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Harsh times big boost for ‘kadogo’ economy in city

FINANCIAL STANDARD
By Akello Odenyo | May 10th 2017
By Akello Odenyo | May 10th 2017
FINANCIAL STANDARD
A cabbage seller awaits for customers. Vegetables have become very expensive in various estates in Nairobi. (Photo: Joseph Muchiri/Standard)

Retailers in small kiosks are making a killing by selling small quantities of pricey commodities which appear out of reach for ‘Wanjiku’.

Even though they end up spending more on basic items, low income earners are more comfortable buying items in lower quantities.

Retailers who attempt to accommodate the needs of the buyers, package these basic goods into smaller portions that can be afforded by most buyers.

In one shop in Embakasi, 50 grammes sachets of sugar being sold at Sh15 each conspicuously dangle on the display counter. There is also another display of tiny bundles of maize flour, cooking fat and coffee.

“Since the sudden upsurge in prices of basic foodstuffs, I package the smallest quantity of most of the items. Surprisingly, the sales are really high, despite low returns,” says the shop’s owner Patrick Wambua.

He continues: “People rarely ask for quarters nowadays, it has been replaced by a sudden demand for a half of the quarter. So I sell an eighth of a kilo for most of the items to accommodate the buying ability of the low income earners.”

Small quantities

Ordinarily, one would expect that increase in sales would consequently result in increased profits.

However, Mr Wambua explained that most of his customers opt to buy very small quantities of a variety of products in order to fit everything into their slim budgets. “Most of my customers earn less than Sh500 day. They have to plan carefully to purchase everything they need, with the little that they have,” he says.

Although Wambua bemoans the meagre profits, he says that he understands the needs of a low earning family even as the cost of living continues to skyrocket.

“They are unable to afford the large quantities offered in supermarkets. Some want a place they can bargain and buy on credit, which can only be offered by shops and open markets,” he says.

Metropolitan discovered that most small-scale shoppers buy smaller quantities oblivious of the fact that in the end, they spend more.

 While one would spend about Sh185 on a kilogramme of sugar for instance, they spend Sh300 for the same amount buying in 50 grammes sachet of Sh15.

Better deals

Similarly, one spends Sh80 more buying a quarter kilogramme of maize flour at Sh65, which costs between Sh160 and Sh180.

Most buyers, however, get better deals buying foods from groceries shop as compared to the supermarkets despite the rise in prices.

“The price of Green peas that has gone up from Sh30 to Sh70 a glass is still better than supermarkets where one has to part with Sh120 to get the same quantity,” said Esther Gakenia, a vegetable vendor in Pipeline.

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