2018 is right up and besides New Year’s resolutions you will probably be listing new commercial ventures to exploit. Kenya’s retail industry is one of those you should consider because it presents the following opportunities for you:
1. Just open a retail shop
You start with the simple ideas, no? Despite Kenya being ranked as having the second most formalized retail industry in Sub-Saharan Africa, it’s still only between 30-40%. There remains opportunity, first, because Kenya is still only 30% urbanized and population plus income is growing. Can’t wait for people to move to the cities? There is need to reach towns beyond Nairobi and Mombasa, need to reach rural areas and opportunity in reducing distance to retail shops for us common mwananchis.
2. Fruits and Vegetables
Sale of Fruits and vegetables in Kenya’s retail industry remains highly informal. We appreciate the convenience Mama Mboga presents us but the sector remains wanting. You can introduce a consolidated model and enjoy economies of scale; perhaps shift control from the wholesalers to your retail chain. There are also gaps in assuring quality at a fair price and availing Kenyans’ favorite fruits and vegetables all year round. Maybe you can preserve these by processing them.
3. One Product store
One of the reasons dukas struggle when supermarket chains come to town is because they largely try to compete on offering the same service. They both try to sell us variety but in that there is only one winner. Chemists (as we call them) are interesting because they sell one line of product and seem to complain less about supermarkets. Retailing only one line of product is a credible idea. This avenue can also be exploited by manufacturers who have waited long enough for a supply contract with a major retailer. When you specialize you build a reputation. This store sells only pencils, everything is possible.
4. Discount store
This kind of shop or supermarket would sell only products that target the more price sensitive segments of the market. Let’s admit it, we are all price sensitive. The major retailers in Kenya have a great range for both the high end and low end markets but it’s difficult to replicate this in the estates since you simply won’t find enough floor space. Sourcing only cheaper products can be an innovative way to make do with this constraint.
It appears that small businesses in Kenya are opting to sell online as a way to fight back against new challenges. When you think about it, we skipped a proliferation of banking halls so there is no reason to think we may not skip brick and mortar formal retail entirely. Kenya’s e-commerce still has challenges with payment solutions and quick delivery. You can’t blame them since we rely on landmarks in-place of precise addresses. Just as there are logistics companies who have bypassed this hurdle through last-mile delivery, it’s possible to have more localized e-commerce service.
How do you expand a duka? Americans, better than anyone else, answered this question with franchising. But it’s not common in Kenya and the failure of Kenchic doesn’t do much to promote this model. Still, it can be done. There are thousands of shops struggling to break-even, to market themselves or get favorable terms with suppliers. Your very own franchise is one of the solutions to these problems.
CONTINUE READING: BUSINESS PLAN FOR A RETAIL BUSINESS IN KENYA1