Kenya has second most developed retail sector in Africa

Kenya has been ranked as having the second most developed retail sector in Africa as increased urbanisation fuels investment of billions of shillings worth of modern shopping malls.

According to London-based consultancy Oxford Business Group, Kenya is second to South Africa and doubles Nigeria, Africa’s largest economy, in the level of development of its formal retail shopping system.

“2015 saw a near tripling of Nairobi’s modern retail space, with close to 170,000 square metres of new leasable area coming on-line,” reads the report in part. “In comparison to other African markets, Kenya’s formal retail penetration rate, which ranges from 30 per cent to 40 per cent, is the second highest in Sub-Saharan Africa and this places the country at roughly half the level of South Africa, where formal retail is estimated to stand at 60 per cent of overall activity, but twice that of Nigeria.”

The OBG reports that the growth in retail malls has been fuelled by demand as the expenditure level for the average Kenyan consumer has risen by as much as 67 per cent in recent years, making Kenya Africa’s fastest-growing retail market.

The increased demand has also fuelled interest from external players, with players like South Africa’s Game and France’s Carrefour that have taken prominent tenancy at the Garden City and Two Rivers Malls respectively.

Botswana’s retail chain Choppies Supermarkets last year announced intent to acquire the assets and operations of one of Kenya’s largest retail stores Ukwala Supermarket with the deal set to proceed this year with the settlement of a tax dispute with the Kenya Revenue Authority.

Last year, rating firm Nielsen undertook a study into consumer spending patterns and the retail industry in five Sub-Saharan countries including Kenya. Kenya was ranked Africa’s second biggest formalised retail economy after South Africa with 41 per cent of Kenyan shoppers surveyed reporting to frequent formal retail outlets citing variety and price comparison as influencing factors.

Eldoret, Nakuru, Kiambu, Thika and Naivasha have been pin-pointed as the next growth frontier in the retail industry.