Insight Retail Magazine Edition 14 by INSIGHT PUBLICATIONS

ISSUE 08 / OCTOBER - DECEMBER 2014

772305 556001 9 9

RETAIL BUSINESS INTELLIGENCE

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RETAIL BUSINESS INTELLIGENCE

556001

08 14

ISSN 2305-5561

IES

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EDITION 014 | AUGUST - NOVEMBER, 2016

Unlocking Africa’s retail opportunities

Retail Vs Mall BE PART OF THE DISCUSSION

BOOK TODAY TO RECEIVE 15% DISCOUNT | QUOTE: AFRA15

Bakery innovation & Expansion Trends T: +44(0)203 033 2020 W: www.retailcongressafrica.com E: info@retailcongressafrica.com

evolution in retail

• Retail Business Partnership Leasing transforms retail sector

RATEGY DIRECTOR | PICK N PAY Jeremy Hodara CO-CEO | AFRICA INTERNET HOLDING

• Dispensing Outsourcing Retail trends inin Retail - Case study outlook

ANAGING DIRECTOR RETAIL ESTATE | MR PRICE Ramanathan Hariharan CEO | MAX, LANDMARK GROUP

S SOUTH AFRICA Christine Service COUNTRY MANAGER | DISNEY

PART OF THE

BROUGHT TO YOU BY:

- Milk , Water & Cooking oil

• Retail Events Highlights Technology trends - Omni-Channel retailing

RETAILERS’ th FORUM & December AWARDS

2nd

4TH EDITION

2016

15 2014

INSIGHT RETAIL #14 | AUGUST - NOVEMBER, 2016

DEC 2016

INSIGHT RETAIL #14 | AUGUST - NOVEMBER, 2016

WHY LEASING IS A GOOD OPTION FOR YOUR BUSINESS. For business capital requirements business owners needs to consider many factors before they can conclude on decisions on how to fund the acquisitions. Choosing between cash purchases, Asset finance and Leasing the assets could involve very technical analysis. Businesses world over are increasingly taking preference on Leasing. Rentworks East Africa Limited, the pioneers in leasing for the region and leading independent leasing provider, has proven to have the ability to help businesses achieve their goals. They lease a variety of business equipment which includes: Supermarket equipment (Trolleys, Shelves, Coolers and Cash registers) Generators, Air-Con units, Construction Equipment, Agricultural, ICT-, Medical â&#x20AC;&#x201C; (including Dental and laboratories), Mining, Vehicles and transportation and Security equipment, office furniture and special business furniture for restaurants and salons. There are many benefits to leasing, No upfront deposits, reduced cash requirements and Tax savings but it also matches the usage of the equipment to the actual cash flows and benefits. At Rentworks East Africa customers are guided through a business supporting model and tailor-made solutions allowing organizations to optimize its performance.

For more information on how leasing can benefit you, feel free to contact us: E-mail: info@rentworks.co.ke

Asset Leasing Specialists INSIGHT RETAIL #14 | AUGUST - NOVEMBER, 2016

07 / NAKU SACCO 08 / LEASING CASE STUDY - TUMAINI 10 / TOMBAKE ENTRY TO KENYA

CONTENT

12 / BAKE CONSULTANCY – BAKE CONSULT 14 / ONE STOP BAKERY SOLUTIONS SHOP 15 / BAKERY ACCESSORIES

PG 10

EDITION 014 AUGUST - NOVEMBER, 2016

16 / OMNI CHANNEL RETAILING 19 / OIL DISPENSING CONCEPT

20 / WORLD CLASS SERVICE - WELLS FARGO

Pg 6.

Refrigeration Trends

21 / WATER DISPENSING CONCEPT

Pg 8. Retail Partnerships 26 / GETTING BAKERY RIGHT FOR RETAILERS 28 / RETAIL LEADERSHIP Pg 10. Innovation Trends

PG 16

29 / RETAIL FORUM 2015 CALENDAR

Pg 12.

Retail Outsourcing

30 / RETAIL IN UGANDA

Pg 14. Expansion Insights 31 / RETAIL STATISTICS 34 / RETAIL CONGRESS Pg 16. Retail & Mall Trends

Pg 18.

