As it appeared in the Daily Nation on November 28th, 2017
A few years back, one of the media houses would broadcast price comparisons of a few basic commodities between the four large retail chains. The four large retailers then were Nakumatt, Uchumi, Tusky and Naivas. Ever since, the retail space in Kenya has undergone tremendously change. We have not only seen the decline of Nakumatt and Uchumi but we have seen a major expansion of other local retail chains such as Chandarana, Quickmart, Magunas among others. Small single store neighbourhood retailers have also sprouted within the residential areas. We have also witnessed the entry into the Kenyan market of two major global retail chains Carrefour and Game. Since the price comparisons by the media house ceased, the question is who among all these retailers has maintained the lowest price? Does any of the retailers have a low cost low prices strategy? Do the single store small neighbourhood retailers have a lower price or a higher price compared to the larger retail chains?
A quick crosscheck in a number of the large retail stores revealed that the prices of basic commodities such as milk and sugar are standard. These retailers seen to abide by the recommended manufacturers’ retail price. However, for many other products including meat products, fruits and vegetables as well as non-food items there is a major variability in price. Price variability is larger stores is also evident in the small neighbourhood stores. Though no major conclusions can be made from such a quick crosscheck, it seems that in Kenya, price of retail products is yet to be a battleground. This could be attributed to the fact that our retail sector is yet to reach maturity.
Globally, Walmart with its footing in the more mature USA market focuses on both low cost and low price. With over 11,000 total retail units in 28 countries and employing approximately 2.3 million staff, Walmart takes the leadership position in the retail sector globally. Over the years, slogans such as “Everyday Low Prices” and “Always Low Prices” have characterized the chain whose last rebranding effort saw it adopt the “Save money. Live better” slogan. On its corporate website, Walmart says that it saves people money so that they can live better. In Kenya, Walmart opened its first store through Massmart’s Game franchise at the Garden City mall on Thika Road in 2015. Massmart is scheduled to open the second Game store at the Waterfront mall in Karen next year. Game prides itself as Africa’s largest discount retailer promising to beat any price of identical products by refunding the difference within 21 days. Will Game be the retailer that offers low prices to the Kenyan consumer?
Other than Game, I am unaware of any other local or global retailer in Kenya that has categorically advanced a low price strategy. More data would definitely need to be collected to confirm if indeed any of our retailers has taken the low price route. If such a retailer does currently exists, I would call their marketing efforts into question. I believe that at the center of being a low cost retailer is the need to efficiently manage the supply chain, keep the labour costs to the minimum, curb pilfering, raise productivity and ensure sound management of the finances. All this will be to the benefit of the customer who can then enjoy better prices every day.
Lucy Kiruthu is a Management Consultant and Trainer connect via twitter @KiruthuLucy