The kiosk is one of the most enduring hallmarks of Kenya’s small business community. For decades, little about these tiny, makeshift structures has changed.
But now, Kiosk Holdings Ltd is hoping to upset this traditional business set-up. The company wants to turn the kiosk into a franchise opportunity in an effort to improve the customer experience and create jobs.
Shadrack Mwangi (pictured inset), 28, is one of the five directors of Kiosk Holdings. Born and raised in Nakuru, he worked in the United Arabs Emirates as a business development officer before coming back to Kenya to start the company. He spoke to Hustle about the vision behind the idea.
Why a kiosk franchise?
First, Kiosk Outlet Stores, which is under Kiosk Holdings Ltd, is an innovative retail company with a keen focus on social enterprise development. We came up with the concept because we felt there was a gap in the market and we wanted to create more value for customers.
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We’re relying on research done by the Oxford Business Group that found the retail industry’s penetration in Kenya at 18 per cent, which leaves an 82 per cent gap that can be exploited, with an estimated market value of Sh17 billion.
Secondly, going to the kiosk was our main way of shopping, until recently when superstores came into the market. However, these superstores tend to be located in major towns.
So we thought of coming up with a social entrepreneurship programme that would revolutionise the kiosk model and allow the public to set up shop in areas where the retail need is greatest.
We enable Kenyans to own a kiosk unit under our management. The units come fully stocked and are replenished by Kiosk Holdings Ltd.
How did you get started?
We first raised Sh2 million in start-up capital, and then sought authority from the Nakuru County government to begin our operations.
We then fabricated the entire kiosk unit from scratch to not only get a shopper’s interest, but also create an ambient shopping experience. We didn’t want the conventional model where a kiosk has poor visibility of products and hygiene is not a factor.
We launched our first unit last year, and are targetting setting up 300 kiosks over the next three years.
The challenges so far?
Our biggest challenge has been dealing with the fluctuating cost of building materials, which means we initially had to adjust the cost of our units from time to time.
However, we’ve now worked out a cost of Sh650,000, which includes Government levies, insurance, CCTV installation and stock.
How can interested franchisees get a unit?
We require those interested to pick a form from any of our outlets, fill it out and sign a contract with our lawyers as they hand over their cheque.
We take care of location identification, store setup and equipment installation. We have three different payment plans and packages, with detailed information available on our website, kioskoutlets.co.ke.
What benefits do franchisees get?
We supply the unit with stock at a wholesale price, which means kiosk investors get to keep the difference between this and the retail price. Most of our clients make between Sh30,000 and Sh40,000 a month, so in a year, most of them will have got their investment back.
We also allow them to get 5 per cent of stock from local suppliers, so the profits on this are their own.
Further, we’ve included a 32-inch screen display in our kiosks where we advertise local businesses. We share the earnings from this revenue stream with the investors at a pre-negotiated rate.
The franchisees also go through a certified training programme at the start and we provide them with a franchise representative and field consultants to support them along the away. Through our support, investors will run their stores more efficiently and save time on ordering stock.
What has the reception to the kiosks been like?
The public is very excited about this new project because we are creating jobs for people by offering new investment opportunities.
Our clients are people with that Sh500,000 in the bank who don’t know where to invest it or how to go about starting a business. We bring a complete unit, and offer additional training on bookkeeping and basic business management skills.
We are currently only in Nakuru, but are planning to expand to Nairobi and Mombasa, as well as neighbouring counties. So far, we’ve franchised 10 units and have a client list of more than 70 clients.
We’re also in talks with the county government of Nakuru to create 3,000 jobs in the next year by setting up three kiosks per ward.
How does your company make money?
We make money from the difference between the manufacturing and wholesale price – remember, 95 per cent of the kiosk’s products come from us. We also make money through the advertisements we get on our screens.
What if a franchisee wants to opt out?
The kiosk unit remains the property of our company, Kiosk Holdings. And the agreement made between an investor and the company is that in case of a contract termination, a franchise fee is refunded to the owner.
What are your future plans?
We are looking to partner with manufacturing companies this year because they play a significant role in our structure.
We’re also planning to launch a card that will allow users to transact using cryptocurrency. We’re testing the technology in partnership with a German company, and plan to launch it by mid-February. The card will also act as a loyalty card.