Retail Landscape in Emerging Africa Countries: Retail Market Assessment in Kenya

  • ID: 3872400
  • Report
  • Region: Africa, Kenya
  • 103 Pages
  • Datum Intel
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Kenyan Economic Growth Above the Ssa Average, Expected to Grow from 5.9% in 2016 to 6.2% in 2018

FEATURED COMPANIES

  • Airtel
  • Carrefour
  • Dormans
  • IBM
  • Mutual
  • Spanco
  • MORE
The Kenyan market is developing steadily, with the economic growth creating a large middle class and with it, bigger opportunities for FMCG companies. However, the rapid emergence of the middle class consumer has brought with it a challenge: Even though the ranks of shoppers grow in record-setting numbers, both multinationals and local companies alike find Kenyan shoppers to be something of a mystery;

What consumer goods do they prefer? How do they decide among brands? How do their shopping behaviors and preferences differ in Tier-1 retail segments like Nakumatt or Carrefour, and in Tier-3 retail segments or in Traditional retail? As they grow in income and sophistication, how do their shopping habits change?

Until now, consumer goods companies and retail players had precious little data on shopper behavior to generate the insights that could help them know the most effective ways to market to Kenyan shoppers.

This publisher is filling that void by introducing real-time data that provides a groundbreaking look at Kenyan shoppers. It brings their purchasing behaviors into sharper focus, helping global and local FMCG companies navigate the variables required to compete in such a complex and fast-changing landscape.

To produce this reports, a consumer survey was conducted in August 2016 in three major cities in Kenya across the modern and traditional retail segments and the results provide the real-time shopping habits of Kenya’s shoppers.

In addition to the survey, an extensive macroeconomic outlook of Kenya was conducted to help existing and new companies navigate the economy and make profitable investment decisions.

Macroeconomic analysis and projections are done by a macroeconomic team with in-depth knowledge of the economy and emerging Africa markets.

Our findings provides a ground breaking view of the economy in relation to its peers in the infrastructure developments, economic growth, logistical operations, and the current retail market assessment.

Key Findings:

- Strong economic growth makes Kenya among the most attractive markets for FMCG goods in SSA
- Kenyan economic growth above the SSA average, expected to grow from 5.9% in 2016 to 6.2% in 2018
- Kenya emerging as a hub for infrastructure and digitization with approximately US$ 500 million investment on ICT infrastructure
- Kenya ranked 108 out of 189 countries in World Bank’s 2016 Ease of Doing Business Report, up from position 129 in 2015, a strong indication of the economy’s strength
- The population of Kenya is increasing by ~ 3,380 persons daily in 2016 indicating higher demand for consumer products
- Kenya is will become an urban country (at least 50% of the population living in urban areas) by 2050
- Almost 45% of the Kenyan households are in middle income segment and expected to increase rapidly by 10% in 2020 hitting 55% of the total households
- Approximately 55% of  household’s consumption is spent on food, an indication of higher demands for consumer products
- Kenya ranked 2nd in Africa and 42/160 globally in 2016 trade logistics performance, rising above 32 countries in record time of 2 years
- Supermarket chains are the leading distribution channel for ‘Home & personal care’ and ‘Domestic appliances & homeware’ categories with a 66% and 75% respectively
- Traditional retail channels ‘Dukas’ and ‘Kiosks’ enjoy higher frequencies of visit with with an average visits of 6 times per week
- Nakumatt is the only supermarket pchain in Kenya with the potential to attract very wealthy shoppers with average baskets at USD 98.5
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FEATURED COMPANIES

  • Airtel
  • Carrefour
  • Dormans
  • IBM
  • Mutual
  • Spanco
  • MORE
Chapter 1: Macroeconomic environment

Overview of the Kenyan economy:

