A Study on Competitiveness in the Supermarket Industry in Kenya Using Porter’s Five Forces

A Project Submitted to the Chandaria School of Business in Partial Fulfillment of the Requirement for the Degree of Masters in Business Administration (MBA)The study sought to analyze the competitiveness of the supermarket industry in Kenya using Porters Five Forces model. The objectives of the study were to assess the effect of the bargaining power of suppliers, bargaining power of consumers, threat of substitutes, current level of competitive rivalry and threat of new entrants on competition within the supermarket industry in Kenya. This study used descriptive research design. The target population of this study was 309 staff working in the marketing departments in Nakumatt, Uchumi, Naivas and Tuskys. This study adopted a stratified random sampling method to select 30% of the target population. The sample size of this study was therefore 93 respondents. This study used primary data that was collected using semi-structured questionnaires. Content analysis was used to analyze qualitative data and the findings were then presented in a prose form. On the other hand, inferential and descriptive statistics were applied to analyze the quantitative data using scientific software called Statistical Package for Social Sciences (SPSS version 20). Descriptive statistics included mean, standard deviation, frequency and percentages. In relation to inferential statistics, the study used correlation analysis to establish the relationship between the independent and the dependent variables. Data was then presented in a tables, bar charts and pie charts. The study established that the bargaining power of suppliers was influencing the competition in the supermarket industry most, followed by bargaining power of consumers, threat of substitutes, current level of competitive rivalry and threat of new entrants. The study also established that it is not difficult for suppliers to enter their business, that purchases from the suppliers represent a large portion of the suppliers business and that the supermarkets stock various brands from different suppliers hence reducing the power of suppliers. The study also established that the bargaining power of consumers has an effect on the pricing and location of the supermarkets. It was revealed that there were threats of substitutes in the supermarket industry such as shopping malls. It was also found that there are no government policies regulating entry into the supermarket industry. The study concludes that entrants in the industry, current level of competitive rivalry, threat of substitutes, bargaining power of consumers and bargaining power of suppliers positively and significantly influence competitiveness within the supermarket industry in Kenya. This study recommends that the relationship between the supermarkets and the suppliers be maintained healthy. The study also recommends that future marketing and expansion plans by the managements of the supermarkets should address the pricing and location of the new branches. This study also recommends that further studies be conducted on the competitiveness of the supermarket industry in Kenya to cover other major upcoming supermarkets in Kenya such as Ukwala and Kassmart