Kenya as Africa’s second largest retail market
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Transcript of Kenya as Africa’s second largest retail market
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7/27/2019 Kenya as Africas second largest retail market
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Survey ranks Kenya as Africas second
largest retail market
Posted Thursday, May 24 2012 at 18:05
Kenya has the second most developed retail market in sub-Saharan Africa with about 30 per
cent of retail shopping being done in formal outlets, a Citi Group study has shown.
South Africa is the most formalised market in region, with double the proportion (60 per
cent) of Kenyan consumers using formal outlets.
The high penetration of modern retail shops is attributed to the presence of strong brands of
local outlets, a broader middle income class relative to other African countries, decent
transportation network and good governance allowing for ease in importation of goods.
Kenya is the second most formalised African country in terms of formal retail pen etration
with retail penetration standing at around 30 per cent, reads the report.
The retail market is dominated by four major outlets; Nakumatt, Tuskys, Uchumi and Naivas.
Three of them (except Naivas) have already crossed into the neighbouring countries.
Nakumatt is the largest retailer in Kenya by turnover. It has 37 stores, followed by Tuskys
which has 37 outlets, Uchumi 18 outlets and then Naivas with 19 branches.
Nakumatt is also present in Uganda, Tanzania and Rwanda, while Tuskys and Uchumi are
also in Uganda. Uchumi recently announced plans to increase its presence in Uganda withthree more branches.
Use of the formal outlets increases customer choices, while creating employment.
According to research this is one of the fastest growing areas in the private sector and it is a
good thing as it helps grow customer choices and provide employment.
However there is need to introduce policies and procedures that will ensure all tax obligations
are captured, said Dr Samuel Nyandemo a lecturer of economics at University of Nairobi.
Kenyan customers were said to be generally loyal and value orientated, pushing retail chains
to compete aggressively on prices. Nakumatts loyalty card programme was reported to have
over 700,000 members.
The increased use of Internet and social media was said to be making Kenyans more western
influenced dictating their shopping habits.
However, the report notes that even with the more conducive climate for modern retail, many
of the established retailers felt that modern retail penetration will peak out at between 45 and
50 per cent, as most of the rural areas will continue to favour informal markets over modernretail.
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The strong presence of local players was also identified as a hindrance to new entrants, with
the research firm recommending acquisition as the best entry option for into Kenyan retail
market for South African outlets addressed by the report.
East Africa is where SA retailers lack scale due to strong local retailers. Acquisition looks to
be the easiest route tobuild scale in this region, said the report.
Three of the dominant retailers; Nakumatt, Tuskys and Naivas are family owned making
them prime targets for acquisition.
Tuskys shareholders are currently involved in a court battle for control of the giant retail
outlet, with some of the directors blaming the power struggle to outsiders engineering an
aggressive take over.
(Read:Tuskys retail chain hit by fierce sibling rivalry)
Nakumatt is also seeking private equity to boost its capital to help it meet its expansion plansbefore listing on the Nairobi Securities Exchange.
The exchange listed Uchumi Supermarket was in 2008 involved in acquisition talks, with
South African based Shoprite being one of its eight suitors.
The supermarket had been suspended from the bourse in 2005, but was re-listed last year
after a successful recovery, and is on another expansion drive, underlining the strength of the
Kenyan retail market.
http://www.businessdailyafrica.com/Corporate+News/Tuskys+retail+chain+hit+by+fierce+sibling+rivalry+/-/539550/1396236/-/6adv9c/-/index.htmlhttp://www.businessdailyafrica.com/Corporate+News/Tuskys+retail+chain+hit+by+fierce+sibling+rivalry+/-/539550/1396236/-/6adv9c/-/index.htmlhttp://www.businessdailyafrica.com/Corporate+News/Tuskys+retail+chain+hit+by+fierce+sibling+rivalry+/-/539550/1396236/-/6adv9c/-/index.htmlhttp://www.businessdailyafrica.com/Corporate+News/Tuskys+retail+chain+hit+by+fierce+sibling+rivalry+/-/539550/1396236/-/6adv9c/-/index.html