This archive report was first published on 6 May 2020.
As the world grapples with the COVID-19 pandemic, Kenya's retail industry is facing unprecedented challenges. However, there is a glimmer of hope in the form of a retail code of practice that has been signed by retailers, manufacturers, and suppliers.
According to Willy Kimani, the Retail Trade Association Of Kenya (RETRAK) is urging all stakeholders to adhere to the code of practice to ensure a vibrant sector. The code, which was signed last year, contains various elements that are undergirded by the principle of fair and ethical dealing.
These elements include ensuring that retailers do not delay payments, do not obligate suppliers to pay for marketing costs, shrinkage, better positioning of goods, and guarding against unfair delisting of suppliers. Suppliers also have certain responsibilities under the code, which include undertaking actions required by a retailer in response to ordinary commercial pressures, dealing with the retailers fairly and lawfully, and maintaining trade confidentialities.
RETRAK is asking suppliers and retailers to ensure that signed agreements are in place, especially as they work to mitigate the effects of COVID-19 on the retail sector and the economy in general. These agreements and joint business plans will contain finer details of the above elements and especially what the payment terms are and when suppliers should expect payment.
By adhering to the code of practice, retailers can plan their cashflows, negotiate with suppliers for better margins, focus on profitability, and not just sales, which will lead to cautious growth plans that ensure that suppliers' money is not diverted. Suppliers are also obvious winners, as they can negotiate trade credit from financial institutions using the legally backed payment period stipulated in the supply agreement.
The retail code of practice is not just a self-regulation tool but will soon be backed by law under the recently assented to amended competition act. However, RETRAK believes that adherence to the code will lead to mutually beneficial relationships that will help keep the industry vibrant.
