South Africa luxury fashion houses will next year open shop in Kenya, offering consumers more choices and raising competition in the segment now dominated by Deacons.
Actis, a private equity fund, has said that Edgars and Foschini are some of the retailers that have booked space in its Sh12.6 billion real estate development on the Nairobi’s Thika Superhighway that is billed as Kenya’s biggest mall at 50,000 square metres.
“The continued growth of the middle class provides opportunities for consumer goods and services providers and fashion giants like Edgars and Foschini have booked space with others,” said Michael Turner, regional managing director of Actis.
“This makes East Africa one of the most attractive destinations for investors in real estate and consumer goods to build retail space and establish their presence,” Mr Turner said in an interview with the Business Daily.
South Africa retail giant Massmart has also confirmed booking at Garden City in what intensifies competition in a market dominated by locals Tuskys, Nakumatt, Uchumi and Naivas.
Foschini has 200 stores spread across Southern Africa dealing in jewellery, footware, handbags and clothing. Its revenues in 2011 stood at Sh145 billion.
Edgars has more than 100 outlets across South Africa, Botswana, Namibia, Swaziland, Lesotho and Namibia. It offers luxury clothing, footwear, textiles and accessories. Its sales hit about Sh110 billion in 2011.
Both firms are looking to spread reach outside Southern Africa with Kenya acting as their launch pad for eastern Africa.
Kenya has witnessed multi-billion shilling shopping malls spring up as real estate investors and retailers seek to tap into a growing middle class with growing disposable incomes and a limited choice of leisure activities.
The malls have food courts, cinemas and luxury clothing.
The new entrants will offer South Africa a piece of Kenya’s retail market, a presence that diminished after the exit of retail chain Metro Cash and Carry in 2005.
Companies from South Africa have found it difficult to crack the Kenyan market, prompting the exit of big brands like cinema company Nu Metro, fast foods giant Nandos, household goods outlet Supreme Furnitures and magazines publisher Media24, a subsidiary of the Johannesburg Stock Exchange (JSE)-listed Naspers.
However, South Africa’s Truworths, Woolworths and Mr Price have been successful, thanks to a franchise agreement with local retailer Deacons, which will now face new competition for control of Kenya’s market.
But Woolworths has spanned off from Deacons to form a joint venture dubbed Woolworth’s Kenya Proprietary Limited, which will be owned 51 per cent by the South Africans and 49 per cent by Deacons Kenya.
Woolworths is dropping joint ventures to launch direct operations outside South Africa.