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wholesale retail food industry kenya

The Wholesale and Retail of Food Industry in Kenya 2016

Nina Shand | Kenya | 08 March 2016

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Report Coverage

The Kenyan Food Retail report examines current conditions and developments in the industry, including the entrance of foreign retailers such as South Africa’s Massmart chain Game and French giant Carrefour through a franchising agreement with Dubai-based franchisee Majid al Futtaim. Profiles are provided for the four major supermarket chains, Nakumatt, Tuskys, Naivas and Uchumi. The only listed company, Uchumi, reported an annual loss of Sh3.6bn in 2014/15 and had to close its loss-making Ugandan subsidiary and retrench more than half its workforce.

Introduction

This report focuses on the wholesale and retail of food in Kenya, a sector that is dominated by the informal sector. Despite this, the country is the second most formalised African country in terms of retail penetration after South Africa, with an estimated 30% of retail sales taking place in formal outlets. Kenya is also the fastest growing retail market in Africa and has the largest GDP in South East and Central Africa. Per capita spend on groceries in expected to rise to US$330.0 by 2020 and foreign retail chains are eager to break into the Kenyan market.

Strengths

• Kenya is the fastest growing retail market in Africa and has the largest GDP in South East and Central Africa.
• Kenya is the second most formalised African country in terms of retail penetration with approximately 30% of retail sales taking place in formal outlets.
• The sector has a skilled workforce.

Weaknesses

• Infrastructure limitations, which have resulted in distribution and supply problems.
• The formal sector is dominated by four major local retail chains.
• The formal sector is reliant on imported foodstuffs.
• The high cost of doing business.
• The informal sector is responsible for 70% and 75% of retail trade in food.

Opportunities

• Expansion by retailers into the rest of East Africa and further afield if the Tripartite Free Trade Agreement (TFTA) is effective.
• For South African retailers, the possibility of forging franchising agreements with local companies.
• Growth in online food retail.
• Increase in formal retail space and a growing shopping centre culture.
• The establishment of convenience, one-stop shopping stores.
• The growth in the urbanised middle class, which should lead to growth in formal retail.
• The possibility of acquisitions as local chains list on the stock exchange to raise funds for expansion.

Threats

• Increasing cost of food could limit the growth of formal retail.
• Increasing local brand loyalty could limit the success of international retailers.
• Security issues and political tensions.

Outlook

Kenya is set to become the hub for inter-regional trade in East Africa and analysts say the long-term prospects for foreign investment are promising. Increasing urbanisation coupled with the growth of the middle class and the associated increase in spending bodes well for the future of the food retail sector. Kenyan retailers are expected to increase the range of their product offerings and are likely to expand further into the region, focusing especially on Tanzania, Rwanda and South Sudan. Although the four large supermarket chains are forecast to remain the dominant players in the sector, a number of smaller concerns as well as international retailers are expected to make it more difficult for them to increase market share.

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The Wholesale and Retail of Food Industry in Kenya 2016

Full Report

R 1 900.00(ZAR) estimated $99.43 (USD)*

Industry Landscape

R 1 330.00(ZAR) estimated $ 69.60 (USD)*

Table of Contents

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PAGE
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Industry Value Chain 2
2.2. Geographic Position 3
3. SIZE OF THE INDUSTRY 4
4. STATE OF THE INDUSTRY 7
4.1. Local 7
4.1.1. Corporate Actions 10
4.1.2. Regulations 11
4.2. Continental 12
4.3. International 13
5. INFLUENCING FACTORS 15
5.1. Government Intervention 15
5.2. Labour 16
5.3. Economic Environment 17
5.4. Lack of Infrastructure 17
5.5. Seasonality 19
5.6. Corruption, Political Violence and Terrorism 20
5.7. Technology, Research and Development (R&D) and Innovation 21
6. COMPETITION 22
6.1. Barriers to Entry 24
7. SWOT ANALYSIS 24
8. OUTLOOK 25
9. INDUSTRY ASSOCIATIONS 26
10. REFERENCES 27
10.1. Publications 27
10.2. Websites 28
COMPANY PROFILES 29
Nakumatt Holdings Ltd 29
Naivas Ltd 31
Tusker Mattresses Ltd 33
Uchumi Supermarkets Ltd 35