Why modern retail is next frontier for job creation, economic growth

Despite current economic challenges, the retail industry in Kenya has been growing, contributing greatly to the country’s economy.

Globally, retail is one of the largest revenue earners and providers of employment. According to the Kenya National Bureau of Statistics (KNBS), wholesale and retail trade is ranked fifth in gross domestic product (GDP) contribution, and third in private sector job creation.

The KNBS data indicates that nearly 90 percent of working Kenyans are in the informal sector, with a majority engaged in wholesale and retail trade. The sector also plays a key role in advancing Kenya’s digital transformation agenda.

The digital economy in Kenya is growing, with the fastest-growing e-commerce markets in Africa. The user penetration exceeds the regional average with a projected 16.4 per cent annual average growth by 2025. In a report titled E-trade advancements across sub-Saharan Africa, Visa ranked Kenya third in total volume of e-commerce in 2019 and 2020.

Arguably, this has led to an increased need to offer convenience and seamless shopping experiences to customers, urging retailers to adopt digitised trade. For example, Carrefour Kenya promotes convenience through its e-commerce application, where we also run our loyalty programme.

The retail sector has also made efforts to stay in line with international trends by implementing new technologies and innovations.

The KNBS ranks the wholesale and retail trade as the third-largest contributor to private-sector employment. About 60 percent of informal employment is in the wholesale and retail trade, hotels, and restaurant sectors.

These industries provide opportunities to both unskilled and skilled populations, employing more than nine million people in 2022. Undoubtedly, the retail industry is a viable solution to the challenge of youth unemployment in the country.

Although more than 70 percent of groceries and consumer goods are still purchased through informal retail such as dukas and kiosks, the retail industry in Kenya is experiencing a transformation.

In an article on The Future of Traditional Retail in Africa, the Boston Consulting Group notes that modern retail is expected to increase market share by five percent by 2030, driven by shifting customer behaviour, a growing digital ecosystem, and an educated and digitally savvy population in the continent.

The optimistic outlook of Kenya’s modern retail sector creates opportunities for international retailers and foreign investors to access local markets and establish export channels for Kenyan products.

For example, Carrefour collaborated with countries like Qatar, Bahrain, UAE, and Egypt to export a variety of herbs and fruits like pineapples, berries, plantains, and avocados, and tea, directly sourced from local farmers. This collaboration is expected to enhance the local agricultural business and boost the country's highest GDP-earning sector.

With an increase in modern retail activities and coverage and the rise of e-commerce, the retail industry will be instrumental in achieving the government’s development agenda, providing more formal employment opportunities, and driving digital innovations and technology.

The industry will play a crucial role in fostering the growth of agribusinesses among small-scale farmers and the manufacturing sector by facilitating linkages between producers and customers and creating market access opportunities.

Christophe Orcet is the Regional Director of Carrefour, East Africa.