Kenya’s retail sector is poised for a digital explosion that will significantly improve interactions between customers and retailers, opening new opportunities in the field of e-commerce and payments.
In recent years, we have seen massive investments in the development of new solutions that aim to reduce the hassles many customers associate with payments and shopping.
However, has this created a more enjoyable experience for everyone? Take the example of PayPal, one of the leading names in payments globally, that built a network effect with its propositions such as VENMO that specifically targets millennials.
Following its rollout, revenues have gone up 22 per cent with net new quarterly subscribers up 80 per cent to hit eight million. And we are all too familiar with the disruption that Kenya’s M-Pesa had on the payments space in the world.
Today, there are so many consumer and retailer needs that are unmet and unarticulated with consumers often expressing frustration at the disjointed retail experiences offered by both brick-and-mortar and online/social media stores.
Digital payments today are worth $3 trillion and projected to grow to more than $8 trillion over the next three years. To carve out a piece of this pie service providers and retailers will need to be deeply empathic about unmet consumer needs, which calls for the creation of ecosystems.
After ATM services, mobile money, internet banking and online payments, the pressure is now on retailers to develop solutions that make the consumers’ shopping experience more fluid and personalised.
Kenya is currently leading the rest of the region in both the development and adoption of cutting-edge fintech solutions. Today, financial service providers in the country are increasingly adopting local technology to automate their services and streamline operations.
This is in turn creating employment and helps in growing the output of the local software industry. In addition to this, commercial banks have come up with new infrastructure and are ready and wiling to make the switch to bring their clients on board.
Data has emerged as the newest revenue stream for companies across various sectors with retail among the sectors that promise a host of opportunities from data analytics. The big five technology giants - Google, Facebook, Amazon, Microsoft and Apple – are at the forefront of turning the hundreds of terabytes of data generated through their platforms each day into revenue.
Alibaba, the world’s largest online and mobile retailer in the world, recently entered a partnership with Pepsi to have the latter leverage on its vast digital reservoir. Alibaba sets the way for the industry to learn it all from scratch through its ‘New Retail’ strategy.
This is just one example of how local companies can adopt the significant changes that are sure to hit the retail sector in Kenya and the rest of the world.
Today, Kenya has more than 30 million mobile phone users out of a total population of 44 million, making the country one of the most digitally versatile economies in Africa.
Kenya offers an enviable mix of talent, infrastructure and progressive legislation vital for companies to create a presence and grow our market while ensuring we bring our consumers along with us.
Paul Ndichu is CEO, Interswitch East Africa.