Tiny stalls swallowing big shops

In August 2000, fire swept through the Freemark Centre in Nairobi and businesses worth millions of shillings went up in smoke

Monday December 22 2008

Stalls like this one have become a common

Stalls like this one have become a common feature in Nairobi and landlords are cashing in on the trend. Photo / Anthony Kamau 

By JOSEPH BONYO

In August 2000, when a huge fire swept through the Freemark Centre in Nairobi just after traders had closed shop for the day, businesses worth millions of shillings went up in smoke — and with it the popularity of stalls.

Housing over 300 stalls stocking various merchandise, it was among the first building to embrace stalls as away of maximising rent and space.

Today, over nearly eight years later, the industry is vibrant again with stretches of buildings on Moi Avenue and Tom Mboya streets littered with the stalls.

The trend has filtered into the high street areas as well. As more traders come up every day to take up the mostly five-by-five foot stalls, so do others exit after finding it hard to break even in the highly competitive market.

But one thing they are succeeding at is edging out the big shops in the central business district as landlords seek to cash in on the stalls boom.

“Previously if one wanted cloths, second-hand or imported from countries like Dubai, it was either from Gikomba or Garissa Lodge in Eastleigh,” says Basil Otieno, a stall trader at the Jamia Shopping Mall.

“But when the centre was established, most people could walk in at their convenience during working hours and get what they want.”

Previous wholesale shops within the city centre are now converting into stalls as demand from low-capital businesses rises. Property owners are also being lured into the business, thanks to the princely sum that traders part with to rent a stall.

“Depending on the location of the stall, the amount you pay for it will vary from the goodwill and monthly rent,” explains Mr Otieno.

The location of the stall within the exhibitions, as they are popularly known, also dictates the price. Those in the know say that because the entrances at either ends attract more traffic, they are charged higher than those right inside the hall or upstairs.

Property experts are linking this phenomenon to the faster and higher return on investment that stalls guarantee.

“Unlike just a building rented by one or two shops and offices, if the place is converted into stalls, the owner is bound get higher returns on it.

“There are issues that are involved and all contribute to the massive profits they reap,” says Oliver Odhiambo, the editor of a property magazine, Homes Kenya.

It is said landlords could be earning nearly double what they charge single users. Conditions set up before one can successfully rent a business premise are also another factor that building owners are capitalising on.

To get a stall, one has to pay a fee known as goodwill, ranging from Sh250 000 to about Sh1 million – again depending on location. Would-be tenants are also required to part with a two months’ rent deposit upfront.

“This provides more than 100 per cent return on investments for the property owners in addition to the monthly rents they would be collecting from the tenants,” explains Mr Odhiambo.

But it is also the convenience of these stalls and their demand that are slowly sounding a death knell to shops, popular with Indian businessmen.

The ease of accessing credit facilities from many financial institutions has led to the expansion of the stalls around town. Existing businesses in this turf continue to get loans to expand, thereby looking for new areas to position their merchandise other than the crowded city centre.

Traders are today stocking goods from South Africa and Dubai in these stalls, some hardly bigger than a kitchenette. However, at the end of the day, they are able to sell and pay rent as well as have their profits safe in hand.

Success in this business is not for the faint-hearted. Those who have been in the business for long say success has been brought about by good networking.

“You do not expect just to start a business and let it do well because others are doing well. You have to create networks of customers and ensure that you satisfy their demands,” says Mr James Gitonga, who has been in the trade for the last four years.

So tough is the business that to survive and ensure constant flow of shoppers’ traffic, most have established credit facilities for their reliable customers. This ensures that the clients pay when they can.

Originally, the stalls began as stores for clothes and other accessories that gave shoppers the conveniences associated with malls. However, they have branched into mobile phone accessories and entertainment merchants.

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