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

[RV Pundit]

Do we have any figures on the demand and supply of private credit post-rate capping? I guess CBK should be able to track those figures in their monthly economic report and so maybe that is the place too look for. I think for me the supermarkets are growing too fast too soon. Nakumatt have been expanding locally and regionally - they bought some supermarket in western kenya recently - and they've been expanding using debt financing - and so interest payments must be killing them.

They all simply need to sell their stake to international players - kenya's retail is now too big for family based homegrown supermarkets.

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.

[hk]

There's a great opportunity for a serious online/mobile retailer to emerge. All the necessary infrastructure is in place. The formal retail sector is ripe for disruption. The reason being the suppliers are really tired of non payments or delayed payments from almost all major supermarkets. To survive most manufacturers are relying on the informal market, especially the kadogo economy. Alternatively some manufacturers will opt for their own distribution channel to reach customers directly. Its already happening in the milk industry where established companies are setting up their own milk atm.

[Globalcitizen12]

What are margins in retail? Lack of payment of suppliers to me seems to be a cash flow problem within retail. Inflation in Kenya is a serious problem. The funny thing is that capping interest rates takes away one of the tools cbk has to reign in inflation.

[Empedocles]

There's a great opportunity for a serious online/mobile retailer to emerge. All the necessary infrastructure is in place. The formal retail sector is ripe for disruption. The reason being the suppliers are really tired of non payments or delayed payments from almost all major supermarkets. To survive most manufacturers are relying on the informal market, especially the kadogo economy. Alternatively some manufacturers will opt for their own distribution channel to reach customers directly. Its already happening in the milk industry where established companies are setting up their own milk atm.

Kilimall

Jumia

These two are growing pretty well. I bought a couple of phones from Jumia and it worked very well. Piki delivered them, I checked them and then paid via mpesa.

Some supplier's, especially mobile phones, are exclusively selling through them.

P.S. Went to Nakumatt Karen on Sunday for the first time in about 5 months. Stock is way down and they've brought stuff (mostly kitchenware) from upstairs to downstairs in a bid to fill the empty shelves.

Mwau exits Nakumatt with sale of 7.7pc stake

[hk]

What are margins in retail? Lack of payment of suppliers to me seems to be a cash flow problem within retail. Inflation in Kenya is a serious problem. The funny thing is that capping interest rates takes away one of the tools cbk has to reign in inflation.

Interest rates spread is what was capped not actual interest rates. The CBK still sets the CBR, it can mop money or inflate at will. And inflation has been within the CBK range. The only thing to watch is credit availability which is decreasing. 

[hk]

There's a great opportunity for a serious online/mobile retailer to emerge. All the necessary infrastructure is in place. The formal retail sector is ripe for disruption. The reason being the suppliers are really tired of non payments or delayed payments from almost all major supermarkets. To survive most manufacturers are relying on the informal market, especially the kadogo economy. Alternatively some manufacturers will opt for their own distribution channel to reach customers directly. Its already happening in the milk industry where established companies are setting up their own milk atm.

Kilimall

Jumia

These two are growing pretty well. I bought a couple of phones from Jumia and it worked very well. Piki delivered them, I checked them and then paid via mpesa.

Some supplier's, especially mobile phones, are exclusively selling through them.

P.S. Went to Nakumatt Karen on Sunday for the first time in about 5 months. Stock is way down and they've brought stuff (mostly kitchenware) from upstairs to downstairs in a bid to fill the empty shelves.

Mwau exits Nakumatt with sale of 7.7pc stake

Jumia and kilimall are doing ok especially on electronics but not good in other categories. Mind you all the electronics are imported, so the manufacturers especially of light goods and food don't have another distribution channel. Nakumatt problem is expensive leases and loads of employees. Normal margins for retail in kenya is 20%.

