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Mushrooming shopping malls in Nairobi hurting retailers

By Dominic Omondi | December 3rd 2016
By Dominic Omondi | December 3rd 2016

High number of shopping malls which are mushrooming at an alarming rate in Nairobi might be denying retailers an opportunity to develop strong customer base.

Property consultancy firm Knight Frank Kenya said that the rate at which shopping malls are being set up is too much for a population that does not yet appreciate shopping as an experience. 

Ben Woodhams, the Knight Frank Kenya Managing Director said that although the number of shopping malls per person in Nairobi is relatively low compared to such cities as Johannesburg, the growth has been “too much, too quick.”

“The retail centres that have come up in the last three to four years have happened so fast in succession that each retailer has had really time to develop a good customer base,” said Woodhams during a press briefing.

According to Woodhams, retailers have to realise that Kenyans have not yet been bitten by the shopping bug, and it would take sometime before that happens.

“You are not just persuading your shoppers to come from one shopping centre to another, some shoppers are used to shopping out of containers or used to shopping out of small dukas,” Woodhams said.

“They (shoppers) are actually changing the way they shop, not just where they shop. And this takes time,” added Woodhams.

Indeed, supermarkets in Kenya have been forced to open convenience shops to align with Kenyans’ shopping habits which include buying products from small shops or dukas.

Nairobi has in the recent past experienced an explosion of shopping malls due to an expanding middle class.

In another of its report, Knight Frank found that, except in South Africa and North Africa that have large and mature shopping centre markets, Nairobi has the largest shopping centre market in Sub-Saharan Africa.

Six-year lease cycle

Other cities with huge shopping centre markets include Luanda, Lagos, Dar es Salaam, and Maputo. Woodhams said that contrary to popular perception, Nairobi does not have too many shopping malls.

“If you look at the relationship between the amount of retail space per capita and you compare that with other cities, Kenya is not particularly high.”

The short, six-year lease has also contributed to the mushrooming of shopping malls in Nairobi. “They know they have to get in very fast because with the six-year lease cycle, if you don’t get in at the beginning it is going to be very difficult to get into that shop later,” noted Woodhams.

Asking rents for retail space remained unchanged since 2014 as shopping centre developments came into the market. The Hub Karen opened in February, while Rosslyn Riviera and Two Rivers are expected to open in January 2017.

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