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Modern Retail Continues to Accelerate Kenya’s Economic Growth
Despite current economic challenges, the retail industry in Kenya has been growing, contributing greatly to the country’s economy.
Globally, retail is one of the largest revenue earners and providers of employment. According to the Kenya National Bureau of Statistics (KNBS), wholesale and retail trade is ranked 5th in Gross Domestic Product (GDP) contribution, and 3rd in private sector employment creation the country.
Data from the KNBS indicates that nearly 90 per cent of working Kenyans are in the informal sector, with a majority engaged in wholesale and retail trade. In addition, the sector plays a crucial role in advancing Kenya’s digital transformation agenda.
Modern Retail Continues to Accelerate Kenya’s Economic Growth
The KNBS Quarterly Gross Domestic Product Report indicates that the value added by wholesale and retail trade to the country’s GDP expanded by 4.9 per cent in the first quarter of 2023 compared to the previous year to record a 5.7 per cent growth. This growth was prompted by increased market activities as both local and international retailers expanded their physical and online presence, which was witnessed throughout 2023 and is expected to continue in 2024.
Adoption of Digital Innovation
The country is experiencing a growing digital economy. Kenya is one of the fastest growing e-commerce markets in Africa with user penetration exceeding the regional average, and a projected 16.4 per cent annual average growth by 2025. In a report titled ‘E-trade advancements across Sub Saharan Africa (SSA)’, Visa ranked Kenya third in total volume of e-commerce in 2019 and 2020.
Arguably, this has led to an increased need to offer convenience and seamless shopping experiences to customers, urging retailers to adopt digitised trade. For example, Carrefour Kenya promotes convenience through its e-commerce application, where we also run our loyalty programme.
Modern Retail Continues to Accelerate Kenya’s Economic Growth
The retail sector has also made efforts to stay in line with international trends by implementing new technologies and innovations. Carrefour Kenya, for instance, introduced the Self-Checkout and Scan&Go services last year, showcasing that technology is becoming increasingly important as customer preferences change. This will not only influence but also accelerate the adoption and implementation of new technologies in other industries in the country.
Employment Opportunities
Data from KNBS ranks the wholesale and retail trade as the 3rd largest contributor to private sector employment. It is estimated that 60 per cent of informal employment is concentrated in the wholesale and retail trade, hotels, and restaurants sectors. These industries are able to provide opportunities to both unskilled and skilled populations, employing over 9 million people in 2022. Undoubtedly, the retail industry is a viable solution to the challenge of youth unemployment in the country.
The Introduction of Modern Retail
Although more than 70 per cent of groceries and consumer goods are still purchased through informal retail such as dukas and kiosks, the retail industry in Kenya is experiencing a transformation.
In an article on ‘The Future of Traditional Retail in Africa’, the Boston Consulting Group notes that modern retail is expected to increase market share by 5% by 2030 driven by shifting customer behaviour, a growing digital ecosystem, and an educated and digitally savvy population in the continent.
Modern Retail Continues to Accelerate Kenya’s Economic Growth
The optimistic outlook of Kenya’s modern retail sector creates opportunities for international retailers and foreign investors to access local markets and establish export channels for Kenyan products.
For example, Carrefour collaborated with countries like Qatar, Bahrain, UAE, and Egypt to export a variety of herbs and fruits like pineapples, berries, plantains, and avocados, and tea, directly sourced from local farmers. This collaboration is expected to enhance the local agricultural business and boost the country’s highest GDP earning sector.
With an increase in modern retail activities and coverage and the rise of e-commerce, the retail industry will be instrumental in achieving the government’s development agenda, providing more formal employment opportunities and driving digital innovations and technology.
The industry will play a crucial role in fostering the growth of agribusinesses among small-scale farmers and the manufacturing sector by facilitating linkages between producers and customers and creating market access opportunities.
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