The State of the Retail Industry in Kenya – A Property Manager’s Role

Purpose: Under the Kenya Vision 2030, the Government targeted to raise the share of products sold through the formal retail channels, such as supermarkets from 5% in 2007 to 30% in 2012. The retail sector was among priority sectors projected to make up the largest part of Kenya’s Gross domestic Product and create approximately 50% of the total formal employment. The formal retail market in Kenya is estimated at 33% of these supermarkets and hypermarkets chains constitute at least 20% of the formal retail spaces. Within this period, developers responded and constructed new malls. In Kenya, many of the newer shopping centres offer a mix of shopping, leisure and even hotels. This is to match other countries’ developments as well as new consumer shopping habits. In 2010 to 2015, most of the shopping centres had their anchor tenant as local players. In 2015, however, the country has seen the entry of several international brands, such as GAME, Carrefour, Shoprite and Choppies, which was made easier by the exit of major brands such as Nakumatt, Uchumi and Ukwala. These first two were anchor tenants in most of the shopping malls. Nakumatt had 66 branches across Kenya, Uganda, and Rwanda. Uchumi had 25 branches spread out in Kenya, Uganda, and Tanzania. The effect of their going down left many shopping malls without an anchor tenant, left landlords with huge rent arrears and left their suppliers in so much debt, that some have had to close business. In time some of these shopping malls found new anchor tenants in Carrefour and Foodplus. Then the COVID-19 pandemic hit and though the anchor tenants seem to be doing well, many line tenants have had to close their businesses. The paper examines the main factors leading to the collapse of these major supermarkets some of which have been there since 1975 and had the backing of the Government and were considered low risk. The paper also examines the effect of this collapse and the COVID-19 pandemic on shopping malls.Methodology: This was done through literature review and interviews with identified groups. Findings: Findings indicate that some of these supermarkets expanded too quickly meaning the growth was unsustainable. Their failure has negatively impacted many groups in the retail sector. These groups include the landlord where they had rented premises and rents were unpaid, suppliers who in some cases have gone bankrupt because of unpaid invoices. Also affected are other tenants in the shopping centres who were attracted to take up space in a shopping centre, because of the presence of a strong anchor. These tenants are now struggling, and some have had to close shop. Tenants who survived the loss of the anchor tenant, may now not survive the COVID-19 pandemic.Practical implications: The paper recommends that the property manager has a role to play in monitoring tenants and identifying a struggling tenant as early as possible. Secondly, that there should be a code of practice between retailers, their supplier, and their landlords. Thirdly the property manager had a role to play in making shopping malls safer by making sure shoppers and retail stores adhere to the standard distancing protocol, traffic monitoring, & face mask wearing.