THE RELATIONSHIP BETWEEN ISSUE NEWS AND CORPORATE BRAND EQUITY: A CASE STUDY OF UCHUMI SUPERMARKETS

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ABSTRACT
This study sought to examine the relationship between issue news and Uchumi
Supermarket’s corporate brand equity. The specific objectives were; to determine
consumer awareness of issue news about Uchumi Supermarket; to establish the
relationship between issue news and Uchumi supermarket brand equity; and to evaluate
the mediating role of consumer’s sensitivity to information from the news media on
Uchumi supermarket brand equity. Literature on brand equity and related concepts such
as corporate brand equity, corporate reputation and issue news were reviewed. The
research was underpinned by the marketing Theory of Buyer Behaviour. Descriptive
research design was used. A purposive sample of eight Uchumi supermarkets currently
operational in Nairobi and 8 competing stores was used. A sample size 73 respondents
comprising of 32 shoppers from Uchumi, 32 shoppers from competing supermarket
brands located close to Uchumi’s eight supermarket stores in Nairobi and nine key
informants was used. Shoppers were selected by intercepting every 10th shopper per store
until the sample was reached. The key informants comprised of three Uchumi managers,
three journalists and three NSE experts. In addition, newspaper clippings and TV clips
were analysed to confirm the issue news as perceived by shoppers. Thematic analysis
technique was applied in analysing data. The data were summarized and presented in
charts using Atlas.ti as the data analysis software. As per the findings, 60% of the
shoppers from Uchumi supermarket and 100% of the shoppers from competing
supermarkets frequented other supermarkets other than Uchumi. In locations where
Uchumi had presence, Tuskys and Naivas accounted for the largest share of customers
with (25%) and 20% of the market share respectively. It was found that 66% of the
respondents attaching importance to supermarket brands and 34% attaching very much
importance to supermarket brands. The results showed that 95% of the respondents
perceived of the reputation of Uchumi Supermarket brand as bad; and shoppers from
Uchumi (56%) and Uchumi’s competitors (91%) perceived of Uchumi Supermarket
brand as the worst in terms of distinctiveness. Consumers could vividly recall the content
of the news about Uchumi, with financial trouble (56%), the issue of corruption and
mismanagement (23%), conflict with suppliers (11%) and closed outlets due to debt
(10%) being the salient issues. The theme of negative impression was the most dominant,
with the news creating a negative impression to 91% of shoppers from Uchumi and 81%
of shoppers from competing supermarket brands. Further, 78% of the shoppers who
considered the news as somehow important had a negative impression of Uchumi
supermarket brand from the issue news compared to 62% of their counterparts who were
not influenced by issue news. Key informants interviewed especially the management of
Uchumi felt that quick action needed to be taken if Uchumi was to survive. Further the
Uchumi Managers and journalists interviewed all strongly felt that Uchumi lacked a crisis
communication plan and that the organisation had been fumbling with its response to the
issue news. Had Uchumi had a crisis communication plan in place, they might have been
able to control the impact of the issue news on their corporate brand reputation and by
extension limited the effect on their corporate brand reputation. It was evident from the
findings that consumers were very sensitive to information from the news media and this
influenced their perception of Uchumi Supermarket brand and determined their choice of
supermarket to patronize. This was shown by the findings which revealed that 63% of
shoppers from Uchumi and 75% of shoppers from competing supermarkets indicated that
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the news was somehow important. Key informants were unanimous that consumers
associate with successful brands and this was not represented in Uchumi Supermarket
brand. Regarding the influence of sensitivity to information on shoppers’ impression of
Uchumi supermarket brand, the results showed that among the shoppers who considered
the news of much importance, 22% had a negative impression of Uchumi from the issue
news compared to 15% whose impression did not change as a result of issue news.
Similarly, 78% of the shoppers who considered the news as somehow important had a
negative impression of Uchumi supermarket brand from the issue news compared to 62%
of their counterparts who were not influenced by issue news. The recommendation is that
there is need for Uchumi supermarket to create an entirely new corporate brand. To this
end, rebranding is part of the strategies that Uchumi supermarket should consider in the
immediate term. Uchumi Supermarket should consider recruiting a strategic corporate
communications expert to turnaround the image of the supermarket brand as part of its
turnaround strategy. Uchumi managers should counter the continued negative publicity
with positive issue news about Uchumi’s move in the right direction. The leadership of
Uchumi should not only replace all the staff implicated in corruption and mismanagement
but also make this information publicly known as part of restoring consumer confidence.

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