Retail sector on doing well...as Carefour knocks...more FDIs/Jobs/Taxes

[RV Pundit]

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http://www.businessdailyafrica.com/Corporate-News/Carrefour-targets-500-jobs-in-Kenya-by-end-of-the-year/-/539550/3207682/-/rdigf2z/-/index.html

[Georgesoros]

Pundit
Unless there is a significant drop in the cost of doing business, the next ten years you'll see businesses slowly moving to greener pastures. China is where it is because the cost of doing business was low. Businesses, especially manufacturing will always follow cheap labor, infrastructure, etc.


http://www.standardmedia.co.ke/business/article/2000202289/why-kenya-lost-oil-export-pipeline-deal-to-dar

[RV Pundit]

Agreed and I think the last 3 yrs we've seen cost of doing business dropping. Thanks to both internal (better roads, cheap and more reliable electricity,etc) and external factors (oil). Once wea roll out SGR -then cost of transport will come down --once we connect more and more kenyans to more reliable and cheaper power (like Lamu and Kitui coal)--we will be there. Of course competition helps and here we have a vibrant private sector. We might not have cheap labour but a kenyan worker is definitely one of Africa's most productive.
We are not there...but we are heading there.

Pundit
Unless there is a significant drop in the cost of doing business, the next ten years you'll see businesses slowly moving to grrreeener pastures. China is where it is because the cost of doing business was low. Businesses, especially manufacturing will always follow cheap labor, infrastructure, etc.


http://www.standardmedia.co.ke/business/article/2000202289/why-kenya-lost-oil-export-pipeline-deal-to-dar

[gout]

They are buying from a local small producer I work with, who has been struggling to push his somewhat quality coffee products through existing market structures.

[RV Pundit]

It easier now to get into manufacturing if you can make a deal with the major stores....these are the building blocks for manufacturing...the more formal our retail become...from little dukas..to conglomerates supermarket....that handle the supply chain...then we would be on our way to being a developed country.

They are buying from a local small producer I work with, who has been struggling to push his somewhat quality coffee products through existing market structures.

[Georgesoros]

Thats nice!

They are buying from a local small producer I work with, who has been struggling to push his somewhat quality coffee products through existing market structures.

[Empedocles]

They are buying from a local small producer I work with, who has been struggling to push his somewhat quality coffee products through existing market structures.

So they finally dropped their fees for suppliers?

Carrefour sparks supplier unease with Sh1.4m fee

In Summary

• French retailer Carrefour enters Kenya with conditions they say will keep small traders out of lucrative sector.
• The retailer wants suppliers to pay a non-refundable fee of Sh1.4 million to do business with it.

http://www.businessdailyafrica.com/Corporate-News/Carrefour-sparks-supplier-unease-with-Sh1-4m-fee/-/539550/2818592/-/frvm0v/-/index.html

[hk]

 I am a small manufacturer and a supplier to carrefour. I don't mind the listing fees which is a one time thing deducted from my invoice. What I love about them is its a contract where I have  to hit a sales target annually and in return they pay after 45 days and I am given ideal shelf space. Getting a product listed at nakumatt is a nightmare and don't even try tuskys. Bottomline carrefour is giving us small manufacturers a chance not only to sell our products but also a chance to meet multinational standards so going forward one can for example sell their products to middle east via carrefour since the franchisee is from middle east with operations all over middle east.

[Georgesoros]

Cartels are being broken.

I am a small manufacturer and a supplier to carrefour. I don't mind the listing fees which is a one time thing deducted from my invoice. What I love about them is its a contract where I have  to hit a sales target annually and in return they pay after 45 days and I am given ideal shelf space. Getting a product listed at nakumatt is a nightmare and don't even try tuskys. Bottomline carrefour is giving us small manufacturers a chance not only to sell our products but also a chance to meet multinational standards so going forward one can for example sell their products to middle east via carrefour since the franchisee is from middle east with operations all over middle east.

[Empedocles]

Cartels are being broken.

About time!

