BUSINESS and FINANCE, ENTERTAINMENT

5 Key Retail Trends To Watch In Kenya

Challenging yet promising opportunities for Kenya’s retail sector.

Going by the recent trends, Kenyan retail sector is booming with many local and international investors eyeing the lucrative market. In a recent report by UK firm, Euromonitor, growth in this sector is attributed to a strong economy, a stable political environment, a widening middle class, and a keen preference in convenience. New York based research firm, Nielsen ranked Kenya as the 2nd biggest market for retail investors in Africa with more than 40% of all Kenyans shopping in supermarkets. The average shopping basket carries about $20.

“Kenya’s retail sector has for years been dominated by local brands such as Nakumatt and Uchumi. Now, that has changed and we are seeing many global brands setting up shop in the market. This growth will continue growing based on the continued economic recovery,” said Ally Khan Satchu, a Nairobi based financial analyst.

In this analysis, we will look at the top trends in the retail sector in Kenya. We will also look at some of the main areas that retailers must look at and what investors can expect from the industry.

Trend #1: Era of the big malls

This is the era of big malls (emphasise on big). New malls are changing the way people shop. Some of the most notable malls that are being developed are: Two Rivers (developed by Centum Investment), Garden City (developed by PE firm, Actis), Unicity (developed by Kenyatta University), and Juja City.

In a recent television interview, billionaire Chris Kirubi stated of his desire to make Nairobi the next Las Vegas with exclusive shopping malls. His group, Centum is in the final stages of developing the 70,000sqm Two Rivers mall in Nairobi’s upmarket area of Ruaka.

This trend is also being experienced in smaller towns such as Mwea, Naivasha, Nakuru, and Meru where mega developments are coming up.

The middle-class have always preferred doing their shopping in malls. Unfortunately, these malls were only available in big towns such as Nairobi, Kisumu, and Mombasa. With the new shift to large scale mall construction, Kenyans will have the chance to shop in high-end malls.

Trend #2: Appetite f0r international brands

International brands are now eying the Kenyan market because of the stable economic and political environment. Some of the major brands that have entered the market are: France’s supermarket juggernaut, Carrefour, Massmart Supermarket (owned by Walmart), Game (a South African brand), and Zara (a Spanish fashion giant) among others. The entry of these brands will increase the level of competition in the industry. This will lead to the survival of the strongest brands. According to Mike Okoth, an independent financial analyst, some local brands will be forced to close shop or be acquired. A good example is Uchumi Supermarket which has suffered losses in the last 3 years due to competition and expensive bank loans.

Trend #3: Online retailing

Jumia Image

Online shopping offers Kenyans an opportunity to buy at the comfort of their homes. Unfortunately, this was not a welcome idea in the country a few years ago. This led to the ultimate closure of some of the premier online shopping companies in the country such as Kalahari and Mocality. However, today, with the increased mobile internet connectivity, Kenyans are again welcome to this idea. A good number of online shopping sites have come up and the industry is now valued at more than $10 million. Industry leaders have taken note of this and are coming up with online strategies to boost their sales. Companies such as Bata, Nokia, Samsung and LG are now partnering with online retailers such as Bid or Buy and Jumia to retail their products to the masses. In addition, supermarket chains such as Naivas are now banking on the internet to offer their products.

Trend #4: Diversification

Diversification is becoming an important driver of retail success in the country. All the major retailers are incorporating new sections in their malls. For instance, it is now possible to buy ready-made meals in supermarkets. It is also possible to buy perishable goods such as grocery and meat in supermarkets. In the past, this was not possible.

According to Euromonitor, many Kenyans want to buy everything in one place. This is because many people who shop in the supermarkets are the middle class who want things done fast. As a result, supermarkets are doing the best to ensure that they have everything in their stores. Retailers are also collaborating with other brands to provide their customers with the best services. A good example is the partnership between Nakumatt (the biggest supermarket in Kenya) and Clarks (a global fashion brand).

Trend #5: Big data

Nakumatt Supermarket Loyalty Card

Globally, big data is changing the way businesses are run. Many Kenyans talk about big data but not only a few of them realize that they are continually using it in retail malls. The use of big data in the retail sector has been with us for a while. All the major supermarkets in the country offer their customers loyalty cards where one gains points whenever they shop. In exchange, the retailers pick the customer data which is found in the national IDs. As a result, they are able to analyze the customers and their trends which they use to tailor services to them. Big data is also manifested through the use of online and mobile modes of payments, which also give the retailers the data they require to make projections and analyze their clients. With this data, retailers will be able to make efficient projections and customers can expect to benefit from the massive deployment of the systems.

With the growing retail space, retailers can expect massive competition, which might force others out of the market. The real benefit of the retail war will be felt by the customers. This is already starting to manifest with many retailers now offering their own branded items which come at a discount. Developers will also benefit through the development of applications and platforms to aid buying and selling of goods in the retail malls.

 

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