide variety of heights and strengths of retail workers. A workstation that allows for alternating between sitting and standing is important, as is room to move about without awkward motions and decent lighting. LIFTING, CARRYING AND STANDING Lifting is an important part of all retail store work. Stock clerks put products on shelves throughout the day, and department store staff stock and retrieve products from stockroom shelves frequently. These tasks contribute directly to the high rates of back injuries, lower back pain, hernias, heart and circulatory problems among retail store workers. Loads that seem too heavy to lift should be broken down into smaller units so that they are manageable. Mechanical lifting devices should be used to lift loads that are too heavy. If no mechanical device is available, have a co-worker help. Heavy loads should not be lifted directly from the floor. Products should be stored at least 18 inches above the floor and not above shoulder height. A ladder may be necessary to be able to reach high items. A table may be necessary to bring products up to comfortable heights. When performing carrying tasks, it is important for an employee to ring the load close to his body. Use handles or cut handles on cartons. Wear comfortable clothing and shoes. Rest and stretch muscles as frequently as possible and take breaks, when possible. Standing can cause varicose veins and back fatigue, aching feet and muscle strain, among other ailments. Foot rests, stools and chairs can help relieve the constant pressure of standing for long periods of time. RWDSU members employed in retail face an exhaustive list of hazards on the job. It is important for them to be aware of those

dangers, as well as their employers’ responsibilities in ensuring a safe workplace. FIRE PREVENTION Fire hazards often exist in retail stores due to flammable and combustible materials, electrical malfunctions, open flames, sparks, hot surfaces, smoking and unsafe storage of chemical products. A retail store ought to have an emergency plan of how to evacuate the store, who to call in case of fire, and job tasks for people responsible for evacuation. Exit paths should not be blocked and must be clearly marked with exit signs that are lighted. It is better to have a preemergency plan than for chaos to result when a fire breaks out, causing loss of life and property damage. Fire extinguishers must be available, and workers should be trained in how to use them. They must be the correct type for the hazard: type A for combustibles, type C for electrical equipment and type ABC for general fires. Fire extinguishers must be inspected regularly to ensure that they are in good working order. The needle gauge must be at the 12:00 o’clock position and the nozzle in good shape. Sprinklers must be installed and inspected at least once a year. Good housekeeping and proper storage and disposal of combustible and flammable materials are the most important steps in preventing fires in a retail store. The employer must allow time in the work day for this type of work to be done.


EXECUTIVE ENFOLD

Nakumatt Holdings Managing Director Atul Shah (Left) and MasterCard Worldwide President, Middle East and Africa, Michael Miebach (Right) exchange partnership documents. Nakumatt Holdings, is set to introduce the multi-currency EMV MasterCard® PayPassTM Prepaid loyalty card to its one million plus Nakumatt Smart Card holders. The partnership with MasterCard heralds the unveiling of the largest prepaid merchant agreement for MasterCard in the Middle East and Africa region, to date.

Nakumatt set to replace Smart Cards with new generation MasterCard Prepaid Cards

N

akumatt Holdings is all set to introduce the multi-currency EMV MasterCard® PayPassTM Prepaid loyalty card to its more than one million Nakumatt Smart Card holders.

earned will only be redeemable at Nakumatt stores.

The new Nakumatt partnership with MasterCard also instructively heralds the unveiling of the largest prepaid merchant agreement for MasterCard in the Middle East and Africa region, to date. Atul Shah, Managing Director, Nakumatt Holdings confirmed that the existing Nakumatt Smart cards will be replaced with the new generation Nakumatt Global MasterCard Prepaid card. As one of the Nakumatt 20th anniversary celebration initiatives, the new Nakumatt Global MasterCard Prepaid cards will conveniently allow customers to load money for purchases at POS terminals, cash withdrawals and online purchases at the 36 Nakumatt stores across East Africa and at any merchant outlet, which accepts MasterCard payment cards worldwide. Nakumatt Global MasterCard Prepaid cardholders will also be able to earn Nakumatt Smart points on purchases made at any of the 33 million retailers and businesses across 210 countries, where MasterCard is accepted. Points

The MasterCard Prepaid cards will provide a safer, faster and more convenient alternative to cash

