Nakawa-based South African owned supermarket chain, Metro Cash and Carry faces collapse over a Shs 1.8 billion loan from Barclays Bank.
A source has told The Weekly Observer that Barclays Bank Uganda Limited moved to place the store under receivership two weeks ago, as it sought to recover the debt.
But the same source said that the decision by the bank to takeover management of the spacious supermarket has riled the managers of Metro who prefer liquidation.
Management has already petitioned court to wind up the company, a move that sources say has been challenged by the bank. A court decision on the matter was expected on August 8.
By pressing for liquidation, management is seeking powers to take charge of the process of winding up the company and paying off all suppliers as well as settling its loan.
Yet liquidation, a process that is sanctioned by court, could possibly prompt the firm to sell off most of its assets, marking the beginning of its eventual collapse.
One of the suppliers who spoke to this reporter on condition of anonymity said the supermarket owes him over Shs 30 million, adding however that there are others it owes over Shs 100 million.
On August 3, some suppliers converged in the accounts section of the company premises demanding to be paid but all left disappointed after they were told by management that there was no money to pay them.
Our sources there said that one of the suppliers, Britannia Allied Industries, makers of biscuits and juices, immediately withdrew some supplies, vowing not to supply to the chain again. The company is demanding about Shs 22 million.
When The Weekly Observer visited Metro on August 3, the atmosphere within the supermarket was that of uneasy calmness, with little indication that business was booming.
The usually filled up shelves were largely empty and the attendants appeared idle as few customers trickled in.
The electronics section of the store––run by Anisuma Traders was closed. The Weekly Observer was told that Anisuma had shifted back its wares to one of its showrooms, located after Shell Petrol Station, along Jinja road.
The management at Metro remains cagey. Patrick Businge, the branch manager told this reporter on Monday that he was not aware of any changes at the supermarket. “I am not aware of anything,” Businge said.
Pressed further, he said he could not give me any more information beyond that. Another manager at Metro only identified as Francis who works in the Supplies Section described this information as news.
He asked this reporter: “Where did you get that information?”
Nick Mbuvi, the Managing Director Barclays Bank could neither deny nor confirm his bank’s takeover of Metro.
“I cannot discuss information about our client in the press. It would be in breach of the client’s confidentiality,” he said.
Rise and fall
If Metro Uganda, whose parent company is based in South Africa collapses, it will have endured a torrid nine year spell, a period within which it has enjoyed some good days but also where it has constantly been on the edge.
When it first set up shop in Uganda in 1999 it was arguably the biggest retail and as well as wholesale supermarket in the country.
Metro’s entry in a way revolutionised the wholesale and retail business that had long been in the hands of Kikuubo traders.
It quickly marked itself out as a unique entity, targeting high-end consumers who were required to possess a special card before they could buy any items there.
This kind of exclusivity however, alienated it from potential shoppers and some analysts think it showed that the firm had not done sufficient homework about the country’s middle class potential, which could not sustain such an establishment.
A senior consultant with Enterprise Uganda, a business solutions firm, who did not want his identity revealed, told The Weekly Observer that Metro’s business model was not feasible from the start.
“Their entire business concept of targeting an exclusive club of members was wrong,” he said, “it delayed Metro from building a solid client base.”
If they were dealing in exclusive products, he said, may be the situation could have been different but their products were available from elsewhere on the market.
Perhaps the red herring for Metro was when other bigger supermarkets, particularly Shoprite set foot in Uganda in 2000.
Unlike Metro, Shoprite was not exclusive and it set its prices lower than Metro, making it an instant favourite for many shoppers and wholesalers.
But the matter became complicated further for Metro after Uchumi Supermarket, from Kenya and Game Stores from South Africa established outlets in Uganda.
Competition
In fact the move by Game Store and Shoprite, to set up a joint shopping mall in Metro’s Lugogo neigbourhood meant that the battle for customers was taken right at Metro’s backyard.
This led to increased competition within the industry, competition that some analysts say, threw Metro off balance. For good measure, Metro in the short run countered competition by abandoning the special card system and drastically reduced the prices of many of its items.
Failed efforts
It also partnered with some smaller supermarkets in Kampala and in upcountry areas like Mbarara. These measures were done in the hope that it would help them win some customers from their competitors as well as expand its reach.
But the latest developments now indicate that it was a case of “too little, too late”. Going into receivership or liquidation can only mean that things are not okay.
If it fails to settle the bank loan or to pay off its suppliers, this might be the final straw that breaks its back. Metro Cash and Cary is owned by South African chain—Met Cash Trading with outlets in Botswana, Malawi, Kenya, Zimbabwe and Uganda.
SOURCE: UG OBSERVER
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment