Supermarkets in Kenya to focus on e-commerce

Posted On November 02, 2015 , 12:00 AM Contador HarrisonPeriscope

Supermarkets and other major retailers relying on physical stores in Kenya are confronting new challenges, especially the emergence of e-commerce, and those failing to adapt to such challenges risk disappearing from the battlefield.At their first meeting in Nairobi last week, webstore developers belonging to different software companies across the world, met some of the owners who own major department stores in East African markets and voiced their opinions on how physical-store retailers can survive amid the emergence of new digital technology and online shopping.According to one of those who attended a highly secretive meeting, e-commerce was seen by Kenya and African retailers as both a threat and an opportunity.”For the opportunity side, e-commerce can allow individual customers to look at what products and services are on offer and to apply data, analytics and rational thinking. However, by visiting physical department stores, shoppers can enjoy emotional and social experiences. They will be able to touch the merchandise, smell the foods, and talk with other people,” a webstore developer revealed to your blogger.He added that retail operators in Kenya like Tusky, Nakumatt, Uchumi and Naivas could adopt e-commerce to support their physical-store business. In Kenya of today, retailers need to develop a great brand identity for their stores and communicate it to people in the right way. It is the way to differentiate their retail store from the others.A South African software developer who also attended the meeting added that in his point of view, the proportion of e-commerce contribution to individual modern retailers should not be higher than 25 per cent so that they can provide a good balance between on and off line shopping experiences.

Aerial view of Nairobi, the Kenyan capital where the meeting took place
Aerial view of Nairobi, the Kenyan capital where the meeting took place

As a member of the executive development team contracted by one of the Kenyan retailers to build their webstore, he said it was a major challenge for today’s retailers to develop e-commerce on the one side and operate physical stores on the other .”In South Africa, we have developed different web stores as a way for our clients to adapt themselves to e-commerce. As retailers, they have been doing cross-activities and developing business from the two worlds. We need to provide a good mix of real and virtual businesses in Kenya and across East Africa,” he said. The developer said e-commerce currently contributed only 4 per cent of the annual turnover of his clients who have web stores.However, the highly sought South African coder expects that contribution to increase to 20 per cent by 2018.He said the contribution of e-commerce to annual sales of retailers around cities like Cape Town, Johannesburg, Durban and Port Elizabeth was averaging around 5 per cent. There are only three major African markets,South Africa, Nigeria and Kenya with a high level of e-commerce by modern retailers.However, in my point of view, e-commerce contribution will increase significantly to between 15 and 23 per cent of annual retail sales achieved by individual modern retailers around the three countries in the next five years. A researcher who consults for a retailer that operates major modern department stores in South Africa, said that since his first visit to Cape Town ten years ago, he has seen a lot of changes in the country’s retail sector. Cape Town itself has become a capital of fashion and the ultimate destination of tourists in South Africa. The Africa’s retail operators can learn from all the things happening in western world and apply them to their own markets, especially in terms of creativity and innovation, as well as providing excellent service and shopping experiences to customers and merchandise offerings.