“Our vision is to assist the Kenyan economy evolves to operate in a world beyond cash, and collaborations of this nature are vital to achieving this goal,” noted Michael Miebach, President, Middle East and Africa, MasterCard Worldwide. “As part of the Nakumatt deal, MasterCard has collaborated with both of Nakumatt’ s banking partners, Diamond Trust Bank and Kenya Commercial Bank. The multibank partnership will see both banks issuing the MasterCard Prepaid card to the retailer’s customers,” Mr. Miebach added. The Nakumatt Global MasterCard Prepaid card features PayPass technology, which is ideal for quick payment environments where speed and convenience matter most. On his part, Mr. Shah said Nakumatt is excited to introduce a more convenient, quicker and safer payment solution to its Smart Card holders. “The Nakumatt Global MasterCard Prepaid card will initially be launched to our customers in Kenya, but we hope to offer the benefits of cashless transactions to our customers in Uganda, Tanzania and Rwanda, next year,” added Shah.

INSIGHT RETAIL | ISSUE 02

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B A R C O D E + PA C K A G I N G

Trading by Numbers; the Barcode case WHAT NEXT FOR AIDC? The benefits associated with AIDC cannot be over emphasized. For instance, in the retail industry it can lower operational costs by eliminating the clumsy price tags, providing accuracy in pricing, efficiency in serving customers and reducing shrinkage and making the use of barcodes a vital requirement. Today, some of the successful retail chains have embraced AIDC as evidenced in the success story of Wal-Mart Inc.

W

hat started as a small time business of identifying railroad wagons in the late 1940’s has mutated to become a global phenomenon that has an impact on trade especially in the area of supply chain management. In 1967, the Association of the American Railroads adopted a bar code as a standard for automatic data identification however; this barcode for identification of wagons had challenges of being corrupted by dirt affecting accuracy. Later, other areas such toll bridges, post offices and pet food manufacturers took up the technology, from the lessons learnt and requested for improvement for application in the respective industries other than the railroads. General Motors was among the pioneer organisations to embrace the use barcodes in the production, shipping as well as distribution of their products. Barcodes; the series of bars of different width arranged against numerals of size of six (6) to 14 digits have completely transformed areas such as retail trade and traceability in supply chain to drastic proportions. Their use as well as that of related technologies such as Bokodes, Radio Frequency Identification (RFID), and Quick Response Code (QRC) is part of a larger global technology going by the name Automatic Identification Data Capture (AIDC). In Kenya and East Africa, the use of barcodes emanated from demand driven by Uchumi Supermarkets in mid the 1990’s.This is just around the same time that the Institute of Packaging (Kenya)-IOPK was established in 1996. The Institute took up the challenge to respond to the retail industry demand by introducing workshops and seminars on the barcodes technology efforts which led to the creation of the first bar-coding scheme service organisation, EAN Kenya. Later in September 1999, Mumias Sugar Company Limited became EAN Kenya’s first client followed by Nestle Kenya Limited.

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INSIGHT RETAIL | ISSUE 02

Furthermore, the use of barcodes in the supply chain management-such as shipping and logistics is of importance. For instance, the tracking of documents as is the case at DHL has been made possible through the use of barcodes. Today, the barcode technology is also in use not only in grocery and supermarket stores but also in every sphere of life such as in mass merchandising, identification of consumers under the loyalty program as is the case at Uchumi Supermarkets, students’ registration, library control and catering areas.

TRADITIONAL BARCODE

QR CODE (QUICK RESPONSE)

The use of barcodes in hospitals for patients’ management including drugs’ dispensing is one of the most innovative of the application of barcodes. Thus, Kenya and East African Community (EAC) ought not to be left behind in embracing the technology if some of the challenges experienced are to be overcome. CHALLENGE On the other hand, the traditional barcodes are fast being dared by other modern technologies such as Bokodes whose advantage is that they can be read in a three dimensional way and the fact that they can hold more information than the traditional ones. At the same time, the difficulty in reading a barcode in other instances by a barcode scanner (reader) has led to the development of RFID. Most recently, the traditional barcodes have strongly being challenged by QRCs which can be printed on a product and downloaded through the use of a mobile phone; particularly smart phones. The EAC region is now poised to go massive when it comes to scanning. Consequently, this development will definitely lead to further exploitation of not only the traditional barcodes but also the QRCs. The region is also likely to explore the use of RFID while awaiting the commercial application of the Bokodes.

