This archive report was first published on 24 July 2019.
Kenyan Retailers Shift Focus to Residential Estates ¶
As the supermarket chains fight for market share in fancy malls, convenience stores are holding their own in the residential estates.
Recent findings by market insights firm Nielsen show that kiosks and groceries in Kenya accounted for 66.3 percent (Sh185.2 billion) of the total fast-moving-consumer goods (FMCG) spend in the year ending March 2019, a 10.7 percent growth compared to a similar period in the previous year.
However, supermarkets accounted for 33.7 percent (Sh94.1 billion), a 0.4 percent growth over a similar period.
Tier-two retailers such as QuickMart, Tumaini, and Cleanshelf are enjoying booming sales by following customers to their doorsteps in the residential estates and capitalizing on the huge FMCG market currently taken up by kiosks.
These retailers have recently opened stores within residential estates in Nairobi, a shift from the previous trend where supermarkets only set up in big town centers.
Cleanshelf's latest stores are tucked in residential areas such as Lang'ata and Shujaa Mall, which is adjacent to Sossion Estate in Nairobi's Eastlands.
QuickMart's latest branch, its first venture into the 24-hour model, is located in Lavington and serves customers in the Kileleshwa and Lavington neighbourhoods.
Tumaini opened its latest store two weeks ago in Roasters on Thika Road, bringing convenience to shoppers and competition to the Game and Shoprite supermarkets housed in Garden City Mall.
Naivas and Tuskys, the bigger tier-one players, have taken note and plan to join the scramble for customers right at their estate doorsteps.
“More and more local retailers are opening smaller outlets to go to the estates to compete with kiosks. Kiosks are convenient and provide the possibility of borrowing from consumers,” said Retail Trade Association of Kenya (Retrak) Chief Executive Wambui Mbarire.
Naivas is set to open its latest store at Mountain View Estate before the year ends, while Tuskys plans to expand its small-format stores concept to Uganda through the franchise model.
“We still believe that there is a huge potential in Kenya which must be tapped first. With Uganda, the small-format stores work better than in Kenya, and we see that evolving fast through the franchise model rather than one investment,” said Tuskys Chief Executive Dan Githua.
The Nielsen data indicates that Kenyan shoppers are most likely to visit an outlet if it was convenient to get to, has variety, well-stocked, and has quality products, in that order, among other factors.
“Convenience is key to the normal Kenyan shopper, and data shows that they frequently visit kiosks for household goods top-ups. They are also price-conscious and will go for products that give them value for money,” said Nielsen East Africa, Consumer Insights Lead, Pauline Achayo.
