Convenient Retail Stores Have a Future in Kenya Real Estate Play

By Juma Fred / October 8, 2017

Over the past 10 years, investors have been scrambling to develop state of the art large scale retail developments to serve Kenya’s widely coveted “growing middle class.

However, concerns are emerging around the viability of some of these new retail projects – especially in and around the capital, Nairobi. Empty prime retail space is becoming a common site in new and old malls alike.

This is especially true in malls where anchor tenants are scaling back operations – as it has been witnessed with Nakumatt in recent months. According to Fusion, in a report, the increase in empty retail space can be attributed to three main factors:

  • Slowdown in Economic Growth The recent prolonged drought
  • The tumultuous 2017 general elections
  • The slowdown in private sector lending as a result of interest rate capping last year has led to a slowdown in economic growth and consequently a decline in mainstream consumer spending.

Oversupply of similar products Save for a few exceptions, developers have failed to supply the market with anything new in the retail sector. Take Limuru road as an example, shoppers have three world-class malls within a 5-minute drive of each other. Each mall offers a premium shopping experience, a wide variety of line shops, and both high end and affordable food outlets.

Consumer shopping habits are changing. Shoppers are increasingly forgoing weekly, two-hour trips to major malls in favor of daily shopping in convenience stores – which offer either proximity to work or ample parking, extended business hours and short checkout lines. All things attractive to working families committed to long working days and busy social lifestyles.

Convenience retail outlets – common in Europe and the US – usually consist of a small anchor store with ten or less complimentary line shops set in either a compact city center location (close to large office developments) or spacious leafy locations on the outskirts of major cities (usually with access to major commuter highways).

Convenience stores are designed for quick and easy shopping with anchors selling mostly fresh groceries and precooked meals, and “frequent use” line shops including pharmacies, coffee shops and restaurants. Convenience retail outlets are easy to plan, easy to build, and require significantly less capital than a standard mall.

They also usually have lower electricity costs, maintenance costs, rates, and taxes, and require less labor allowing rents to be lower and savings to be passed down to customers. If you get the location and layout right, convenience retail outlets are easier to fill and easy to exit making them the perfect investment for savvy retail investors.

About Juma Fred

Juma Fredrick is an enthusiastic journalist who believes that journalism has power to change the world either negatively or positively depending on how one uses it. You can reach him on: (020) 528 0222 or Email: [email protected]

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