BOKODE

The Author is the Founder and current Chairman of the Institute of Packaging (Kenya)-IOPK currently lecturing on Packaging Science and Technology at Technical University of Kenya (Former Kenya Polytechnic University College). He is also the Founder of the Bar-coding scheme in Kenya and current Director of the Barcode Global Standards One (BGS1) East Africa.


A S S O C I AT I O N

Bringing Retailers Together

U

nder the now all popular country’s ambitious Economic Blueprint, Vision 2030, wholesale and retail trade is identified as one of the six sectors under the Economic Pillar with the potential to deliver 10% economic growth per annum. Based on this, the government aims to increase efficiency in Kenya’s retail sector and raise the market share of products sold through normal channels to 30% thereby contributing an additional KShs. 50 billion to the GDP. In addition, according to the Kenya National Bureau of Statistics, the retail sector growth rate stands at 10% controlled by medium class consumers however, it is yet to mature to reach the strides of their peers in developed countries such as in Europe and America. Even with such vibrancy thanks to the numerous categories of retailers, the sector has not had a recognized business association. It is against this background that the newly formed Retail Traders Association of Kenya (RETRAK) seeks to fill in some of the existing gaps and address sector challenges through one common platform. Generally, business and trade associations are mutual assistance organizations formed for the purpose of promoting growth and progress in their particular industries by providing a central information source about the industry and its issues, establishing best practices guidelines, lobbying with local and state government, and promoting the image of the industry through licensing, membership standards and public service advertising. Associations differ from one to another depending on the objectives and purpose they are established for and the benefits their members or stakeholders acquire from them. Most business and trade associations are not-for-profit corporations; formed as informal clubs and do not collect money. Bobby Gadhia, the Chairman of RETRAK explains that the association is the sector’s central body representative comprising of various stakeholders. “Our aim is not to fight anyone but act as advocate whose aim is to seek solutions for the numerous issues within and out of the sector,” he explains. Its objectives are;

• To be a central representative body putting • •

views of retail trade companies to Government departments and agencies, Parliament and other relevant organizations. To be a research and policy analysis center, aggregate and publish statistics, and to provide analysis on retail trade and other relevant market information. To be a technical center providing commentary, guidance and advice on all legal and other regulatory developments of relevance to the retail trade sector.

Our aim is not to fight anyone but act as advocate whose aim is to seek solutions for the numerous issues within and out of the sector • To provide a forum for the exchange of non-

competitive information by articulating retail trade concerns.

Even as the association plans to roll out a massive recruitment drive scheduled for end of February 2013, RETRAK which has already attracted membership from the supermarkets’ fraternity has literally hit the ground running. One of its notable activities so far has been the ‘Chomoa Coins’ campaign. Towards the end of November 2012, the Central Bank of Kenya partnered with key stakeholders such as the Kenya Bankers Association (KBA) and RETRAK among others, to promote the re-circulation and use of coins. Mr. Gadhia says the association’s membership will be drawn from anyone in the retail arena; these include those operating and employed in shops and supermarkets, those in telecommunication and electronic consumer goods’ businesses, airtime dealers as well as those in the clothing and other related accessories but not only limited to these. Formed in 2012 spearheaded by GfK Retail and Technology East Africa, a Nairobi based research company, the Executive Committee is comprised of Bobby Gadhia of PC World (Chairman), Anil Dhingra of Ukwala Supermarkets (Vice Chair), Sameer Shah of Nakumatt Holdings (Treasurer), John Wanjohi of Hippora Business Solutions (Ass. Treasurer), John Muthee of GfK (Secretary), Willy Kimani of Naivas Supermarkets (PRO) and Madhav Bhalla of Taibjee & Bhalla Advocates as the Legal Officer. RETRAK is also seeking to tackle the controversial plastic paper bag issue. According to research done by the National Environment Management Authority (NEMA), the United Nations Environment Programme (UNEP) and the Kenya Institute for Public Policy Research and Analysis (KIPPRA) sometime ago, 100 million plastic bags are handed out annually in Kenya by supermarkets alone, the vast majority destined to end up in the environment, clogging sewers and drains, polluting soil, posing a danger to marine life and causing death to livestock when inadvertently consumed. RETRAK is seeking ways to put an end to all this through a drastic approach. “The association through its members is consulting on how to handle the issue as we seek to encourage re-cycling and

