South African retailer Shoprite is the latest retailer in Kenya to announce laying off of its 100 staff and the closure of its Waterfront, Karen branch due to the reduced flow of shoppers.
Carolyne Walubengo, Shoprite HR Manager in a notice to the Kenya Union of Commercial Food and Allied Workers (KUCFW), informed it of the plans to terminate employment contracts of all employees on May 20.
“It is envisaged that the extent of the redundancy will impact all employees at the said branch. There are currently 104 persons employed at the branch of which 74 are KUCFW members.”
The management of the Ksh 3.0 billion Waterfront Mall, that opened its doors in 2018, assured its customers that services will continue being provided by other retailers.
“We will endeavor to ensure that our clients will continue to receive the services and goods in spite of the closure,” David Muguku, Director at the Waterfront Karen said in a statement.
“Similarly, we would like to assure our other tenants that we will continue to closely work with them to ensure minimal interruption to business and wherever possible, jointly establishing solutions that fit their business needs”.
Cytonn Investments observes that constrained spending power among consumers is due to a tough financial environment and an introduction of 0.8 mn SQFT of retail space in 2019, with the addition of malls such as The Well in Karen and the expansion of Sarit Centre in Westlands.
Waterfront was the fourth mall to be opened up in Karen area, in addition to; The Hub, Karen Crossroads, and Galleria, whose sizes are 322,917 SQFT, 85,035 SQFT, and 158,229 SQFT and were opened in 2016, 2005 and 2011, respectively.
It now remains with its branch at Westgate, Garden City mall and City Mall (Mombasa).
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Cytonn Investments Q1’2020 Markets Review, Kenya’s retail sector performance softened slightly with yields declining by 0.1 per cent points to 7.7 per cent in Q1’2020 from 7.8 per cent in FY’2019 attributed to a tough economic environment that continued to affect consumer’s spending power as well as the existing oversupply of retail space estimated at 2.8 mn SQFT as at 2019.
During the period, continued entry of international retailers drove up average occupancy rates by 0.4 per cent points to 76.3 per cent in Q1’2020 from 75.9 per cent recorded in FY’2019.
“Despite the existing oversupply of retail office space by approximately 2.8 mn SQFT as at 2019, we expect continued activities in the sector, supported by the continued entry of international retailers and expansion of local retailers, which will cushion the performance of the sector in 2020.
The investment opportunity is in mixed-use concepts in areas such as Karen and Kilimani, with attractive yields of 10.6 per cent and 8.4 per cent, respectively,” said Wacu Mbugua, Research Analyst at Cytonn.