[Empedocles]

Carrefour is really shaking up the other supermarkets:

Carrefour entry in Kenya spells doom for Nakumatt

http://www.businesstoday.co.ke/carrefour-entry-in-kenya-spells-doom-for-nakumatt/

[hk]

There's a trouble brewing in retail land http://www.businessdailyafrica.com/Supermarkets-in-turmoil-as-heavy-debt-load-weighs/539552-3432754-juj5h4z/index.html . Suppliers are complaining of non payments and even some have started withdrawing supplies. Nakumatt I think instead of investing in smaller stores in neighbourhoods it went for big outlets in malls. Now I think they're reeling from expensive leases.

[RV Pundit]

They are all growing so fast so soon - they might burn out - if they don't recapitalize.

There's a trouble brewing in retail land http://www.businessdailyafrica.com/Supermarkets-in-turmoil-as-heavy-debt-load-weighs/539552-3432754-juj5h4z/index.html . Suppliers are complaining of non payments and even some have started withdrawing supplies. Nakumatt I think instead of investing in smaller stores in neighbourhoods it went for big outlets in malls. Now I think they're reeling from expensive leases.

[Empedocles]

Nakumatt admits to be having some problems:

Nakumatt admits financial crisis, seeks aid to stay afloat

[Georgesoros]

It's the normal business cycle. More players more competition.

[gout]

Are the rents retailers paying for floor space sustainable?

[Empedocles]

Are the rents retailers paying for floor space sustainable?

Nope.

Most, if not all, of the shopping malls in Nairobi were not built with financial considerations as the number one priority. After 9/11, when laundering money internationally became much more difficult, our thieving elite turned to the local real estate market, in this case shopping malls using the Yaya Centre as the benchmark. This, in turn, explains why our real estate "boom" took off starting 2002. So in effect, the shopping malls were built to launder corruption proceeds.

Looking at the very high turnover of tenants (if they any, that is) in Kenyan malls reveals the underlying problem, especially along the Thika Superhighway (note that not all malls were built using corruption money but by investors joining the Ponzi train).

http://www.nation.co.ke/business/Malls-outdo-each-other-to-attract-clients--shoppers/996-3369046-3qmych/

Another interesting article from The Business Daily: Booming malls entice retailers despite glut fears

[hk]

Are the rents retailers paying for floor space sustainable?

Nope.

Most, if not all, of the shopping malls in Nairobi were not built with financial considerations as the number one priority. After 9/11, when laundering money internationally became much more difficult, our thieving elite turned to the local real estate market, in this case shopping malls using the Yaya Centre as the benchmark. This, in turn, explains why our real estate "boom" took off starting 2002. So in effect, the shopping malls were built to launder corruption proceeds.

Looking at the very high turnover of tenants (if they any, that is) in Kenyan malls reveals the underlying problem, especially along the Thika Superhighway (note that not all malls were built using corruption money but by investors joining the Ponzi train).

http://www.nation.co.ke/business/Malls-outdo-each-other-to-attract-clients--shoppers/996-3369046-3qmych/

Another interesting article from The Business Daily: Booming malls entice retailers despite glut fears

Nakumatt has two problems. One its the anchor tenant of most malls with expensive leases of malls that have little traffic except on the weekends. Second they introduced blue label basically their own label of products that they're paying cash and not moving fast enough. This label ranges from milk to furniture. This is affecting their cashflow.
Actually Thika superhighway has the most profitable Mall TRM mall reason being it has alot of traffic from nearby neighbourhoods. Garden city on the other hand not doing so well. The KU shopping centre is a bust. The only other mall is juja mall which I think opened a week ago.

[Georgesoros]

With the introduction of interest rate caps, the reorganization is continuing. Inflation rate is down, so pple are dont have as much money as they used to. Businesses need to reorganize.

[hk]

With the introduction of interest rate caps, the reorganization is continuing. Inflation rate is down, so pple are dont have as much money as they used to. Businesses need to reorganize.

Actually inflation isnt down it has risen from 6.26% August to 6.34% in September. The capping of interest should spur more borrowing thus more money in circulation. Because interest payments are lower leaving citizens with more money in their pockets. The capping of interest rates should lead to more inflation which is what's happening.
So that's not the problem.Unless the argument is capping of rates have reduced credit availability and I haven't seen data to indicate that.