BOBBY GADHIA Chairman, RETRAK

re-using among consumers,” Mr. Gadhia adds. Pilferage or stock shrinkage is another issue that RETRAK is working to reduce. According to industry insiders, with the formal retail trade market estimated to be worth more than KShs. 200 billion, it could well be losing more than KShs. 3 billion annually to shoplifters among other shrinkage avenues. Beyond surveillance systems, retailers are of the opinion that there is need to review existing laws to make them more punitive both for shoplifters and employees tried under theft by servant clauses. “We want to lobby the government to pass punitive laws to discourage shoplifting,” he reveals. At the same time, RETRAK seeks to pass a motion that will see members share their employees’ database aimed at discouraging ‘recycling’ of employees blacklisted with vices such as shoplifting. RETRAK is also seeking to address a brewing row between retailers, the Kenya Copyright Board and Music Copyright Society of Kenya with regards to playing music as well as collection of royalties. Mr. Gadhia notes that the association has a lot rolled down its sleeve and it is only a matter of time before RETRAK is recognized as the sector’s mouthpiece.

INSIGHT RETAIL | ISSUE 02

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THE U CLUB CARD

Rewarding Loyalty T

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he Kenyan market is laden with a bevy of customer loyalty programs introduced by various companies in the retail, telecommunications, hospitality, transport sectors. Generally, loyalty programs are structured marketing efforts that reward, and therefore encourage, loyal buying behavior. Uchumi Supermarkets Limited primarily introduced its loyalty program to collect customer data to assist the management in decision making. Data collected helps to interpret the evolving customer trends and product preferences and is also shared to the suppliers to combat product stock outs and enable them tailor make targeted promotions to the customers with the intention of strengthening their brands’ positioning in the customers’ minds. With over 600,000 members, the U Club Card no doubt continues to command attention within the East African region. Its competitive advantage includes; customers can earn and redeem their points throughout the year at any Uchumi branch countrywide. At the same time the points can be left to accumulate over a long period while the transactions do not have to be card present- meaning that a customer can quote their loyalty card number at the till to earn or redeem their points.

To the customers; the U Club Card is seen as the ultimate savings plan as one customer Ms. Mary Mwangi clearly points out, “At the beginning of that year after the Christmas season, I had no money yet I needed to buy my children books. I redeemed the points earned to shop for my children as they resumed school,” explains the elated customer.

Through the strategic partnership with Reward & Recognition (R&R); the largest loyalty program in East Africa, the scheme has created a balanced approach with emotional bonding elements which guarantees Uchumi shoppers an advantageous shopping experience. U Card members are able to earn points from other major brands whenever they purchase from their outlets. Some of the partner outlets include: Sarova Hotels, Nairobi Sports House, PC World, DHL, Toyworld, The Kikoy Company, Manix Clothing Stores, Ashley’s Executive Salon & Barbershop, White Rose Drycleaners, Acacia Medical Center, Wishes Gift Shop, Mimosa Pharmacy, Copy Cat, Banana Box, KrugerKent Pharmaceutical, Concord Car Hire Ltd., Spa Cleopatra, and the Healthy U stores. This partnership has in times of inflation, purchasing power distribution, competitive pressures and multi-optional customers helped Uchumi acquire new customers, win back previous customers and retain current customers.

At the point of sale, the Gift Card payment is eligible to earn U-card loyalty points like any other form of payment however; the amount spent in reloading (top-up) shall not earn points.

INSIGHT RETAIL | ISSUE 02

The mag-striped card is less prone to fraudulent activities, thus the data is safe from hackers and fraudsters. The global customer loyalty schemes’ trends are fast changing and Uchumi continues to innovate ways of making the program add more value to its customers. As it seeks to explore more ways of rewarding its customers, the supermarket chain has provided U Card members the opportunity to earn points on transactions made in Kenya, Uganda and Tanzania. UCHUMI GIFT CARD The Gift Card is a plastic card that replaces the traditional paper based Uchumi Gift Voucher. Whoever the card is given to can reload it (Gift Card) for own use or pass it to another person as a gift. It is issued for free at any Uchumi customer service desk countrywide however; customers are expected to purchase goods worth KShs. 1000 during the initial acquisition process.

At the beginning of that year after the Christmas season, I had no money yet I needed to buy my children books. I redeemed the points earned to shop for my children as they resumed school

Furthermore, due to the prevailing coin shortage in the country, Uchumi devised a way to combat the issue through the Gift Card allowing customers to save their coins’ change at the tills which can also be used as a budgetary tool for their monthly shopping expenses. This secure card complete with a four digit PIN code does not attract any ledger fees on a renewable expiry period of five years. The card can be passed on from one customer to another by loading value on it and simply gifting it to the selected acquaintance.


WEIGHING SOLUTIONS

Total Weighing Solution

T

he weighing scale is one of the most fundamental instruments for the economy and for industries that has been used from ancient times. The invention of the weighing scale was a huge necessity as there had to be a standard measurement of material that was being traded, and there had to be established agreed upon measuring parameters in order to make trade possible. Today, weighing scales have become very high-tech devices. From bathroom scales with Wi-Fi connection to ultra-precise devices used in research or industry, modern scales are able to provide very accurate measures almost instantly.

essential component to maintaining the health of one’s body and measuring the progress of a growing child. A person’s weight is used to calculate a Body Mass Index (BMI) that can determine if he is under or overweight. At the same time, scientifically, chemists often deal with chemical equations that call for specific amounts of substances and different concentrations of solutions.

We are your reliable partner in weighing world servicing the entire East African region

To achieve the various weight objectives, Endeavour Instrument Africa Limited is one of the leading suppliers of electronic scales in Kenya. The company is a service oriented company, providing cost effective weighing solutions. “We are your reliable partner in weighing world servicing the entire East African region,” explains Sharad Kothari. The company’s professional and dedicated team ensures delivery of tailor made cost effective weighing solution, round the clock backup service to clients having annual maintenance contract with the company us, our technicians are dully certified and authorized by Weights and Measures department, Ministry of Trade. Endeavour Instrument Africa Limited serves clients in over 15 different types of industries such as Plastic, Horticulture, Food Products, Packaging, Chemical, Laboratories and Pharmaceutical.

In the early 20th century, electronics merged with weighing scales, taking the accuracy and precision to one step further. Since then, there have been remarkable advances with the gradual release of sophisticated precision instruments such as digital floor scales, moisture analyzers and many more. With all the advances in weighing scales, mankind has only improved its ability to weigh and measure with greater accuracy than ever. Commercially, an exact scale is critical for restaurants and other food industries that must portion food for sale. Today, meats, fruits and vegetables are usually weighed before being paid for. From a health perspective, a weighing scale is an

Barcode Global Standards 1 (E.A) Ltd We are ISO Compliant & KEBS recognised East African Community (EAC) and COMESA preffered Barcoding Partner.

Our Services

• International Barcode numbers for all products • Training on barcoding and Supply Chain Management • Consultancy on Inventory Control, Asset Management and Warehousing • Verification of barcodes for use in Supermarkets • Generation of Barcodes for packaging

Our Solutions

• POS • Inventory Management • Asset Management • Traceability • Supply Chain

Author: Mr Shavad Kothari Endeavour Instruments Africa Ltd. e: info@endeavourkenya.co.ke

OUR RATES - 2013

Category

Turnover Amount

Category: 1 Category: 2 Category: 3 Category: 4 Category: 5 Category: 6 Service providers

Start Up to Kshs 12M Kshs 13M to Kshs 20M Kshs 21M to Kshs 40M Kshs 41M to Kshs 100M Kshs 101M to Kshs 250M Kshs 251M and above

Category

Turnover Amount

Category: 1 Category: 2 Category: 3 Category: 4 Category: 5 Category: 6 Service providers

Start Up to Kshs 12M Kshs 13M to Kshs 20M Kshs 20M to Kshs 40M Kshs 40M to Kshs 100M Kshs 100M to Kshs 250M Kshs 250M and above

Registration Fees (One time) Kshs 3,000.00 Kshs 3,000.00 Kshs 3,000.00 Kshs 3,000.00 Kshs 3,000.00 Kshs 3,000.00 Kshs 3,000.00

Annual Licence Fees Kshs 4,500.00 Kshs 10,000.00 Kshs 20,000.00 Kshs 30,000.00 Kshs 40,000.00 Kshs 50,000.00 Kshs 50,000.00

Total Amount (Inclusive of 16% VAT) Kshs 8,700.00 Kshs 17,400.00 Kshs 26,680.00 Kshs 38,280.00 Kshs 49,880.00 Kshs 61,480.00 Kshs 61,480.00

