Nairobi, KENYA: The retail sector in Kenya is rapidly expanding and diversifying, which has encouraged more investment and changed the shopping habits of Kenyans, a new survey by Procter & Gamble (P&G) has revealed.
M-commerce, where Kenyans use mobile payment to shop, has tripled in the past two years, making it the fastest growing sector in retail.
Traditional retail still dominates the market although supermarkets and malls, a distant second, are catching up as the choice shopping destination for Kenyans.
Speaking on Tuesday in Nairobi, P&G Managing Director Vivek Sunder said that the Kenyan consumer and retail landscape is one of the most advanced in the region with high penetration in many product categories.
“Kenya was reclassified as a middle-income economy in 2015 and this is clearly being evidenced by the shopping habits and rising consumerism. Although traditional retail stores still dominate the FMCG sector, supermarkets and hypermarkets are catching up fast,” he said.
Malls and proposed shopping complexes currently occupy more than 470,000 square meters of land including residential areas and attracted more retailers who would otherwise not travel to the city to shop.
P&G’s Fast Moving Consumer Goods (FMCG) data also reveal that Kenyans spend the bulk of their income (about 60%)on food and beverages a further 23 percent is spent on personal and household care products.
Laundry is the biggest and most developed category within household care segment, with 90 percent of Kenyans using bar soap while 85 percent reporting using powder detergents.
Many Kenyans who use powder detergents said the availability of the products in smaller sachets at affordable rate was the biggest reason for their shift from solely using bar soap.
Over 200,000 Kenyans own a washing machine while more and more Kenyans are opting to take their clothes to local laundromats instead of hiring in-house washing personnel.
Euromonitor projections show that total retail is expected to grow by 84 per cent to $ 16 Billion in 2020 from the current USD 9 billion (2015).
Supermarkets have become permanent fixtures in the rapidly growing number of malls in the country, with the names of tenant supermarket stores sometimes substituting some mall names.
Currently over half of urban dwellers now shop in supermarkets (modern retail) regularly. This is driven by the fact that supermarkets stock branded products that are well known and well-known brands are generally perceived to be quality.
E-commerce is a growing segment within the retail sector however, many Kenyans are still reluctant to shop at online stores despite the convenience and easy access to great deals.
Today less than 1 percent of Kenyan retail sales goes through e-commerce and this will likely hold for the foreseeable future.
According to Mr. Vivek, operational and logistical challenges are the main obstacles for the growth of e-commerce and more shoppers will feel comfortable buying items from an online store once the logistical issues of time, location are fixed.
While overall retail in Kenya grew by 13 percent in 2016, modern retail (supermarkets) grew by 18 percent, indicating the increasing importance of supermarkets as a retail channel.
Supermarkets contributed 30 percent of the total FMCG retail sales for the 2015/16 financial year, and projections show that this sector will keep growing as consumers opt to shop in bulk instead of single items.