- Summary of the economy and facts about Kenya - population size, global ratings, political system, currency, religion, languages, map of Kenya and regions
- Political context and history of Kenya, geographical advantage, regional characteristics and area and land utilization.
- Key infrastructure status - road networks (paved or unpaved and length in km according to class), rail network in km, number of port terminals, and number of airports (domestic and international), 2016 key infrastructure map - roads, rail, airports, ports.
- Access and supply of utilities - electricity (electrification rate - rural vs urban), clean cooking energy (rural vs urban), number of internet users, mobile subscriptions, Facebook and Internet users; Facebook, internet and mobile penetration rate in 2016
- The role of Safaricom on mobile money transfer - M-Pesa; Safaricom network coverage map; Level of M-Pesa uptake in Kenya; Financial, penetration and subscription evolution of Safaricom’s M-Pesa (2008-2015).

Analysis of the economy:

- Kenya GDP growth relative to Sub-Saharan Africa (2011-2017); Percentage of key sector contribution to GDP growth (2011-2015).
- Inflation analysis by type for 24 months (2014-2015); and exchange rate analysis against US Dollar, British Pound and Euros (January, 2014 - December, 2015)
- Evolution of Kenyan business environment and emerging investment opportunities; Greenfield FDI evolution in Kenya (various years)
- Analysis of key trade partners to Kenya - Top countries importing from Kenya, and top markets for Kenyan exports.
- Analysis of key infrastructure status in Kenya compared to East African peer countries.
- Analysis of ease of doing business in Kenya compared to 10 other African countries; Kenya’s ratings in ease of doing business against some European, Asian and African countries; Major milestones undertaken to improve the business climate.

Sociodemographic analysis:

- Population analysis by age, birth rate, life expectancy at birth, fertility rate, urban vs rural population, urbanization rate of Kenya compared to Europe and Africa’s averages.
- Population growth analysis and projections by gender (2010-2020) and population proportions by gender - 2016.
- Urbanization rate and projections of Kenya versus East Africa and Sub-Saharan Africa (1950-2050); Proportion and evolution of rural versus urban population of Kenya (1950-2050)
- Realities of the ‘widely discussed’ rise of the Kenya’s middle class; Households’ segmentation by annual income ranges (2010, 2015, 2020)
- Analysis and projections of GDP per capita and growth rate (2011-2020);
- Households’ consumption analysis by product category across different product categories and income segments - lowest, low, middle and upper income segments.
- Analysis on the distribution of income (Gini index) and consumption expenditure per capita in rural versus urban areas; Population share versus consumption share of the rural/ urban areas.

Key operations, logistics and supply chain analysis:

- Kenya performance in logistical operations (various indicators) in Africa and compared to 11 European and Asian countries.
- Kenya versus Africa’s best South Africa in logistical operations (various indicators); Evolution of Kenya’s logistics (2007-2016).
- Operational logistics and quality of trade and transport related infrastructure in Kenya versus South Africa.
- Logistical competence and quality of service delivery in Kenya versus South Africa.
- Efficiency of logistical processes and major sources of operational delays in Kenya versus South Africa.
- Changes in logistics environment for the last three years and availability of qualified personnel in Kenya versus South Africa.
- Key logistical infrastructure map of Kenya and links to 8 East African countries (Road networks, pipelines, railway networks, inland waterways).
- Distance, time at sea and transit time from major European, Asian and Africa’s ports to Mombasa port in Kenya; List of Global sea line service providers linking Mombasa to the world.

Chapter 2: Focus on Nairobi and Urban Kenya

Understanding Nairobi and its regional strength:

- Nairobi population dynamics and benefits: Population analysis and growth projections (2010-2030); Population analysis by age and analysis of the working population.
- Pictures of Nairobi today and after Vision 2030 flagship projects and satellite cities.
- Analysis of the 9 mega infrastructure development projects in Nairobi; estimated costs; major developers; status and completion dates…

Chapter 3: Retail Market Assessment

Macroeconomic outlook of the retail landscape in Kenya:

- Households consumption expenditure by products category in Kenya, and across different income segments (lowest, low, middle and highest income)
- Per capita grocery consumption in urban areas of Kenya, across different income segments (lowest, low, middle and highest)

Retail market assessment findings:

- Kenyan shopper products and retail channel preferences: Executive summary, study type, methodology and objectives, sample size details and field research dates.
- Shoppers retail spending levels and consumption patterns (various attributes tested)
- Retail channels (traditional versus modern) penetration levels by product categories (various attributes tested).
- Market positioning of hypermarkets and supermarkets chains (various attributes tested)
- Focus on major supermarket chains: Key strengths and preferences across different income groups (various attributes tested).

