Competitive Strategies and the Performance of Supermarkets in Nairobi City, Kenya

Abstract

The current business environment is characterized by high level of competition, as such it is necessary for firms remain competitive. The study sought to investigate how competitive strategies affect the performance of supermarkets in Kenya with a special focus on Nairobi city’s ten leading supermarkets. The specific objectives were to find out the influence of Differentiation, Cost leadership and Focus strategies on the performance of supermarkets in Nairobi City. The research sought to find out why despite the increase in knowledge and use of competitive strategies, supermarkets are still witnessing decline in sales and eventual closure. Notably, this research was a descriptive research. A sample of 10 supermarkets were selected from the 102 supermarkets in Nairobi City that have been in existence for five years between 2013 and 2018. The study targeted 10 staff in each of the targeted supermarkets from top management, line managers and sales assistants. The sample was stratified into various categories from top management, line managers and sales assistants. Closed ended questionnaires were utilized in the collection of data and analysis was done via descriptive and inferential statistics. SPSS was used for data analysis. In carrying out the study, the validity as well as reliability of research instruments was ascertained. Use of tables and charts were heavily applied in the presentation of research results. From the findings an adjusted R2 of 0.635 was obtained indicating that 68.2% variations in performance of supermarkets can be linked to competitive strategies (namely: cost leadership strategy, differentiation strategy and focus strategy). The findings further indicate that unit increase in cost leadership strategies leads to a significant increase in performance of Supermarkets in Nairobi City, Kenya by 0.898 times. Secondly, a unit increase in differentiation strategies brings about a significant rise in performance of Supermarkets in Nairobi City, Kenya by 0.917 times. Lastly, a unit increase in focus strategies leads to a significant increase in performance of Supermarkets in Nairobi City, Kenya by 0.579 times. The study concluded that there is a significant and positive relationship between the competitive strategies and performance of Supermarkets in Nairobi City, Kenya. The study therefore recommends that the management of supermarkets should strive to consistently reduce operational and overhead costs. Management should also ensure that there are proper overhead controls and further ensure that advertisement costs as well as promotional costs are minimized. Secondly, the study recommends that management of supermarkets should consistently come up with innovations as this is a key aspect of differentiation which provides firms with dominant positions and lasting benefits specifically those that no other firm or business can imitate the unique features of the firm and Lastly, the study recommends that supermarkets should carry out market researches to establish the segment to focus on as this will grow the share of the market of the supermarkets through niche markets and narrow markets operations which are sometimes not considered by other market players.