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Market profiling: Why some businesses treat locals poorly

A business plan is displayed in chess. [Getty Images]

For the last few weeks, social media has been awash with claims of racism experienced by Kenyans on some business premises.

Videos and testimonies of nasty experiences have been submitted to the internet jury, with some agreeing as others disagree.

The Alchemist, a renowned entertainment hub and one of the establishments implicated in these claims was forced to suspend its operations to allow for investigations to ascertain whether there was any discrimination.

Kilimanjaro, a popular restaurant in Nairobi’s Central Business District (CBD) known for its Swahili dishes, was at some point forced to offer an explanation after a lady referred to as Gladly Nelly on social media detailed how she was discriminated upon.

How true these claims of discrimination are, remains a matter of investigation by authorities.

However, they have elicited a debate on the business strategies of some enterprises which seem to target or prefer persons of a particular class, race, or ethnicity.

It may be a case of putting your money where your mouth is, but at the end of the day, is it worth it? And does ethnic targeting in business have a place in today’s market?

Dr Anthony Odek, a sociologist and lecturer at St Paul’s University says businesses have aspects of culture.

In this context, businesses in the country are either targeting locals or expatriates. These categories can be further classified into high and low context cultures.

“It is assumed that most of the foreigners have a certain culture in terms of spending and doing business,” he told Financial Standard. “So if somebody is an expatriate, he or she is likely to come with some value in terms of money and behaviour.”

This behaviour will be seen in their spending choices, for example, ordering fine wine and elaborate cuisine in restaurants.

“Rather than have many people who will be buying products at a low cost, they (businesses) would rather go for few people who, even if you have twenty of them, they will be going for expensive wine and unique meals,” said Dr Odek.

This in turn sustains the business.

He noted that while this keeps the business going, it raises the question of class. He says high-class individuals avoid crowded establishments. 

“Some companies (businesses) would rather reduce the number of people coming to their place to attract the upper class. In places like Loresho or Lavington, there are hotels that sell specific cuisine. Those who frequent are a select set of individuals and the security is very tight,” he said.

In terms of value and businesses, he admits that these categories of high-end clientele do provide this.

However, it might be difficult for some businesses to openly say they want a specific type of customer -probably for fear of backlash.

He says some businesses may choose to specialise in Chinese or Japanese cuisine to attract particular patrons who will spend more.

“But the food will also be available for people who are not Chinese but prefer it. They will not be restricted from entering those places. Such people may not even care whether the place is written Chinese or Japan,” said Dr Odek.

Patrick Wameyo, a business strategy, credit risk, corporate, investment and banking consultant opines that while segregation did have its place in the history of business, such cannot stand in the 21st century.

“The moment you segregate your clientele on basis of race and not income level, you are already at war with people with a contrary opinion,” said Wameyo.

Target market

But what if the business itself prefers to target a particular category of persons as its customers? For example, at the Kenyan Coast, Europeans are regarded highly as tourists compared to locals.

Wameyo says there is no problem if such a business has that preference. A problem will result if that preference is used to segregate other customers who are not their target market.

Ethnicity however does have its place in business considering how Chinese, Italian or Japanese restaurants are thriving in the country, and globally.

Kenyans have also opened up restaurants abroad where they do the same.

In Nairobi, restaurants like K’Osewe Ranalo Foods have excelled because of this business acumen. As such, Wameyo says, no one should be stopped from eating at a place like K’Osewe just because they are not the targeted market.

Research published in February 2022 by the Harvard Business School confirms that race does determine how customers are treated.

“Preliminary results from a series of studies of hotel concierge interactions show that front-line service workers often treat customers inequitably, providing better assistance to white customers than Black and Asian customers,” reads the research conducted by Alexandra Feldberg (Assistant Professor Harvard Business School) and Tami Kim (Assistant Professor University of Virginia-Darden).

In the case of The Alchemist, a video shared online allegedly showed two queues: one for white and Asian clients and the other for black Africans.

A guard is even seen allegedly redirecting a black client to another line.

A statement released later by the establishment said it was closing after consultation with the Nairobi County Government.

The closure was allowing a review of operations if there has been a policy of discrimination.

“Interviews and footage will be reviewed of the past events - both at the gate and inside the establishment,” read the statement.

For Kilimanjaro Restaurant, the statement from the management “condemned the act of racism and supporting injustice against anyone based on the colour of their skin, social status or religion.”

“... And also urge all of us to see humanity beyond race,” the statement added.