Managers’ Training

Subscribe for your next Issue: details on on Pg. 3318 See See details See details onPg. Pg. 20

+254.735.350.690 +254.725.350.690

PG 18 Is Now

Mandev Complex, Mombasa Road | P.O. Box 30223 - 00100 Nairoi Kenya Tel: +254 738 703 983 | +254 727 762 242 | Email: info@uni-eastafrica.com | www.uni-eastafrica.com 4

INSIGHT RETAIL #14 | AUGUST - NOVEMBER, 2016

EDITOR’S NOTE Dear Reader,

556001 772305 556001 9

ISSN 2305-5561

ISSUE 08 / OCTOBER - DECEMBER 2014

RETAIL BUSINESS INTELLIGENCE

772305

RETAIL BUSINESS INTELLIGENCE DEFINING REGIONAL STRATEGIES

ISSN 2305-5561

Now available in...

EDITION 014 | AUGUST - NOVEMBER, 2016

Unlocking Africa’s retail opportunities

Retail Vs Mall

elcome to the 14th edition of the Insight Retail magazine, the only business magazine distributed quarterly and free to the retail industry in East Africa. The publication shares insight on emerging and trending retail topics, technology and innovation cum industry’s best practices with a global benchmark.

BE PART OF THE DISCUSSION

BOOK TODAY TO RECEIVE 15% DISCOUNT | QUOTE: AFRA15

Bakery innovation & Expansion Trends T: +44(0)203 033 2020 W: www.retailcongressafrica.com E: info@retailcongressafrica.com

evolution in retail

INSPIRATIONAL SPEAKERS INCLUDE:

• Retail Business Partnership Leasing transforms retail sector

• Dispensing Outsourcing in Retail trends in Retail - Case study outlook

CO-SPONSOR:

MEDIA PARTNER:

PART OF THE

BROUGHT TO YOU BY:

- Milk , Water & Cooking oil

• Retail Events Highlights Technology trends

RETAILERS’ th FORUM & December AWARDS

2nd

- Omni-Channel retailing

4TH EDITION

2016

15 2014

INSIGHT RETAIL #14 | AUGUST - NOVEMBER, 2016

DEC 2016

Today, commercial expansion has become a norm for any business person involving where he/ she is planting the next branch, making it the top agenda of every business meeting. This issue mainly focuses on retail expansion and insights on the trending mall concepts; a vital element that every business growth plan has to undertake. We also highlight upcoming trends on Joint Business Partnerships (JBP); entering the industry with mutual interest of the suppliers and retailers, taking business to the next level.

EDITORIAL & ADVERTISING

Insight Retail East Africa CONTRIBUTORS Jasper Ouma Geoffrey Gitonga Karen Koigi EDITOR Ronald Rotich DESIGN/LAYOUT Judith Okong’o 0721496922

PUBLISHER Insight Retail East Africa © 2016 Insight Retail All material is strictly copyright and all rights were reserved. Reproduction in whole or in part without the written permission of Insight Retail is strictly forbidden. The greatest care has been taken to ensure the accuracy of information in this magazine at the time of going to press, but we accept no responsibility for omissions or errors.The views expressed in the magazine are not necessarily those of Insight Retail or Retail Interchange Centre. Retail Interchange Centre Ltd P.O. Box 36106 City Square 00200 Nairobi, Kenya +254 725 350 690 +254 735 350 690 email: info@insightretails.com www. insightretails.com www.insightpublication.org

In our retail events roundup for Q3/2016, coming up is the Regional Retail Conferences as scheduled for Mt. Kenya – Eastern Region, Western & Nyanza Region and later on Q4/2016 will be at coastal region and probably one National Event either in Uganda or Tanzania. We do appreciate our esteemed suppliers and industry solution providers who have embraced and partnered with us throughout our retail events, at regional and national levels. They have managed to build their brand network one-to-one with the users and business partners who share their vision, enabled better understanding of their business models - enabling the solution provider to tailor and plan solutions required in advance - and incorporate the same in their organizational strategic planning to ensure that they meet the requirements of the industry for both short and long term periods. On our Publication, Insight Retail Magazine readers are also urged to subscribe for the magazine so as to get direct delivery of the publication to their stores, attend any of our Retail events complementary and get nominal listing on upcoming East Africa Retailer’s and Supplier’s Directory which is currently incubated on the magazine. Finally, we would like to thank our readers and the entire retail industry for your continued support and contributions. Happy reading!

