Markets & Finance

Supermarkets win more shoppers as kiosks lose out

uchumi

Uchumi Jipange along Thika Road, Nairobi. Leading retail chains in the country have been expanding into residential areas further away from cities. Photo/File

The ground is shifting against kiosks in residential areas where supermarkets are opening large and well-stocked stores, a recent survey on shopping trends in Kenya has shown.

The Reja Shopping Survey by Consumer Insight showed that the slow death of kiosks was also being driven by consumers changing how frequently they shop.

The survey conducted in the second half of 2012 shows that kiosks — for years the preferred choice for many Kenyans — were losing the battle for survival to supermarkets that have set up hundreds of branches across the country.

Two in every three of the 1,305 shoppers sampled admitted to regular shopping (at least once a week) at a supermarket, not a “duka”, because of convenience (86 per cent), pricing (43 per cent) and good facilities (22 per cent).

“Kenyans are, therefore, exploiting this accessibility and convenience to shop for consumables such as bread, milk and groceries on a weekly basis,” said Consumer Insight managing director Ndirangu wa Maina.

The survey shows that 55 per cent of shoppers now buy their necessities weekly as opposed to 16 per cent in 2011. Those who shop on daily, the group that buys provisions from kiosks, dropped to 11 per cent from the previous year’s 13 per cent.

Kenyans who do their shopping between two and three times a month remained unchanged at 22 per cent while monthly shoppers dropped from 15 per cent eight per cent, reflecting constrained incomes and the search for fresher products.

The proportion of people who shop less than once a month remained unchanged at four per cent. Shoppers from supermarkets in Mombasa, Machakos, Nairobi, Nyeri, Nakuru, Eldoret and Kisumu were interviewed for the study twice last year.

“The trend towards weekly shopping is a factor of the personal economic insecurities amongst Kenyans. With the high cost of living, many people are weary of emptying their barrels in one round of shopping and prefer to space it out,” said Uchumi Supermarkets chief executive officer Jonathan Ciano.

The leading retail chains in the country – Nakumatt, Tuskys, Uchumi, Ukwala and Naivas – have been expanding into residential areas further away from cities.
“Many urban residential areas have at least a branch nearby since most leading retail firms have expanded further away from cities,” said Mr Maina.

The Thika superhighway is the latest example of the exodus with Nakumatt and Tuskys set to open new branches in coming months along the busy road where three malls are being built.

READ: Supermarkets take competition to Thika superhighway

Uchumi is also planning to revamp its existing Ruaraka branch dubbed ‘Jipange’ to match the rivals’ bigger and modern stores.

Nakumatt CEO Atul Shah said the Roysambu branch set to be opened by March would serve a clientele base arising from the “fast growing residential areas along the highway”.

Jonathan Ciano, the Uchumi supermarket’s chief executive, said that mid-sized supermarkets coming up in estates posed a greater threat to kiosks than established retail chains.

Kiosks, he added, have the proverbial nine lives since they have the benefit of late-night convenience, ability to operate cheaply in low-population areas and ease of moving.

“The risk does exist but kiosks have several factors that play to their advantage. Demographics of a residential area and its economic viability to big retail firms are key determinants of their survival,” said Mr Ciano.

The Reja Shopping Survey further revealed that shoppers were drawn more to buying items viewed within the supermarkets advertising more than television and radio commercials, outdoor or newspaper advertisements or posters and fliers.

While TV, the leading traditional media channel, boasted 37 per cent of shares in creating awareness, in-store (point of sale advertising and product placement) activities accounted for a joint 49 per cent.

This is despite a recent survey showing that about 90 per cent of the population in Kenyan’s urban areas had access to TV sets with advertisers pumping in billions of shillings in prime time advertisements. The 2009 population census showed there were 2.5 million television sets in Kenya.

“The finding basically means that in the emerging shopping landscape, in-store channels are equal or even more influential than TV,” said Mr Maina.

The impact of TV is, however, not waning as the survey noted after investigating the market shares of some popular milk, maize meal and detergents brands.

According to the Reja report, the “advertise-and-win” strategy adopted by marketers helped Ariel detergent replace OMO as the top brand while Soko maize meal has wrestled the top position away from the long-time incumbent, Jogoo.

Some ‘incumbents’ such as Mumias sugar, Always sanitary pads and Royco curry powder, however, continued to control their segments with market shares of 68, 65 and 42 per cent respectively, more than double their nearest competitors.

“Whether challengers will succeed in dethroning them (leading brands) remains to be seen; for all their strength, their number one positions are no longer off limits to challengers,” the report further stated.

Plastic cards

Another key finding of the report was that despite the increasing use of plastic cards for shopping, cash was by far still the most commonly used mode of settlement.

The report indicates that 95 per cent of shoppers still prefer using notes and coins in supermarkets with only four per cent using credit cards or their alternatives.

“Those fearing a total overhaul of the shopping experience can console themselves with the knowledge that, in our market, cash is still king,” the report says.

Data by the Central Bank of Kenya shows that consumers shopped for goods worth Sh77.82 billion through point-of-sale (POS) machines between January and September last year, while the number of debit cards issued rose to 8.6 million.

Over the corresponding period last year, Sh43.73 billion was transacted when the number of debit cards issued stood at 7.14 million.

This growth was mostly driven by the more affluent in society, a fifth of whom the report noted preferred using debit or credit cards.

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