[Globalcitizen12]

20% is good margin

[Empedocles]

Jumia and kilimall are doing ok especially on electronics but not good in other categories. Mind you all the electronics are imported, so the manufacturers especially of light goods and food don't have another distribution channel. Nakumatt problem is expensive leases and loads of employees. Normal margins for retail in kenya is 20%.

Reminds me of a funny story when I first came back to live in Kenya. Went after about a year back to Europe for a couple of weeks holiday. Decided to go shopping in the neighborhood supermarket. Line up to pay, the lady finishes and we end up staring at each other. Her wondering why the heck I'm just standing there. Me wondering why nobody's packing my stuff.

[hk]

There's something about kenya retail sector that I don't understand. There's consolidation going on in the pharmacy retail sector. Haltons and Good life are busy acquiring independent pharmacies . However the two upcoming pharmacy giants products are more expensive than independents stores. I'd have thought with economy of scale their products would be cheaper. Someone needs to start an online pharmacy store and give the brick and mortal guys a run for their money.

[RV Pundit]

Do regulations allow for online store? I think we would have to adopt US kind of laws with possibility that people will order all sort of dangerous drugs online. The problem with most of our companies is trying to grow organically - from their own profits & revenue- rather than by attracting new capital esp from foreign fund managers awash with cash to invest.That is very dangerous way to grow fast. It make sense if you growing slowly over the years - but the supersonic growth speed that supermakets and those pharmacies are trying - they definitely need to get some fdi - or they'll burn out.

There's something about kenya retail sector that I don't understand. There's consolidation going on in the pharmacy retail sector. Haltons and Good life are busy acquiring independent pharmacies . However the two upcoming pharmacy giants products are more expensive than independents stores. I'd have thought with economy of scale their products would be cheaper. Someone needs to start an online pharmacy store and give the brick and mortal guys a run for their money.

[Empedocles]

There's something about kenya retail sector that I don't understand. There's consolidation going on in the pharmacy retail sector. Haltons and Good life are busy acquiring independent pharmacies . However the two upcoming pharmacy giants products are more expensive than independents stores. I'd have thought with economy of scale their products would be cheaper. Someone needs to start an online pharmacy store and give the brick and mortal guys a run for their money.

Kenyan retail prices never make sense in comparison to established western markets. For example, Brookside milk costs more per L if you buy the 2L container than if you buy 4 triangular packets of 1/2L. 

We do have an online pharmacies with pikipiki delivery: http://www.epharmacy.co.ke/ and www.kenyaonlinepharmacy.com, among others.

No clue on how they're doing. Never tried them and probably wouldn't.

The problem we have with pharmacies is the sheer amount of counterfeit medicines flooding the country, massively distorting the price perception of wanainchi suffering under extremely tight budgets. I have a friend who owns a pharmacy and the stories she tells me about the returns in importing and selling counterfeits, in a country where wealth guarantees 99.99998% immunity (Chris Murungaru of Anglo-Leasing fame, a veterinary doctor, is rumored to be a major player), are absolutely staggering:

Not a bad investment. Then, of course, the penalties are laughably outdated:

The penalty in Kenya for those dealing in counterfeit medicine is, for instance, a jail term of six months and a fine of about Sh20,000, which is not deterrent enough, said Mr Athman Hemed, an inspector at the Kenya Pharmacy and Poisons Board.

But then of course the next elections are always more important.

[RV Pundit]

http://www.businessdailyafrica.com/Corporate-News/PE-firm-Leapfrog-acquires-local-pharmacy-chain-in-Sh2-2b-deal/539550-3462078-shx44cz/index.html

[hk]

http://www.businessdailyafrica.com/Corporate-News/PE-firm-Leapfrog-acquires-local-pharmacy-chain-in-Sh2-2b-deal/539550-3462078-shx44cz/index.html

Its funny that a drug manufacturer http://www.businessdailyafrica.com/Indian-firm-to-buy-Sh1bn-stake-in-Universal-Corp/539552-3076566-qngnkmz/index.html was bought at half the price the Leapfrog paid for a drug distributor.