Rising consumer spend powers Kenya's shopping malls surge

The sharp rise in the number of shopping malls has placed Kenya’s retail sector on the second spot in Sub-Saharan Africa, after South Africa.

Thursday February 18 2016

Interior Cabinet Secretary Joseph Nkaissery buys a jacket at a shop at the Westgate Mall in Nairobi on December 21, 2105. PHOTO | EVANS HABIL | NATION MEDIA GROUP

Interior Cabinet Secretary Joseph Nkaissery buys a jacket at a shop at the Westgate Mall in Nairobi on December 21, 2105. PHOTO | EVANS HABIL | NATION MEDIA GROUP 

A solid build up of shopping malls in the last ten years has placed Kenya’s retail sector one notch to the top of Africa's retail sector.

Kenya's retail penetration now ranges from 30 per cent to 40 per cent, though significantly behind South Africa at 60 per cent, thanks to a more than a decade long steady economic growth.

Oxford Business Group says that the average value of consumer spending has risen by as much as 67 per cent in the last five years, making Kenya the fastest growing retail market.

According to research conducted by the Oxford Business Group (OBG), malls have presented a new level of urbanization which together with increase in disposable income has fuelled the growth of the retail sector.

Further, they have provided convenience to shoppers who previously travelled long distances to access large shopping outlets.

“Over the past five years, the average value of consumer spending has risen led by large blue-chip domestic companies in a number of segments which will continue to expand and diversify as more international brands enter the market place,” said OBG in a statement.

FASTEST GROWING

Last week, real estate consultancy Knight Frank released a report indicating that Nairobi was among top five cities in Sub-Saharan Africa with the largest shopping centre development outside South Africa.

The Shop Africa 2016 report said that Nairobi has the largest mall development with around 470,000 square metres of shopping centre space in the pipeline.

“The developers of Nairobi’s modern malls are building new city hubs, where people can live, work, shop and play, all on the same site, in locations near key transport links,” said Knight Frank Kenya Retail Portfolio Manager Ashmi Shah.

OBG expects the Kenyan retail sector’s positive growth to continue over the coming two years supported by expansion of retail hubs into rural areas and cities outside Nairobi.

This will be accelerated by devolution which has led to higher incomes in the counties and significant investor interest in developing retail centres in these areas.

While OBG predicts growth of malls in the main urban centres such as Kisumu, Nairobi and Mombasa will continue, it also expects expansion of commuter townships like Ruaka, Syokimau, Kiambu and Kitengela to offer additional opportunities to retailers.

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