Local retail stores will not lose their spaces to the increased activity of international outlets, according to Kenya traders’ association chief executive Wambui Mbarire.
Highlighting this, the existence will be propelled by tiers II category of stores which include among others Tumaini, Eastmatt, Cleanshelf and Mulleys supermarkets.
This is compounded by the Kenya’s customer behavior identified in shopping from specific store for only particular products.
International stores continue to make entry and unveil expansion plans. This is mainly due to ease of doing business and less barriers as provided by the Companies Act.
“Other than shopping from supermarkets, Kenyans understand where to get certain goods such hammers in a hardware and laptop from electronic shops. Game supermarket from South Africa faced a challenge in starting in Kenya as it hoped to stock all varieties,” Mbarire said.
Mbarire said that the market had experienced a 33 per cent growth in 2018 from growing middle class, rapid urbanization and the opening of modern shopping malls requiring anchor tenants.
This was despite the financial woes facing Nakumatt and Uchumi chain of stores. However, international operators only enjoyed 2 per cent market share.
“They are not getting into towns which have higher proportion of consumers,” she said.
Mbarire maintained that the international operators played a role in shifting the paradigm in the industry from competition based to profitability strategies.
“Local players have realized that large number does not mean performance,” she added.
She also argued the boom of online retailing websites like OLX, Jumia, Pigiame, Masoko and Kilimall will positively impact the stores in customer experience.
“E-commerce only complements the sector and the brick-and-motor stores will always be there because customers need to feel, smell and touch before they can buy,” she added.
Kenya’s retail sector has been faced with a slow grow for the past years. It was expected to achieve 30 per cent growth in 2012 but hit the mark in 2015, projecting to grow to 35 per cent by next year.
The growth has been hampered by financial woes faced by Uchumi and Nakumatt. Capital Markets Authority (CMA) reported poor governance and poor strategy execution from investigations made to rule out the notion of financial issues.
Most retailers placed aggressive expansion plans to drive competition with other players, however at the expense of their suppliers who often stocked goods on credit.
Manufactures are banking on the drafted regulations by the Competition Authority to overlook on buyers’ power and unfair practices by dominant players.
“Nothing prompted buyers to make payments. This will be a big relief from payment delays and defaults to manufactures and suppliers. This will also include shelf power and avoid allocation of lower shelves to starting suppliers,” Kenya Association of Manufactures chief executive Phyllis Wakiaga said.