Registration Fees (One time) Kshs 5,500.00 Kshs 5,500.00 Kshs 5,500.00 Kshs 5,500.00 Kshs 5,500.00 Kshs 5,500.00 Kshs 5,500.00

Annual Licence Fees Kshs 5,500.00 Kshs 15,000.00 Kshs 30,000.00 Kshs 50,000.00 Kshs 75,000.00 Kshs 100,000.00 Kshs 100,000.00

Total Amount (Inclusive of 16% VAT) Kshs 12,760.00 Kshs 23,780.00 Kshs 41,180.00 Kshs 64,380.00 Kshs 93,380.00 Kshs 122,380.00 Kshs 122,380.00

COMPETITOR’S RATES

Contact or visit us at Laptrust (former Cannon) House, 7th Floor, Suite W.O.I P.O. Box 70083 –00400 Nairobi, Kenya Tel: 020 222 9962, 0711 717 717, 0738 717 717 Email: info@bgs1eastafrica.com / bgs1eastafrica@yahoo.co.uk

www.bgs1eastafrica.com


RETAIL NEWS WRAP

Cleanshelf acquires a fresh look The past; a springboard into the future 2012 was the year that sought to give Cleanshelf Supermarkets Limited a complete makeover. While rolling out a new approach to business, among the areas that the company pursued included incorporating more professionals into the business and re-engineering its operations to embrace issues such as relationship marketing. Roles that were not clearly defined have been defined while a distinct policy and clear job description for every department have been installed. Along with the family members-cum-employees who have learned the trade through experience, the new members are to not only inject their valuable skills into running the business but also a fresh set of ideas on how to grow and popularize the Cleanshelf brand. The changes coincided with the retail chain’s 10th anniversary; celebrations that provided a great platform for earnest efforts endured over the years. Less than six months since the re-organization coupled with determination to balloon into a force to reckon indications are that all in leaning on the positive side of things. With time each Clean Shelf outlet should sustain itself.

The company seeks to be a leading retailer in the region providing dignified shopping experiences to all through world-class services. In its bid to satisfy its consumer’s needs, Cleanshelf Supermarkets has realized the need to learn the purchasing behavior of shoppers in every town in order to provide them with the right products. Cleanshelf Supermarkets has plans to open more stores in 2013. Tracing its roots from a wholesale store in Limuru town, today it operates outlets in Kahawa West, Kiambu, Kerugoya, Nyahururu, and recently, Ongata Rongai.

important tool in providing vital market intelligence which enables it plan based on shopper trends, customer tastes and preferences.

PRIVILEGE CARD Introduced in 2010 by Cleanshelf Supermarkets, the Privilege Card has grown to command a following of 37,921 members from an initial 500. According to the Supermarket’s management, the program not only rewards customers for their loyalty but also gives them a sense of belonging. They belong to the Cleanshelf Supermarkets fraternity as valued link to the chain without whom there would be no retail chain. On the chain’s end, the loyalty cards are an

The downside of the loyalty card however is, businesses may deem it as an enough effort in rewarding loyal customers and neglect other vital ways of doing the same.

Peter Mulei Supermarket sets shop in Mlolongo F

ast rising Peter Mulei chain of Supermarket has opened its third branch in Mlolongo Township.

Speaking during the official opening of the branch in December 2012, Kevin Mulei Ngumbi, the chief executive officer, Peter Mulei and Sons Limited noted that the company seeks to increase and strengthen its operations and brand in the upper and lower parts of Eastern Province. Mr. Ngumbi added that the company took advantage of the retail opportunity based on the development of the township. For a long time, Mlolongo lying along the busy Nairobi-Mombasa highway is best characterised by the weighbridge, heavy commercial trucks stop-over coupled with entertainment spots however, the recent times have seen the proliferation of the real estate sub-

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INSIGHT RETAIL | ISSUE 02

sector judging from the construction of various middle to high end residential areas. Located near Solomon School, the expansive branch targeting Mlolongo, Athi River and Kitengela residents as well as the hundreds of people using Mombasa Road to various destinations will give its clients an unforgettable one stop shopping experience. Shoppers have the opportunity to sample the branch’s deli, café and bakery services as well as M-PESA and Agency banking. “To the residents of Mlolongo, thank you for welcoming us to your town, for walking with us through this journey and even giving us a peaceful and friendly environment to work in,” a delighted Mr. Ngumbi said adding that the Supermarket promises to not only give them the best service and goods at pocket friendly prices but also involve in various corporate social responsibility programs within the township.

