Changing consumer bevaviour slows down retail expansion
Real Estate
By
Graham Kajilwa
| Feb 15, 2024
Changing consumer behaviour has been linked to decreased expansion of retail outlets in the country. This is documented in the latest report by property consultant and advisory firm Knight Frank.
Carrefour, Quickmart and Naivas are some of the major retailers that have been documented in the report as having opened new outlets.
The firm notes that traditionally, retailers primarily focused their outlets within well-established malls, predominantly situated in affluent neighbourhoods, distanced from the majority of urban residents.
But with the evolving consumer spending behaviours, marked by a preference for convenience, have compelled retailers to establish their presence in residential areas.
This shift, Knight Frank adds, coupled with reduced disposable incomes and the surge in e-commerce, is prompting retailers to recalibrate their customer outreach strategies.
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“Consequently, there has been a discernible decrease in both market expansions and new entrants compared to previous years, as developers align their efforts with a more conservative approach, characterised by fewer speculative developments,” says Knight Frank in the report.
The firm cites that Nairobi boasts a population of about five million people and is home to many local and international retailers.
However, Kenya’s formal retail penetration is less than 30 per cent of the market.
“Nevertheless, Nairobi’s suburbs are home to several prime retail centres which demand a monthly prime rent ranging from Sh250 per square feet in the uppermost floors to Sh800 per square feet on the ground floor,” the Kenya Market Update report for the second half of 2023 reads.
“Like the office market, landlords are also preferring dollar rents with limited success as all the retailers earn Kenya shilling.”
New stores
Over the period, Quickmart opened its 59th outlet along Outering Road while Carrefour opened two new stores to take their total tally to 22 – one at Nairobi’s Central Business District and the other in the coast region at Promenade Mall.
The country’s largest supermarket chain, Naivas, exceeded the 100 outlets by opening six stores – at Malindi, Kisii, Waiyaki Way Shell petrol station, Sabasaba in Mombasa, King’ara Road in Lavington, and Cathedral Mall in Kakamega.
Naivas now has 101 outlets.
Regrettably, the period saw the closure of South Africa’s Builders Warehouse at Waterfront Karen, which has been attributed to the challenging economic conditions and the limited adoption of the Do-It-Yourself (DIY) culture in Kenya.
The closure paved the way for China Square, a budget-friendly retail chain offering diverse consumer goods such as electronics, furniture, DIY hardware, kitchenware, and stationery, to open its second store there.
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