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The Wobbly Story Of Kenyan Retail Industry: What Is The Future Like?

The Wobbly Story Of Kenyan Retail Industry: What Is The Future Like?

Fursaafrica by Fursaafrica
June 19, 2020
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The Kenyan retail Industry is the 4th greatest contributor to the Country’s GDP after agriculture, manufacturing, and transport, according to the Kenya Bureau of Statistics (KNBS) and also comes in 2nd in size after South Africa in the African Continent, with a market penetration of between 30-40% as of 2017.

The retail sector has experienced tremendous growth since Kenya’s independence when the locally owned business began to sprout, with the entry of Chandarana Supermarket in 1964 followed by the government-owned Uchumi in 1975.

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Over the years several other players have joined the market, with the key players being Nakumatt, Tuskys, Naivas and local enterprises such as Quickmart, Eastmatt, Cleanshelf among others and in recent years foreign-based chains such as Carrefour, Choppies, Game and the South African based Enterprise Shoprite have made their entry into the market.

By the year 2016, the retail industry accounted for 8.8 % of Kenyans GDP and employed 235,500 0f Kenyans according to statistics by KNBS. The steady growth of the Country’s GDP over the years lead to increased incomes, therefore increased purchasing power and an increase in consumption expenditure.

However, in the year 2019 a report by AT Kearny, an American based global management consulting firm on Global Retail Development Index (GRDI), which ranks the top 30 developing countries for retail investment, indicated that Kenya had fallen from 5 places from the year 2016 pushing it out of the top 30. In the previous years, Kenya had been ranked at position 25 in 2016 and 29 in the year 2017.

This was evident as some of the major retailers were put into receivership. In the year 2014 Uchumi supermarket had 33 branches countrywide, which came down to 12 branches in 2018. Nakumatt which had more than 60 branches in the year 2016 downsized to just over 40 branches by the year 2017. This was in contrast with some of their competitors such as Naivas and Tuskys which grew to more than 60 and 50 branches countrywide respectively.

The entrance and growth of new players in the market meant that Nakumatt and Uchumi had to come up with new methods of customer retention and growth, with the retailers opting for rapid expansion, increasing number of branches and with the rampant mismanagement leading to inadequate internal funds, the most viable source of expansion funds was the retention of supplier payments as it attracted no interest and bank loans.

In addition, the growth in real estate led to the growth of malls and the subsequent growth of the retail sector as supermarkets rushed to occupy the malls, which the two major chains had not anticipated.

Competition, mismanagement, lack of growth strategies, and funding eventually pushed Nakumatt, Uchumi, Choppies, Ukwala, and Ibrahim’s out of the Kenyan market, with takeovers from Naivas and Tuskys and with the foreign-based retailers such as Carrefour gaining their niche in the market.

In the year 2018, Tuskys announced a 3-year expansion plan to increase its branches from 64 to 100 by the year 2020, Carrefour recording increased sales of 13.87 billion in the year 2018 and has currently opened the Carrefour Mega which was previously Nakumatt Mega. Quickmart targeting to open 6 new outlets in 2020 in addition to its merger with Tumaini making it the 3rd Largest retail chain in Kenya.


Competition in the retail sector has led to the management coming up with new strategies to ensure continuity, some retail chains opting for online shopping, price wars, the opening of stores in smaller towns in a bid to attract the Kenyan middle class with more consumers opting for retailers close to their residences as opposed to the malls and also the sourcing of funds from selling off their stakes to investors to expand their operations as in the case with Naivas and Quickmart. They have both acquired funding from private equity funds Amethis Finance based in France and Adenia Partners respectively.

The recent few months however have not been a smooth sail for Tuskys, with it closing some of their stores in Nairobi, Kitale, and Mombasa. The management cited some of their stores in the same location being too close to each other. However, consumers raised their concerns on social media on empty shelves in their stores. With concerns of mismanagement, delays in supplier payments, and theft. One can only hope that Tuskys does not go the Nakumatt and Uchumi way as expansion strategies, excellent management and accountability are key for the survival of any retail business in Kenya.

A report from Fitch Solutions a UK based Company on Country Risk & Industry Research indicates a downward consumer spending from its predicted 6.1% year to year growth to 4.8 % for the year 2020 due to the Covid-19 pandemic.

This could reflect negatively on the retail sector as various sources of livelihood for Kenyans have been negatively affected by the pandemic. Most Kenyans are opting to cut costs.

However, with the growing number of foreign investors in the retail sector, increased e-commerce platforms in the Kenyan market, there is still hope for the growth of the retail sector since the players are few as compared to a large number of consumers in Kenya.

Author: Doreen Wairimu

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