The mini-marts dotting residential estates have fast become a big deal. As the giant supermarket chains viciously fight for market share in fancy malls, the convenience store sector is fast holding its own.
Tier-two retailers such as QuickMart, Tumaini and Cleanshelf are enjoying booming sales — having followed customers to their doorsteps in the residential estates and capitalised on the huge fast-moving-consumer goods (FMCG) market currently taken up by kiosks.
Recent findings by market insights firm Nielsen show kiosks and groceries in Kenya accounted for 66.3 percent (Sh185.2 billion) of the total FMCG spend in the year ending March 2019, a 10.7 percent growth compared to a similar period in the previous year, which explains the rush to the estates.
Yet supermarkets accounted for 33.7 percent (Sh94.1 billion), a 0.4 percent growth over a similar period.
CleanShelf, QuickMart, Tumaini have recently opened stores within residential estates in Nairobi — a shift from the previous trend where supermarkets only set up in big town centres.
Cleanshelf’s latest stores are tucked in residential areas such as Lang’ata and Shujaa Mall, which is adjacent to Sossion Estate in Nairobi’s Eastlands.
QuickMart latest branch, its first venture into the 24-hour model opened earlier in the year, is located in Lavington strategic spot and serves customers in the Kileleshwa and Lavington neighbourhoods.
Previously, shoppers had to take a ride to the Junction Mall to make purchases at the Chandarana outlet.
The 24-hour store brings convenience to shoppers who occasionally need to top-up households goods.
Tumaini opened its latest store two weeks ago in Roasters on Thika Road, bringing convenience to shoppers and competition to the Game and Shoprite supermarkets housed in Garden City Mall, which is directly opposite to the growing residential area.
And now the bigger tier-one players such as Naivas and Tuskys have taken note and plan to join the scramble for customers right at their estate doorsteps.
“More and more local retailers are opening smaller outlets to go to the estates to compete with kiosks. Kiosks are convenient and provide the possibility of borrowing from consumers.
“Formalisation of traditional trade will happen in future but the kiosks are here to stay,” Retail Trade Association of Kenya (Retrak) Chief Executive Wambui Mbarire told the Business Daily.
Naivas is also set to open its latest store at Mountain View Estate before the year ends.
Tuskys future growth roadmap also involves opening more smaller shops in estates, a strategy the firm is taking to reach a wider customer base amid growing cut-throat competition.
Tuskys plans to expand the “small-format stores” concept to Uganda through the franchise model as the retailer embarks on regional expansion and as it intensifies the growth of its mini-marts.
“We still believe that there is a huge potential in Kenya which must be tapped first. With Uganda, the small-format stores work better than in Kenya, and we see that evolving fast through the franchise model rather than one investment,” said Tuskys Chief Executive Dan Githua.
Naivas also has plans to open additional stores before the end of the year and most of the outlets in the line-up target residential areas, a segment, the supermarket chain said in an earlier interview, they could no longer ignore.
The Nielsen data indicates that Kenyan shoppers are most likely to visit an outlet if it was convenient to get to, has variety, well-stocked and has quality products, in that order, among other factors.
“Convenience is key to the normal Kenyan shopper, and data shows that they frequently visit kiosks for household goods top-ups.
“They are also price-conscious and will go for products that give them value for money,” said Nielsen East Africa, Consumer Insights Lead, Pauline Achayo.
The retailers setting up shop in the residential areas have also set a bar higher in terms by pumping in more resources to ensure a variety of goods on display and in setting up grocery and fresh food sections within the stores.
The fast-growing retailers such as Tumaini, QuickMart and Cleanshelf supermarkets have in their latest outlets embarked on stores facelift, by investing in fashionable store architecture and fittings.
Cleanshelf founder Timothy Kihara, who spoke to the Business Daily during the unveiling of the Kayole branch, said the brand had embarked on a more customer-centric approach for an all-rounded experience by hiring a local design and fittings firm Renova Limited to craft the supermarket’s trendy layout and display, and a fresh foods consulting company Professional Vision Group.
Globally, Nielsen predicts, that physical stores will grow by 54 percent over the next five years to hit 272,400 stores and local growth in outlets will be marked mostly in central and in the lake region where 113 percent and 134 percent spike in stores, respectively, will be experienced.
“Devolution is fuelling this growth and the expansion has a ripple effect providing employment opportunities to the locals and new avenues for suppliers,” said Ms Mbarire.
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