Wholesale and retail trade is the 5th largest contributor to Kenya’s GDP and the 3rd largest contributor to private sector employment.
In 2016, wholesale and retail trade employed 238,500 Kenyans and accounted for 8.4 percent of Kenya’s GDP.
According to Nielsen, a leading global information, and measurement company, shifting consumer trends has driven growth in formal retail, with 30 percent of the Kenyan population now shopping informal retail establishments compared to 4 percent in Ghana and 2 percent in Cameroon and Nigeria.
This is the second highest in Sub-Saharan Africa after South Africa, which has a formal retail penetration of 60 percent.
Years of robust GDP growth increased purchasing power, and shifting consumer habits have accelerated the transformation of the Kenyan retail market.
The industry is currently well represented by both local and international franchises including Carrefour Kenya, Tuskys, Nakumatt, Uchumi, Massmart (trading in Kenya as Game), Choppies (which acquired Ukwala Supermarkets), Naivas, and many local brands such as Mulley’s, Eastmart, Quickmart and Clean shelf. The entry of Carrefour, Game, and Choppies has in part been aided by the recent woes facing Nakumatt and Uchumi.
According to the Cytonn Weekly Report, the growth of the retail industry in the decade to 2017 has been driven by;
The average value of a shopper’s basket increased by 67.0 percent to USD 20 (Kshs 2,016) between 2011 and 2017, making Kenya the fastest growing retail market in Sub-Saharan Africa.
Findings from an analysis carried out by Cytonn Investments show that Kenyan retailers can succeed by:
The Capital Markets Authority (CMA), twice investigated Uchumi management and auditors for errors contained in the offering memoranda for the two rights issues in 2005 and 2014.
The long-term capital gained by selling equity stakes to PE firms would alleviate the need to borrow for expansion. Furthermore, external owners would also enforce good corporate governance by insisting on proper processes and procedures.
These are now closed. Furthermore, Chandarana Supermarkets features two outlets, one at Rosslyn Riviera and a second at Two Rivers Mall, only 5 minutes away.
Chandarana Supermarkets also has an outlet at Yaya Centre and another at Ad-Life Plaza, only 5 minutes away. Both outlets compete for the same pool of consumer in Ngong Road and Kilimani areas.
Kenya’s retailers should continuously ensure that they are not signed past the right leverage ratios and this could even mean selling some stake in the company to get equity.
Had the company exited these markets earlier, shareholders would have avoided millions of shillings in losses.
Additionally, introducing store level financial reporting to better quantify individual store performance for investors is another way to enhance operational efficiency. It is common practice for global retailers to report average metrics for an individual.