A Proposed Model for Supermarket Branch Network Expansion in Kenya

Abstract

The aim of this study was to design a model explaining branch network expansion of selected supermarkets in Kenya. The specific objectives of the study were to determine how store layout design, store image, retail assortment, branch location and store brands influence branch network expansion. The study employs the Wheel of Retailing, Hotelling location, Queuing and Game theories to explain branch network expansion. The study adopted a mixed research design collecting both qualitative and quantitative data at the same time. The inclusion criteria was supermarkets with more than 5 branches and with an annual turnover above 0.5 billion. A sample size of 300 was derived from 1200 employees using the slovin’s formula. Proportionate stratified sampling was used to draw the sample. Qualitative data was collected using focus groups while quantitative data was collected through a likert type questionnaire. Three hundred questionnaires were distributed and one hundred and eighty three were returned. Thereturned questionnaires were analyzed using the statistical package for social scientists. The findings reveal that all the independent and dependent variable were significantly related at p=0.000. The study concludes that branch location and store brands are branch network expansion drivers. Store layout and store image are linkage factors while retail assortment is a follower to other factors during branch network expansion. At the first hierarchy of the model is retail assortment, followed by store layout and store brands, store image at level three and branch location at level four. The study recommends that retailers needed to adopt layout designs similar to distribution centers and suppliers. The study further recommends that retailers needed to use their established names during mall negotiations. Flagship stores to be open in cities, next to bus stops and also inventory control negotiations maximized through use of store brands.