Kenyans cut shopping trips in tough economy

Kenyans are making less shopping trips per year compared with countries such as Egypt, Ivory Coast, Ghana and Nigeria, a new report has shown calling on manufacturers to rethink their packaging and pricing.

A household survey by research consultancy firm Kantar, shows that Kenyans are trimming their shopping budgets and favouring discounted goods in big packs to save on money and reduce trips to supermarkets.

Kenyans make less shopping trips at an average of 300 a year, being fewer than the 805 trips by Ivory Coast shoppers, with the key reason being drive for “getting more for less,” according to the study.

Egyptian shoppers made 746 trips per year, Ghana (560) and Nigeria 390.

“With a forecast 2019 economic growth of over six percent, Kenya’s economy is showing signs of stability on the back of macroeconomic steadiness, yet at a micro level Kenyans are seen to be experiencing the perfect storm,” says the survey.

“In the midst of this daily struggle for most Kenyans, the market is re-engineering to provide alternatives and options so that people can make ends meet.”

Lowest spending

The study further shows that Kenya has the lowest average household spend of about $220 (Sh22,758) on first moving consumer goods (FMCG).

This is compared with Nigeria, Ghana and Ivory Coast at $228 (Sh23,626), $349 (Sh36,164) and $363 (Sh37,615), respectively.

Kenya is also seen to be one of the most expensive of the countries covered in the research.

Average price of an item in Kenya is about Sh51 compared with Nigeria’s Sh20, Ghana and Egypt at Sh31.

The average price of key FMCG items bought by households in Africa shows Kenya on top of the ladder.

For instance, while the average spending on toothpaste in Kenya is Sh90, a shopper in Nigeria spends Sh50.

A toilet soap costs a Kenyan consumer Sh60 on average compared with Sh20 in Egypt and Sh30 in Nigeria.

The same plays out on margarine where a Kenyan shopper pays about Sh60 while in Ivory Coast, the same quantity costs about Sh20.

Despite Kenya being key producer of coffee and tea, consumers still pay higher.

For instance, while a Kenyan would spent about Sh30 on average to get either coffee or tea, a shopper in Ghana pays Sh20 while an Ivorian pays Sh10.

This scenario of relatively expensive consumer goods and falling purchasing power is shifting spending patterns and how manufacturers are delivering their products to the market place.

Kantar says that with average Kenyan household spending on consumer products shrinking at three percent last year, the importance of affordability in driving consumption comes to the fore.

Price push

According to the study, higher prices are pushing consumers to rethink ways of making ends meet by turning on credit purchases or favouring second hand goods.

“Gikomba, Toi and Korogocho markets are familiar places for Nairobi inhabitants where you can get a whole new wardrobe for as little as $10 (Sh1,000). They are value-for-money and offer items at very attractive and affordable prices,” the study notes.

About 80 percent of low-income household spending on local brands was on big packs (those above 100 grammes), the study further showed.

This especially applied within home and personal care where average consumption on big packs has grown faster than small packs, implying that consumers are looking for value.

Most local brands are seen to be cashing in on this group of consumers by offering right price points.

“The price points of Sh5, Sh10, Sh50 and Sh100 are where a lot of non-monthly purchases happens, and companies like Unilever are also playing in these segments to drive affordable consumption,” says the study.

The “buy what you need” approach through dispensers is also picking up as a business models that foster convenience and affordability. The study cites growth of fresh milk and cooking oil “ATMs” in Kenya as a great example of this.

Refilling stations

This compares with Philippines where Unilever unveiled shampoo and conditioner refilling stations in a bid to help reduce the single-use plastic packaging use among consumers and drive affordability.

According to Osato Igbinadolor, a consumer insights expert and director at Worldpanel division of Kantar East Africa, stakeholders in manufacturing, retailing and government will more than before have to collaborate in building new business models to match changing consumption patterns.