Influence of Competitive Strategies on the Performance of Supermarkets in Nairobi Central Business District

Abstract

The study was on the influence of competitive strategies on the performance of supermarkets in Nairobi Central Business district. The purpose of the study was to determine the influence of competitive strategies on performance of retail stores in Kenya. The study was guided by specific objectives which are: to determine the influence of differentiation strategy on performance of supermarkets in Nairobi Central Business District, to assess the influence of cost leadership strategy on performance of supermarkets in Nairobi CBD, examine the influence of focus strategy on performance of supermarkets in Nairobi CBD. The study adopted cross-sectional survey design. The target population was the supermarket customers enrolled in loyalty programs of the following supermarkets Tuskys, Naivas, Carrefour, Ukwala, and Uchumi. The target population was 5420 and was sampled using simple and stratified sampling method to get a sample size of 343. Data was collected by use of questionnaire. Qualitative data was coded and analyzed by the use of SPSS. Both regression and correlation analysis were done to determine the relationship between the dependent variable and independent variables. The first objective was to determine the influence of differentiation strategy on performance of supermarkets in Nairobi Central Business District. The results show that respondents agreed that supermarket in the CBD package their products in accordance to the customer needs. Respondents also agreed that there is strong coordination among departments in the supermarket. They also agreed that supermarket have a wide range of products. However, they disagreed to supermarkets emphasizing in creativity and innovation as well as benchmarking with other leading companies. The second objective was to determine the influence of cost leadership strategy on the performance of the supermarkets in the CBD. The results show that the respondents agreed that supermarket in the CBD focus on efficiency while offering their services. They also agreed that supermarkets in the CBD offer their products at lower prices to attract customers. They also agreed that supermarkets use technology to render most of the services. Results also show that respondents agreed that costs are reduced by use of technology. However, the respondents disagreed that supermarkets are able to withstand competition because of their low prices. Respondents disagreed to supermarket focus on specialization. The third objective was to determine the influence of focus strategy on the performance of the supermarkets in the CBD. The results showed that the supermarkets in the CBD have not embraced focus strategy. They have not segmented their market and the supermarkets have not endeavored to meet the customer needs. In conclusion, differentiation and cost leadership strategies have been embraced by the supermarkets. They have led to a positive influence to the performance of the supermarkets. Even though focus strategy has not been fully adopted, the regression and correlation analysis shows it has a positive influence to the performance. The researcher recommended that supermarkets should embrace innovation and creativity as well as benchmarking with other leading companies as differentiation strategies. The researcher also recommends that supermarket should focus on specialization to increase profit margins together with product pricing to help withstand competition. The researcher recommended that the supermarket should embrace focus strategies such as market segmentation. The researcher recommends a similar study can be done incorporating supermarkets that are without the CBD and the country as whole; a similar study can be done but with incorporation of other variables; a further study can be done to identify other factors that lead to firm competitive advantage of supermarkets in the CBD.