Middle class sprouts shopping mall boom

Three years ago, Ong’ata Rongai resident Martin Njoroge would move from one kiosk to the next ticking off the items in his shopping list.

By then, other than the crowded Tuskys supermarket in the main town centre there was nowhere else to enjoy one stop shopping, a norm for emerging satellite towns that surround Nairobi.

While the tiring exercise drained his energy, Njoroge was not alone – and this shopping habit was a norm among the residents of Ongata Rongai, where the middle-class residential suburb grew faster than the development of social amenities.

With the economic boom and the expansion of the middle-class (Kenya is second in terms of growth to South Africa), investors have followed the aroma of cash with malls.

Here eateries, boutiques and banks are opening up in areas once thought to be the backwater of Nairobi.

A few years ago, Ongata Rongai was no more than a quarry and a Maasai cattle market. Today, the opening of Maasai Mall has changed the shopping habits of the residents as investors funnel money into Kenya’s newest shopping centres.

“It is convenience brought closer to home,” Mr. Njoroge says. “Having a mall closer saves me the hassle of going to elsewhere for a major shopping.”

Mr. Njoroge’s sentiment is shared by residents across the area – and perhaps around Kenya’s new metropolitan areas.

The one-stop shopping experience and lifestyle that had been limited to residents in high-end residential areas – of Muthaiga, Lavington , Runda and Kileleshwa- is moving to the satellite towns where a new middle-class has settled.

Ignored by developers, middle-end estates and homes have been serviced by general stores, small shopping centres and moderate to poorly stocked kiosks.

“There was a vacuum in the market when it came to the shopping experience around residential estates,” said the Managing Director Greenspan Investment Ltd Mr Shirish Shah.

Eyeing the opportunity, the developer and his team came up with the idea of a mall in Donholm, one of the oldest satellite estates in Nairobi’s Eastlands. As a result, Greenspan Mall was born which gives service to residents spanning both Jogoo Road and Outer Ring Roads.

Anchor stores

Retail superstores like supermarkets have been lining up at the developers doors to book space in the establishments. This is a complete shift from shopping habits of yesteryears.

“Before, the customers would come to us wherever we were, but now we have to move to where they are,” explains Atul Shah, Managing Director of Nakumatt Holdings.

The steep competition as the stores compete for the consumer has fuelled the hype to set up shop nearer to the consumers.
Anchor stores with brand names such as Naivas, Tuskys, Uchumi and Nakumatt now provide basic services and commodities drawing the traffic needed into the malls. And the market is not nearing the saturation point.

Garden City, along the Thika Super Highway, which will be the largest shopping mall in East Africa, will house two anchor clients Nakumatt and Massmart’s Game.

According to Mr Shah, shops located within malls rather than stand-alone locations have an advantage: “Malls give more services beyond simple retail shopping. It is more economical for them to get all they need at a go,” says Mr Atul Shah.

And it is mixture of services that are making these malls an attraction to the middle-class that is escaping the hustle and bustle of the crowded City estates.

The three-floored Maasai Mall in Ong’ata Rongai for instance hosts a supermarket, Ethiopian, Italian and Chinese restaurants, bookshops, hair saloon, and ATM outlets. Residents like Mr Njoroge are thrilled by such changes.

“The anchor clients attract traffic into the malls which in turn attracts other tenants,” explains Mr James Karanja, Head of Project Finance at Housing Finance.

The lifestyle change facilitated by the increased purchasing power of the middle-class has brought forth the shift, explains Karanja who has seen developers cash in on the shift, putting up centres in areas with a high residential population.

Gated communities

With most of the middle-class living in the city periphery, developers have sought to provide them with the service and amenities needed in their back yards.

Gated communities that have been propping up now have a provision for malls. They have been some of the biggest beneficiaries of the trend as each has a Mall within it or in the surrounding area.

Along Thika Superhighway, near Roysambu, - some 12 kilometres from the city centre, the construction of the Thika Road Mall is under way, a short distance from Garden City, as the expanded road brings with it a new line of estates and housing projects.

A report by Citigroup released mid last year regarded Kenya as one of the fastest growing middle class, making it a lucrative market for retail stores.

“Kenya is the second most lucrative retail market after South Africa,” said the report. A shopping experience that Kenyans appreciate is the one stop shopping, where they are able to get everything they need from one place.

“When you looked at the malls like Westgate, Sarit, and the rest, it is not just residents from the surrounding that were frequenting them, but also those from Eastlands and other areas,” says Mr Karanja.

Traditionally, ‘malls’ were standalone buildings clustered together, each housing a different store. The increasingly high cost of land and limited space in residential estates has resulted in the high-rise system of construction being adopted.

“The malls are an organised way of having the shops together. Before, they were staggered across a centre Land prices have been on a steady increase (in urban areas), and with the growing demand, the space in residential areas is now limited,” says Mr Karanja.

Developers have been opting to go higher with the shops than wider or following the middle class to the new satellite towns.

Taj Mall, a five-storey building near Jomo Kenyatta International Airport, is one of such establishments with a children’s play area on the roof and as well as a restaurant.

According to Ramesh Gorasia, Managing Director of Taj Mall, their main target is the mass market. With increased population and better infrastructure in the areas, the return on investment is improved.

The boom in plush malls in Nairobi is also attracting international retailers and well-known brands that need a concentration of well-heeled shoppers to justify their investment.

Even as the new malls prop up, older arcades and shopping centres like Fedha’s Valley Arcade and Lavington Green are receiving a facelift and expanding.

It is a new way of shopping, where malls are in hot pursuit of the middle-cash, seeking their cash, and them seeking better services.