What to expect in the near future in the Kenyan retail industry

Kenya’s retail industry has continued to grow in the past few years. It’s actually been one of the key drivers of the Kenyan economy. With the IMF forecasting GDP growth will rise from 5.6% last year to 6% in 2016, retailers will be aiming for stronger returns amid increased consumer confidence. We have seen entry of international retail brands in the last few months.  However in as much as many retailers are coming on board, others are closing down. The rise of the middle class with high disposable incomes, as well as the improved infrastructure, which lowered transport costs for businesses, are key in promoting retail growth. Another key factor has been the growing property boom, allowing retailers to take up prime locations near residential areas for customer convenience, as well as the devolution of services to rural areas, encouraging the footprint expansion of retail outlets nationwide.

So anyone might ask what’s next for the retail industry. The following are the most likely outcomes;

More customer-focused selling. Retailers will have to invest on soft skills training of their staff. More recently is the shopping experience one can get at the Hub at Karen…its different from the usual retailers we’ve had in Kenya. Everyone will now be forced to improve or they will be forced out of the market.

Widening of product portfolios. Every retailer will be fighting to remain relevant in the market. This will force them to stock products and have a variety for the customers to choose from. This would however be tricky as a retailer might get herself into a dead stocks scenario due to stocking of non-movers/ dead stocks. Need for data analytics.

Value addition. Due to increased number of retailers, customers will be looking for retailers where they have an additional value as a result of visiting the shops. Currently almost all retailers have a bakery and deli section. All retailers are moving to a ‘One Stop Shop’ scenario. More services will be added on.

Security Concerns. Shop lifting and pilferage account to approximately 3%-5% of the shop turnover. Retailers will have to invest more on their systems, processes and controls to reduce the incidences of shop lifting and pilferage. This would also mean growth of the security industry.

Formal Retail Space. The market may struggle to accommodate the coming floor space in Nairobi. Additional formal retail space may lead to a risk of oversupply, according to some analysts, as leasing activity declined in some established malls. Those malls could be prompted to undertake upgrades to regain lost footfall and tenants as major retailers move to newer malls or secure space in upcoming developments, according to local media reports.

County Growth. With Nairobi expecting to be overstretched in the near future, most retailers in their bid to sustain themselves will move to the counties. This is already happening with more retailers opening up in the Peri-urban towns in Kenya.

The list is endless……anything you might want to add