Kenya’s Quiet Shopper Revolution
Private brands and online shopping promise to turn Kenyan retail on its head, especially if their potential for disruption is realized fully.
Driving both trends is the 21st century Kenyan shopper. A savvy buyer who is largely responsible for a double revolution in Kenyan retail: first by supporting the supermarket innovation of private labels (products sold under the supermarkets own name), and now by opting for technology enabled online shopping.
As revealed in the latest Reja Shopper Report from Consumer Insight, 77pc of shoppers have become acutely aware of ‘unbranded’ products and are increasingly opting to buy them, to the loss of traditional brands. Kisumu city, with 84pc awareness, curiously leads the country in this area.
For supermarkets, Tusky’s benefits from the highest (53pc) shopper awareness of house-brands, followed by erstwhile leader, Nakumatt, at 41pc. Uchumi, the sole listed supermarket, enjoys 33pc awareness, just above Naivas.
Food is by far the largest private label category – mostly sugar, bread and rice– and is responsible for the top five of own-branded items. Following are household and personal care items, making an altogether strong trio.
While good for the supermarkets, and their shoppers, the shift has meant complex times for brand owners forced to compete; especially for those facing delisting from the shelves.
But for every brand feeling the pressure in store, there’s another that has strategically chosen to ‘take it outside’, and reach shoppers through dukas and kiosks. This most traditional path should not be ignored –it has created giants: Safaricom, the telecom firm, for example. Higher frequency plus low value, smaller stock units are the winning strategy here.
Still, shop-led strategies are not cheap; the top duka-brands – Safaricom, Colgate, Blue-Band – are also owners of magnificent marketing and distribution systems. Maintaining these adds significant costs to company budgets. Costs that make in-store pressure pale in comparison. Little wonder some brands have turned to a more disruptive, if affordable, alternative: online selling.
A quieter, less visible shopper trend, online shopping has recently become a viable option, driven by mobile-internet growth. The leading e-commerce sites revealed in the study were Africa’s OLX and Jumia, with 38pc and 16pc of shoppers respectively terming them ‘favourites’. Both have won a slice of market-share through relentless TV and radio advertising. Amazon, with no supporting media campaign, still achieved10pc favourite-site status. Facebook, the giant social networking site did equally well, but with fewer repeat buys.
Categories that dominate online shopping in Kenya are similar to those worldwide; clothes, personal grooming items and electronics - computers and computer games. Airline tickets (18pc of purchases) and software (36pc) are the top services sold online.
Attracting Kenyan shoppers online area trio of factors: the opportunity to save time (68pc), almost unlimited choice (40pc) and 24-hour availability (66pc). Convenience clearly has its charms.
One major challenge facing online retailers is traffic acquisition, numbers are simply too low to justify overheads. With 87pc having a working internet connection, there is still no stampede. So what is holding back the market?
More than half said they are aware of online shopping, but many (38pc) simply ‘don’t know how to shop online’ and others are ‘happy with off-line shopping’. Of more concern is the relatively high 24pc who fear fraud. Only 13 pc said “a lack of internet” stopped them shopping online. Perhaps the tipping point will come when users are educated better about the benefits, or offered radically different shopping experience than they are accustomed to. Online remains a space to watch keenly.
Overall, the Reja Study captures these fairly recent trends – private labels and online shopping – which, beginning less than four years ago, are proving to be the frontline of retail evolution in Kenya. Together, they reflect the rising influence of shopper and supermarket power.
The report also defines the emergence of a new, young and aspiring (but price sensitive shopper) as they navigate their world. Success in engaging this segment will determine which brands take-off, and which brands sink.
About Reja Research Study
REJA is a shopper behaviour study that gives insights on why consumers choose certain products and brands over others. Respondents are interviewed as they exit Kiosk, Duka’s and Supermarkets. A total of 2235 shoppers were interviewed across 10 major towns.
Further information on the study can be obtained by contacting:
Tel: 020 2146540 or 0727 375045