Rise in Kenya’s Inflation will not Slow Down Consumer Spending -P&G Survey

Consumer spending in Kenya is expected to continue to rise after hitting Sh1.8 trillion in 2016 as the sector expanded by 13 per cent due to diversification which has changed their shopping habits according to  Procter & Gamble (P&G).

Besides inflation remaining a factor depressing growth of consumption at an individual level, an increased choice will act as a catalyst to growing consumption states the report.

“The total cumulative figure for retail spending in 2016 is $17.62 billion (Sh1.8 trillion) which can be allocated across different channels based on 30 per cent supermarkets, 67 per cent traditional retail, and three per cent special channels. Overall, retail spending accounts for 30 per cent of Kenya’s GDP,”aid Vivek Sunder, Managing Director P&G.

“The main driver of increased KES spending among Kenyan Consumers is per capita spending thus, the economy continues to grow faster than the population,” added  Vivek .

“Inflation has made consumers to start to make choices between products they buy and is actually one of the reasons why supermarkets are welcome these days. They represent choice and choice makes it possible to feel like they are making smart decisions in an inflation ridden environment,” reads part of the report.

With a diversified economy, consumer spending in the country will lead to dynamics like consumption at the individual level holding strong with the retail pie getting bigger within the economy ‘growing at a faster rate driven by increased per capita spending.’

Data from P&G reveals that Kenyan spend the bulk of their income about 60 percent on food and beverages and 23 percent on personal and household care products.

Sunder said that the Kenyan consumer and retail landscape in Kenya is one of the most advanced in the region with high penetration in many products categories.

“Although traditional retail stores dominate the Fast-moving consumer goods (FMCG) sector, supermarkets and hypermarkets are catching up fast,” he said.

Overall retail in Kenya grew by 13 percent in 2016, modern retail grew by 18 percent, indicating the increasing importance of the supermarkets as a retail channel.

From the data, supermarkets contributed 30 percent of the total FMCG retail sales for the 2015/16 financial year and projections show that the sector will keep growing as consumers opt to shop in bulk instead of single items.

E-Commerce and M-commerce were noted to be driving growth within the non-store retailing. “Better technological infrastructure coupled by increased internet penetration and smart payment methods are boosting non-store retailing,” said Vivek.

Related: Kenya’s Inflation Soars to 6.99pc In January -KNBS