Differentiation Strategy and Performance of Supermarkets in Kenya

Abstract

Competitive strategy is the long-term plan that a firm has to achieve an advantage over its competitors in the business environment. The success of an organization in a competitive environment depends on how well it addresses challenges and positions itself. The purpose of this study was to establish the influence of differentiation strategy on the performance of Supermarkets in Kenya. A descriptive cross-sectional survey of all supermarkets in the 47 Counties focusing on five counties that were selected based on retail yield, household expenditure, and retail space demand according to Cytonn Report 2019. The unit of analysis, therefore, was all the supermarkets in five counties, namely Kiambu, Nyeri, Mombasa, Nairobi, and Machakos, while the units of observation were 270 employees from the supermarkets. The collected data were processed, binary coded, and entering them directly into SPSS software for analysis. It was found that implementation of differentiation strategy dimensions, namely effective technological adoption to enhance quality (χ² (1) = 31.220, p < 0.001; phi(ɸ) = 0.340. p < 0.001), customisation of products through investment in innovation (χ² (1) = 4.296, p = 0.038; ɸ = 0.126, p = 0.038) , charging of premium price for products (χ²(1) = 7.493, p = 0.006; ɸ = 0.167, p = 0.006), and customer perception of valued difference in products (χ²(1) = 6.723, p=0.010; ɸ = 0.158, p=0.01) are significantly associated with improved performance of supermarkets in Kenya. An increase in the adoption of a differentiation strategy increases the probability of satisfactory organizational performance (χ² (1) = 11.975, p = 0.001, Phi/Cramer's V = 0.211, p = 0.001). Therefore, the differentiation strategy is a statistically significant determinant of the organizational performance of supermarkets in Kenya.