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Expanding retail space attracts global brands

REAL ESTATE
By Peter Muiruri | January 19th 2017
Kamlesh Nuckchady, General Manager of French chain of beauty and health retail stores Madora. 

Recent reports have indicated that Nairobi is becoming saturated with shopping malls, mainly in affluent areas. The Hub in Karen, Thika Road Mall and Garden City Mall both on the Thika Superhighway, Galleria in Karen, The Village Market in Gigiri and The Junction on Ngong Road are some of the big names in this sector.

Towering among them all is Two Rivers off the Northern Bypass near Ruaka. While the influx of these malls may herald reduced earnings for developers as they scramble for occupiers, they have become focal points for global brands that are redefining lifestyles in the city.

A few years ago, only a few well travelled Kenyans knew of brands like Carrefour, the French retailer; or Turkish luxury fashion line LC Wakiki.

What about Madora, the French chain of beauty and health retail stores set to open in a number of top malls in the city? These brands are slowly becoming household names in Kenya. According to proprietors, there are good reasons why these global brands can only set shop in particular locations in the city.

Kamlesh Nuckchady, Madora’s general manager in Kenya, says there are certain minimum requirements that must be met before international luxury brands can set shop in a particular place.

While every other business looks to open a store hoping that prospective customers will notice and come flocking in, Nuckchady says brand presentation is key to a firm like Madora that seeks to attract high-end clientele, some of whom have a choice to shop abroad.

“You cannot set up in any corner of the city. For example, we target middle to high-end clients. Our items are not cheap either and clients will expect that we choose locations that are at par with their status,” says Nuckchady.

The company’s shops are currently in The Hub and Westgate Shopping Mall in Westlands. It intends to open another shop in Two Rivers on Valentine’s Day.

According to Forbes magazines, Africa will see 179 new malls in the next two years where more global brands will find more space and better infrastructure. It adds that the continent is home to 45 million households having what it terms as “discretionary income” as well as 160,000 millionaires.

With the new malls attracting brands that were only known through cable television, Forbes says the African market can no longer be viewed as a secondary one.

Young population

Its young population in comparison to the rest of the world means these malls are here for the long haul, it notes. “Africa’s population is set to grow to 2.3 billion by 2050. In contrast to the rest of the world, however, its booming population is getting younger. African millennials are changing their consumer spending patterns, from markets to malls, where they can eat, drink and socialise as well as shop,” says Forbes.

According to Nuckchady, however, upcoming malls should make sure that the workmanship in the new edifices measures up to international standards.

He says there are times when tenants are forced to redo some of the works in the stores “since customers know how the shop of a top brand should look”.

Oxford Business Group says Nairobi saw a tripling of retail space in 2015 going into 2016 with close to 170,000 square metres of new leasable area and second only to South Africa.

“In comparison to other African markets, Kenya’s formal retail penetration rate — which ranges from 30 per cent to 40 per cent, according to analysts –—is the second highest in sub-Saharan Africa. 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, Africa’s largest economy,” says the OBG report.

Though Nuckchady says the number of mega retail outlets seems to be too big for the country, this will give customers a wide range of choices for their preferred goods.

“The new malls are attracting people who would ordinarily fly out and shop at Dubai Mall. We have clients who routinely visit us since they are assured that the quality of the products is at par with any other international store,” he says.

With more mega retail projects in the offing, a scramble for that top dollar is just beginning.

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