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XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 
Foreign retailers take over Kenyan high-end market

NAIROBI (Xinhua) -- Foreign supermarkets in Kenya have taken over the high-end market after troubled Kenyan retailers closed their branches at various exclusive malls.

The foreigners completed the “coup” last week after French retailer Carrefour took up space at Sarit Centre in Westlands, an expat district, surrendered by financially troubled supermarket Uchumi.

Uchumi, a home-grown retailer, had occupied space at the mall for over 20 years serving high income customers that included diplomats and Kenyans of high-ranking.

The branch is the fifth to be opened by the France-based supermarket targeting high income earners in upper income residential areas.

Others include branches at The Hub in Karen, Two Rivers Mall along Limuru Road, Thika Road Mall along Thika Superhighway and the Junction Mall along Ngong Road, all which are areas in the capital Nairobi where the high and middle-income earners flock.

The other foreign retailers in the East African nation are South African supermarkets the Game, and Shoprite and Zimbabwean Choppies.

Shoprite has taken space at Garden City and Westgate malls, which Nakumatt once occupied for several years.

On the other hand, the Game is also housed at Garden City and at the Waterfront Mall in Karen, an exclusive suburb.

While Shoprite, Carrefour and Game target high income earners, Choppies is fighting it out with local retailers that include Tuskys (the biggest with 64 branches), Naivas and Eastmatt for the middle and lower segment markets.

Prices of goods at the high-end supermarkets are usually higher than those at the other levels as this is a niche market, where shoppers look for among other things quality and class.

Analysts noted that the fact that the foreigners have taken over the highly lucrative market and continue to expand illustrates a fast-growing sector.

“The expansion activities by retailers indicate a healthy retail sector, which is supported by positive demographics evidenced by high population growth rate of 2.6 percent against global average of 1.2 percent that has led to sustained demand,” Cytonn, a Nairobi-based investment firm, said in a note Monday.

“Rapid growth of infrastructure making more areas accessible to investors and Kenya’s growing position as a regional and continental hub hence witnessing an increase in multinationals operating in the county, and e-commerce as seen through the increased digitization of cash systems and a rise in mobile money and access to internet, have also boosted East African nation’s retail sector,” said Cytonn.

Ernest Manuyo, a business management lecturer in Nairobi, noted that having lost the niche high-end market, Kenyan local retailers may find it hard to reclaim it.

He added that the local chains must institute better financial and supply chain management processes, and strong corporate governance frameworks to evade troubles Nakumatt and Uchumi are struggling with.

           

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