South African retailer Shoprite is opening its third store at City Mall in Mombasa in August.
“The City Mall store will carry an extensive range of locally produced products with some imported items from around the world. It will be the first Shoprite outlet with a seating area inside where customers can enjoy foods prepared in the store’s fresh foods departments,” Shoprite Kenya general manager Andrew Mweemba said in a statement.
Its first store was unveiled at Westgate in 2018 and the second at Garden City Mall in March.
Shoprite has also announced plans to accelerate the number of stores by the end of this year.
“A lease agreement has been concluded with The Karen Waterfront and the Group will follow up on other opportunities as they become available. Shoprite sees a lot of potential in the country and is excited about the prospect of expanding its footprint over time,” it said in a statement.
In the recent years, retailers in Kenya have been growing rapidly in a bid to tap into the relatively low formal retail penetration as well as the growing population and middle class, and hence increased disposable incomes according to Cytonn Investments.
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According to Shoppers’ Trend 2019 Report by Nielsen, informal retail in Kenya accounted for 66.3% of the total retail spend for the year ending March 2019, a 10.7% growth from 2018, whereas modern supermarkets, on the other hand, accounted for 33.7%, which was a 0.4% decline from 2018.
However, rapid growth has resulted in financial constraints for major retailers such as Nakumatt, Uchumi, and Choppies. “This has largely due to thinning profit margins and poor capital management as well as (ii) market saturation making selection of catchment areas to launch new stores a challenge, coupled by (iii) fierce competition from the increasingly growing international retailers such as Carrefour on the one hand who attract the high-end and upper mid-end income classes and on the other, the constant challenge of informal retail, who attract the lower mid-end and low end consumers especially in counties such as Kiambu and Bungoma,” cites Cytonn.
