Roundup: Kenya's retail sector growing fast, mobile commerce booming

Kenya's retail sector grew by 13 percent in 2016 and is rapidly expanding and diversifying, which has encouraged more investments and changed the shopping habits of Kenyans, according to a report released on Tuesday.

The Kenyan Retail Sector Performance Report noted that the supermarket experienced expansion largely due to the shopping dynamics in that channel.

"There is a growing tendency of most consumers to shop for goods in bulk as opposed to shopping for individual items when the need arises," said the report conducted by U.S.-based Fast Moving Consuming Goods firm Protocol & Gamble (P&G).

M-commerce, where Kenyans use mobile payment to shop, has tripled in the past two years, making it the fastest growing sector in retail.

Traditional retail still dominates the market although supermarkets and malls, a distant second, are catching up as the choice shopping destination for Kenyans.

Another driver of the modern retail growth sector is the consistent availability of quality brands and better prices for bulk purchases.

The report indicated that supermarkets prefer to stock branded products due to their association with quality.

P&G Managing Director Vivek Sunder said that the Kenyan consumer and retail landscape is one of the most advanced in the region with high penetration in many product categories.

"Kenya was reclassified as a middle-income economy in 2015 and this is clearly being evidenced by the shopping habits and rising consumerism. Although traditional retail stores still dominate the FMCG sector, supermarkets and hypermarkets are catching up fast," Sunder said.

Malls and proposed shopping complexes currently occupy more than 470,000 square meters of land including residential areas and attract more retailers who would otherwise not travel to the city to shop.

The data showed that over half of the country's urban dwellers now shop in supermarkets regularly.

The research noted that in future, proximity will be one of the big drivers for supermarkets as a channel gaining importance with the retail sector, while for the next five to ten years, traditional small shops will continue to be the dominant retail channel.

The P&G report indicates that Kenyans spend about 60 percent of their income on food and beverages while another 23 percent is spent on personal and household care products.

According to the report, E-commerce and m-commerce are fueling the expansion of the non-store retail sector.

"The key drivers of these channels include better technological infrastructure coupled with internet penetration as well as smart payment methods," says the report. Enditem