The Highs and Lows of the Kenyan Retail Sector in 2017
‘Cautious Optimism in the Face of Turbulence’ is what describes the Kenyan retail sector. A growing young upwardly mobile and affluent middle class, rapid urbanization and growing internet and smartphone penetration are among the many reasons for the driving force behind the growth of the retail sector.
This is seen in Nairobi, the country’s capital and in the sprawling shopping centers, multi-storied malls and huge complexes offering shopping, entertainment, and food all under one roof.
Sadly, the optimism has been followed by a long list of challenges and hurdles that have tend to impede the strong growth prospects in East Africa’s leading economy.
In 2016, 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 according to Procter & Gamble (P&G).
The sector’s potential has been explained well in the Economic Pillar of Vision 2030 that seeks to improve the prosperity of all regions of the country and all Kenyans by achieving a 10 percent Gross Domestic Product (GDP) growth rate by 2017.
According to the Vision 2030 Medium Term Plan 2013-2017, six priority sectors that make up the larger part of Kenya’s GDP (57 percent) and provide for nearly half of the country’s total formal employment have been targeted: Tourism, Agriculture, Livestock and Fisheries, Wholesale and retail trade, Manufacturing, IT-enabled services (previously known as business process off-shoring), Financial services, Oil and Gas.
“Growth in Kenya’s retail has been driven by the country’s constant steady growth,” Robert Tashima, Managing editor: Africa, Oxford Business Group. The Group ranks the sector as second-most formalized in Africa. This is due to the increasing urbanization with a rise in the levels of disposable income driving consumer’s preference for organized retail.
Top Four Retail Trends in Kenya 2017
“Brand consciousness, green malls, entry of international retailers and online shopping are some of the key trends in the retail market in Kenya in 2017”
Brand Consciousness
Green Malls
Entry of International Retailers
Online Shopping
Mixed Fortunes for Nakumatt and Uchumi
However, 2017 witnessed mixed fortunes for the sector.
One, Nakumatt previously the leading retail store in Eastern Africa continues to undergo a severe cash crunch.
These have led to the closure of its flagship branches in the region due to accrued supplier debts that accumulated to Kshs 30 bn by 2017.
Tanzania (1), Uganda (3), Kenya (12) – Nakumatt Lifestyle, NextGen Mall, Westgate Mall, Nakumatt Junction, Ronald Ngala, Bamburi, Lungalunga, Thika Road Mall, Haile Selassie, Kisii (Moi Avenue), Kisumu Mega Plaza, Garden City Mall.
Uchumi Supermarkets suffered the same fate in 2016. As per The Ministry of Industry and Trade, Uchumi and Nakumatt accounted for 73.0 percent of the total debt owed by Kenyan retailers to suppliers.