Experts in the real estate industry have unearthed a new trend in the retail market, specifically for big chain supermarket chains.
As revealed in the East Africa Retail Market Infographics for 2024 Quater 1, supermarkets have opted out of malls and settled to set shop in residential estates.
It was explained that consumer shopping preferences occasioned the new trend.
The report detailed that most Kenyans were opting for convenience shopping, hence supermarkets' push to move closer to the consumers.
Consumers were also reported to have adopted cost-saving measures when undertaking shopping. Therefore, it will be easier for a customer to go to a supermarket near them than going to the mall far away to do shopping.
"Traditionally, retailers primarily focused their outlets within well-established malls, predominantly situated in affluent neighbourhoods, distanced from the majority of urban residents. However, evolving consumer spending behaviours, marked by a preference for convenience, have compelled retailers to establish their presence in residential areas.
"This shift, coupled with reduced disposable incomes and the surge in e-commerce, is prompting retailers to recalibrate their customer outreach strategies," read the report in part.
Consequently, the experts detailed that there would be minimal projects on malls as had been witnessed in previous years.
"As a result, there has been a discernible decrease in market expansions and new entrants compared to previous years, as developers align their efforts with a more conservative approach characterised by fewer speculative developments." read the report in part.
"The retail sector stands as one of the top-performing asset classes in the market."
Meanwhile, the report also highlighted the rent rate for supermarkets at major malls. According to the estimates, supermarkets pay between Ksh3,800 to Ksh6,450 per square meter.
Key Highlights in the Retail Industry in Kenya
- Supermarkets are increasingly setting up branches at residential estates.
- There is an increase in e-commerce.
- There is a decrease in market expansions and new entrants
- Supermarkets dominate the formal retail market, with prime monthly rents ranging between Ksh3,800 to Ksh6,450 per square meter.