Peter Mulei Supermarket operates two other branches both within Machakos Town. “Our plan is to venture the counties especially those in the lower and upper parts of the Eastern Province,” he revealed. The history of Peter Mulei & Sons spans 50 years ago when a young and energetic Peter Ngumbi Mulei after trading in various fields, eventually settled for the retail business in Nairobi city. Upon the advent of the post-independence Kenya, he consolidated his various retail businesses and relocated to Machakos Town where the company (Peter Mulei & Sons Limited) was born in 1969.


R E TA I L N E W S W R A P

Naivas rewards shoppers instantly

The Naivas reward card is an innovation which ensures that shoppers get rewarded for their shopping. Anyone can be a holder of the reward card. For application, one requires submitting a copy of his Identification Card or passport as well as filling in an application form and within a week, the reward card is ready for collection from the point of application. Initially the Naivas reward card was Green in color but from the year 2010, the supermarket chain introduced its new look composed of ‘Green and Orange colors’ which complement the supermarket’s slogan Mambo Tick. Points are awarded on every KShs. 100 shopped, redeemable at any Naivas outlet countrywide when the redemption session is on.

“I hurriedly picked up a bottle of cold water to rush back to the office on that hot Friday afternoon. As I flipped through my bag at the supermarket till, I suddenly realized that I had left my wallet on my desk. I looked up to explain to the cashier what was going on only for him to gladly reveal that I could actually use my reward card by redeeming the points earned. Thanks to the Naivas reward card, my thirst was quenched, save for the embarrassment.”

The cost of acquiring a new card or replacing the old model card with Mambo Tick is met by the company however; replacing a lost or dilapidated card comes at a cost of KShs. 100.00. Customers are encouraged to acquire the Mambo Tick card which has a better edge over the now outdated Green card. “This is because it identifies a loyal customer like it is the case mentioned above,” explains Willy Kimani, Manager, Naivas Marketing and Business Development adding that plans are in the pipeline to make the reward card superior in terms of transactions and convenience to the shopper.

Retail chain engages in various projects

The 2012/2013 financial year has seen Uchumi Supermarkets Limited engage in various projects. GIFT CARD Due to the prevailing coin shortage being experienced in the country, Uchumi devised a way to combat giving its customers sweets and other small items in place of coins at the till through the introduction of the Gift Card allowing customers to save their coins’ change which can also be used as a budgetary tool for their monthly shopping expenses. With a renewable expiry period of five years, the card can be passed on to shoppers’ acquaintances as a token for a special celebratory occasion.

GROWTH During the second quarter of the year, Uchumi Supermarkets opened three branches; Rongai branch located at the newly opened Masai Mall, Eldoret branch and Natete, Uganda. In 2013, the retail chain is looking at adding on to its branch network by opening new ones in Kisumu, Mombasa, South Coast, Kisii, and Maua towns.

CORPORATE SOCIAL RESPONSIBILITY (CSR) As it has been the tradition, all Uchumi branches visited a Home of the branch’s preference during the festive season with donations ranging from food, clothes, toiletries and other items. A major CSR activity is carried out in the beginning of each year by the Company.

TALII NA UCHUMI END YEAR PROMOTION For the first time, Uchumi ran a promotion simultaneously and under an identical theme “Talii na Uchumi” in Kenya and Tanzania and “Tour with Uchumi” in Uganda aimed at promoting domestic and regional tourism and as a way of creating brand awareness among all sponsoring brands. The Grand draw scheduled for 2nd of February, 2013 will see winners walk away with holiday and hotel packages, insurance covers among other prizes. BACK TO SCHOOL OFFERS This budget friendly offer ran from the 3rd-13th January, 2013 where shoppers had the opportunity to participate in the “Talii” promotion.

INSIGHT RETAIL | ISSUE 02

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Deli

Its growth in Kenyan retail stores

**Article sponsorship for full page with corporate logo is available at kshs.45,000/= Note: All costs above exclude VAT at the rate of 16% and relates to full colour advertisements. Articles can accompany the advertisements retrospective to the advertisement size. ** Special offer for corporate institution who wish to do an article not an advert. For further clarifications, do not hesitate to contact us and we look forward for your continued support.

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