How is coronavirus impacting the Kenyan Retail industry?

We are in hard times. We are in a time that no one had prepared for. A time that even our contingency plans might work but for a short duration.  A time that we aren’t sure of when the pandemic will end.

Forgive my pessimistic view. In recent history no global pandemic has been contained in less than 2 years. For example:

  1. Ebola in West Africa- Dec 2013 to June 2016 with over 20,000 death
  2. The Swine Flu H1N1/09 pandemic- Sept 2008 to Aug 2010 with over 19,000 deaths
  3. The HIV-AIDS pandemic- 1981 to date with over 25 million deaths & counting
  4. The Spanish Flu pandemic- Jan 1918 to Dec 1920 with over 50 million deaths

With this history, we should all brave ourselves for the long haul.  With many countries around the world still in lockdown due to the coronavirus pandemic, retailers are left with no option but to find new ways to cope and meet the customers demand.

Here are some of the effects on retail shops though not conclusive

Panic buying.

When it was announced that Corona is with us. This sent shock waves and Kenyans rushed to stockpile basics and food commodities in readiness for any lockdown. This saw an increase in sales and footfall in the first week of March. 80% of the sales was on Basics or what we refer as the Hot line in our retail outlets. In fact some Unga brands were on the verge of being out of stocks. With now the locking down of some areas (Eastleigh, Mombasa Old Town), Kenyans are on the look out and any area that’s deemed a hotspot such area could experience panic buying. As a retailer check out on those areas if you have an outlet there, do your RIGHT stocking.

Embrace E-Commerce

There has been an upsurge too on use of E-commerce by the retailers. Any retailer who as yet hasn’t embraced E selling should just plan to pack and leave the industry. In fact, it’s gotten to a level that Mama Mboga’s are selling via online media. 90% of Kenyans are now spending over 75% of their time on the gadgets. Take advantage of the same. I need not stress on this

Non- Mover Categories becoming Fast Movers

Corona came to reactivate some dead or slow-moving categories. Before Corona, some stocks like Sanitizers and Wipes were only left to the ‘Elite’ in the society. These are stock lines that were regarded as slow movers. Not that people disregarded Hygiene…but they were seen to be luxury items. Corona has made it possible and rejuvenated these lines. So as a retailer you can’t ignore these lines.

Statutory Regulations Non-Conformity

Kenyans are entrepreneurial. They are able to see ‘Low lying’ fruits as they say. However, they are others very unscrupulous and would do anything for cash. Check out the sanitizers and other stocks that you are buying if they have the relevant approvals (Kebs and KRA). This could be a risk exposure to your entity and to your customers.

Staff numbers Vs Pilferage

Corona has forced institutions to downsize and reduce their workforce. Others have been sent on unpaid leaves. Retailers have come up with shift options for their staff. Its high time for institutions to ask the hard question…..Do You really need all those staff?

The biggest loss to retail is through stealing and pilferage. Even as we use few numbers of staff, are we sure that our pilferage levels are bare minimum. For those staff that probably we’ve sent on unpaid leave not 100% will come back after Corona. How prepared is your institution?

Retail Outlets opening hours

Before Corona there was a rush by retailers to open 24-hour outlets. With the current lockdown and curfew having a 24-hour outlet may not be feasible taking into considerations the costs involved vis a vis the sales numbers.  It’s time for retailers should evaluate their outputs against their costs during these periods of 7am to 5pm and correlate the same against the 24-hour costs and sales outputs.

Alcohol & Wines Sections Growth

Corona came with the closure of restaurants and bars. Kenyans love social life and their drinks. This has seen an increase on alcohol and wines categories as Kenyans opt to enjoy their drinks in their homes. As a retailer, this is a section to check out for as we know it’s a high margin section too and also pilferage commonly happens here. Take into consideration to the affordability and your customers niche as you stock.

Vegetables & Grocery Sections

Kenyans have been advised to stay indoors and reduce their movements. Some markets have also been closed. Some areas are now on lockdown. Movement between counties has its own share of challenges. Farmers are looking out for options to offload their produce. As such some are basically taking their farm produce to the estates and customers doors. This might eventually mean that the Groceries, vegetable sections might lose out. In fact, this could work well for the farmer as they are paid in cash not like how Retailers delay their payments and at times even don’t pay.

Do you have a supply contract with your Fresh produce supplier? Check on your stocking levels.

Risk of Shops Closure

Basics and foodstuffs have very minimal margins. During this corona period Kenyans are not buying luxury or comfort goods which have higher margins. This in effect means there’s risk of cashflows and some retailers might struggle. Most suppliers too have opted for shorter credit periods and cash basis.

Some studies in the UK have also indicated that some retailers could be wiped out if corona virus continues. Some retailers in UK have shut down online operations in a bid to protect warehouse staff. Kenya isn’t immune to the same. How well are you managing your cashflows?

New Business opportunity.

As the adage goes, in every adversity there is always an opportunity. Even during this corona periods there are many opportunities for retailers. These opportunities are pegged against all the challenges faced above and others. Contact us to help you unlock those opportunities.;;;

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