NAIROBI, (Xinhua) — Kenya’s growing retail market has become the new destination for foreign supermarkets seeking to expand their operations, at a time when troubled local supermarket chains are closing stores.
The country has in the past months attracted at least three major international supermarkets, which have already set up operations, with another lining up to enter the market. Zimbabwe-based Choppies supermarket, French retailer Carrefour and South Africa’s Game are the three outlets that have already set shop in Kenya. Choppies entered the Kenyan market slightly over a year ago after buying seven branches of a struggling local supermarket. The supermarket has since rebranded all the stores and changed the interior set up to reflect its international brand offering Kenyan consumers unique experience. On the other hand, Carrefour, the second-largest supermarket in the world, set up from scratch two outlets in high-end malls in Nairobi namely The Hub in Karen and Two Rivers Mall in Runda. The supermarket has further accepted to take up space vacated at a mall in middle-income neighborhood by struggling Kenyan retail outlet Nakumatt supermarket, therefore, expanding its reach.
Game, a South African retail outlet, also has a store in the East African nation at a mall in the capital Nairobi in middle-income suburb opened nearly two years ago. To soon join the three outlets is another South Africa’s retail giant Shoprite, which last week announced it would take space once occupied by Nakumatt at a mall in Nairobi. The entrance of the supermarkets into Kenya marks a turning point in East African nation’s retail chain business, with the foreign outlets banking on their big international names to grow their customer bases. And Kenyans have embraced the foreign supermarkets alongside the local ones, with the big players taking the battle to the home-grown outlets with good bargains. At one of the outlet of Choppies along Tom Mboya Street in the central business district, the firm’s red color and its slogan Value for Your Money stands out on the busy road. On Monday, the shop was busy with shoppers getting in and out with bags of goods that included cooked food, an addition at the outlet. Not far away from the supermarket are local ones namely Tuskys and Naivas, which have a tighter grip on the local market. “I love the new setting of Choppies supermarket because currently one can get cooked food unlike before when the other outlet Ukwala was running the shop,” said Grace Musya, an office assistant at an NGO in the capital.
The aggressive entrance of foreign supermarkets into the East African nation is happening as local outlets face turbulence that has led to closure of several branches for most of the businesses. The biggest casualty is Nakumatt, which currently is on its knees as auctioneers pile pressure on it over unpaid rent and failure to pay suppliers. The company has closed up to six of its branches in major towns across Kenya and others in the neighboring Uganda and is now banking on a deal with a rival for survival. Nakumatt, which for several years dominated Kenya’s retail market and spread to Uganda and Rwanda, has left a huge gap in the country’s sector, which the foreign supermarkets are currently scrambling to fill amid rise in development of malls. Also troubled are Tuskys, which early this year shut down two of its branches in Nairobi over failure to break even and differences with landlords, and Naivas which last week shut two branches in the capital over low sales at the locations.
In 2016, Kenya’s retail spending hit 17.5 billion U.S. dollars as the industry expanded by 13 percent, according to a recent survey by Procter & Gamble (P&G). The survey attributed rapid expansion of the retail sector to shopping dynamics, but mainly Kenyan consumers’ habit of shopping goods in bulk as opposed to when the need arises. Of the 17.5 billion dollars, supermarkets’ share was 30 percent, with 67 percent going to shops and the rest to special channels like online. Henry Wandera, an economics lecturer in Nairobi, noted that foreign supermarkets are flocking into Kenya because of three reasons: a growing middle-class whose income is on the rise, the gap being left by troubled local outlets and the real estate development, in particular malls. Malls and proposed shopping complexes currently occupy more than 470,000 square meters of land in Nairobi, according to industry data. “Kenya has in the last years seen growth in malls with anchor tenants mainly being supermarkets. Some of these malls are in high-end areas that local supermarkets may not afford the rent or may not even wish to invest there especially with the collapse of Nakumatt. This space is now being taken by the international retail chains,” he said.