Appendix:

- Overview and breakdown of the total sample
- Number of interviews by PSUs
- Population sample by gender, age and household size
- Social economic breakdown of the sample
- Education and professional breakdown of the sample
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FEATURED COMPANIES

  • Airtel
  • Carrefour
  • Dormans
  • IBM
  • Mutual
  • Spanco
  • MORE
Africa’s retail landscape brand-new report providing a groundbreaking look at Kenyan shopper. The report brings shoppers purchasing behaviors into sharper focus, helping global and local FMCG companies navigate the variables required to compete in the Africa’s complex and fast-changing landscape.

It answers the following critical questions about the Kenyan shoppers:

- What consumer goods do they prefer?
- How do they decide among retail channels?
- How do their shopping behaviors and preferences differ in Tier-1 or Tier-3 retail segments or in the traditional channel?
- What is their average shopping basket?
- As they grow in income and sophistication, how do their shopping habits change?

Until now, consumer goods companies and retail players in Kenya had precious little data and analysis on shopper behavior to generate insights that could help them know the most effective ways to market to Kenyan shoppers.

The report provides the following:

Analysis on the consumer's future prospects, blending economic forecasting, employment trend analysis and households income shifts in affluence; consumer attitudes toward retail channels; retail channels penetration; and the market position of modern retail channels. Among our findings:

- Kenyan total retail spending is strongly driven by social economic class (SEC), but category spending breakdown gets relatively stable across the SECs.
- Large supermarket chains have very diverse penetration levels in relation to the retail categories and by SECs.
- Supermarket chains are the leading distribution channel for ‘Home and personal care’ and ‘Domestic appliances and homeware’ categories.
- Traditional retail channels ‘Dukas’/ ‘Kiosks’ enjoys higher frequencies of visits above the other outlets in the total retail visit on average.
- Shoppers mostly go to the supermarket chains by foot or by public transport, and generally spend an average of 10 minutes to the outlet.
- Penetration rate of the top retail players is far ahead of the competition in both brand awareness and penetration.

On the macroeconomics perspectives, the Kenyan market is developing steadily, rated second best in Africa after South Africa in the World Bank’s 2016 ease of doing business.

Kenya has GDP growth rate of 5.9% in 2016 and expected to reach 6.2% in 2018 and with this, creating a large middle class meaning greater opportunities for FMCG companies. The GDP per capita is approximately USD 1,628, growing at an average of 8% annually to reach USD 2,218 by 2020, and this will further increase the consumer basket.

The current multi-billion dollar infrastructure development projects undertaken by the Kenyan government is an incentive for investment as these have the potential to transform the Kenyan economy and East Africa region over the next couple of years.
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- Airtel
- Barclays Bank
- Bata
- Beiersdorf
- British American Tobacco (BAT)
- Cargo Express
- Carrefour
- Centum
- Cisco Systems
- Coca Cola
- Delmas
- Dormans
- Eukor Car Carriers Inc
- GMA CGM
- General Electric
- Google
- IBM
- Intel
- Kim-Fay
- Korean Advanced Institute of Science and Technology (Kaist)
- Maersk Line
- Maxam
- Mutual
- Naivas
- Nakumatt
- Safaricom
- Sinohydro
- Spanco
- Standard Chartered Bank
- Toyota
- Tumaini
- Tuskys
- Uber
- Uchumi
- Ukwala
- Vodafone
- Young & Rubicam
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