Hasson & Frères winds down as signs of financial distress intensify

Hasson & Frères winds down as signs of financial distress intensify

Hasson & Frères, the longstanding fixture of retail in Kinshasa, is winding down operations in DRC, possibly leading towards a full closure of its retail and distribution businesses.

The group has operated in DRC since 1936 and had 12 supermarkets or wholesale distribution centres in the city, as well as investments in real estate and agriculture. It remains a family owned business. It currently has just four stores – two in Gombe, one in Kintambo and a fourth at 16ème rue Limete in the Industrial Quarter.

Executives have revealed that the scale and number of taxes and high operating costs have forced the company to wind down operations. One report has quoted 38 separate taxes to which the company was subject. According to Congolese media, a source close to the Federation of Congolese Enterprises (FEC), has said the group continues to have some of its facilities rented to some local banks, telecom companies and other individuals.

It was first reported in December that Hasson & Frères was completely closing its operations in DRC. Now it appears that at its main store in Gombe there are significant gaps on the shelves – for example no cosmetic products – and staff have been put on leave.

DRC remains an intensively difficult market in which to operate, high risk and ranking 182 out of 190 countries in the World Bank’s Ease of doing Business Index. South African chain Shoprite entered DRC in 2012 but has managed to open just a single store. Whereas in other challenging markets such as Nigeria and Angola, Shoprite has found a way to build substantial store networks across multiple cities. No other major international supermarket chain has entered DRC. Both Spar and Carrefour are known to have been previously been interested in DRC at points and Casino, Auchan and Système U all have stores in other parts of Central and West Africa.

However, small domestic supermarket chains have flourished in DRC in recent years. The largest of these, Kin Mart, has 10 supermarkets in Kinshasa. We have also seen signs of growing investment in retail in DRC. For example, in July XSML-owned African Rivers Fund (ARF) invested an undisclosed amount in Moni-shop, a supermarket in Kinshasa. XSML also invested in general merchandise and cosmetic retailer Galaxy, which has 8 stores in DRC, the same year.

This looks like an inevitable slow wind down and ultimately a closure of Hasson & Frères in DRC after more than eighty years of continuous operations. The closure will only have a limited impact on the retail landscape in Kinshasa: Hasson & Frères has been winding down its retail operations for some time and its business will disperse among the many small chains of supermarkets and general merchandisers.

The wider implication is more simply how much the group’s problems are a bellwether for the business landscape in DRC. In December 2017, Nestlé closed its manufacturing operations in the country, which it had started in 2011 at a cost of $43m. Nestlé did not explicitly cite high operating costs, although that will have been a factor. Rather, it pointed to softening demand and the slow growth of the middle class – a factor that will have played a part in Hasson & Frères’ problems as it came under more competition.