Managing Editor – Titus Korir

QUOTE OF THE SEASON

Customer acquisition costs 7X more than customer retention.” We welcome your feedback and suggestion through our email: retail@insightretails.com.

RETAIL online #14 | AUGUST NOVEMBER, 2016 Our publication isINSIGHT also available from the- web links below www.insightretails.com | www.insightpublication.org

REFRIGERATION TRENDS

Introducing the new Site Supervisor • Automated alerts for “out of tolerance” conditions • Energy monitory & demand • Access to data logs and equipment performance information • Real time & historical alarm notification Why Do I Need Facility Controls? Optimize your customer experience and achieve energy savings with Site Supervisor. Designed for C-Stores, Pharmacy, Mixed Retail and Commercial, Site Supervisor allows you to economically deploy controls for simultaneous foodservice equipment and refrigeration, optimization of lighting and HVAC systems throughout your entire enterprise.

Site Supervisor Home Screen

or small format retailers, providing fresh, quality food while maintaining a convenient shopping experience for their customers is a constant challenge. It means keeping close watch over every store system and piece of equipment impacting that experience — from refrigeration and lighting to heating and cooling.

When needed, authorized users can access temporary overrides effortlessly.

Enter Site Supervisor, a flexible facility control platform that simplifies this while giving retailers, including C-Stores, Pharmacy, Mixed Retail and Commercial, better control over their key store systems.

Key Benefits: • Intuitive Navigation: Easy to use with no special training for day-to-day operation. Familiar processes, icon-based navigation, and common tool bars on wall-mounted, desktop or mobile device.

As part of Emerson Climate Technologies’ Facility Controls family, the new Site Supervisor manages refrigeration, HVAC, lighting and other critical equipment and systems. It also collects data on important performance indicators, including refrigerated case temperatures, energy usage and HVAC discharge and space temperatures, so store managers can quickly respond to issues that may impact the customer experience and food safety. While powerful and feature-rich, Site Supervisor is still easy enough to use at the local levels. Site Supervisor gives store managers and service technicians enterpriselevel visibility to systems and equipment through a simple, intuitive interface. Optimized for small format stores, the local manager-friendly user interface makes it easy to determine current conditions.

Site Supervisor is optimized for use with Site Manager 16.2 and can also seamlessly connect to Emerson’s ProAct™ Services to diagnose alarms, resolve problems, and maintain systems.

• Priority Actions: Highlights the information needed for action and resolution. Priority alerts are visible in red for easy recognition, visibility and action. • Fast Response: Managers and servicers can act quickly, with detailed information available instantly in convenient drill-down screens • Mobile Optimized: Access and operate from anywhere. In addition to wallmounted and desktop control, authorized user can access on phone or tablet. • Secure Data: Options to manage locally, on your network or through the Emerson cloud. Key Features: • HVAC control, lighting control, door monitoring • Refrigeration monitoring and control • Remote access via standard web browser

INSIGHT RETAIL #14 | AUGUST - NOVEMBER, 2016

What Makes Up The Emerson Family of Facility Controls? Site Supervisor is a key element of the Emerson family of controls components and an architecture to build upon. At the core of the system is a centralized supervisory controller. From the centralized supervisory controller, a number of Emerson and third party control nodes can be connected to the Site Supervisor. What Are The Benefits Of Facility Controls? There are a host of benefits associated with facility controls. For most retailers, the immediate benefit is reduced power consumption through enhanced system optimization and control. With facility controls, the facility operator gets the benefits of: • Effective facility control of HVAC, lighting, and refrigeration systems • Enhanced facility insight • Notification of alarm conditions • Ability to troubleshoot mechanical systems remotely • Visibility of operational trends (equipment run times, power consumption) • Advanced diagnostics with smart devices • Product quality metrics temperature by case)

(product

• Energy trending & reporting • Reduced energy consumption More information on the site supervisor and facility controls systems is available from our website at www.emersonclimatemea.com.

RETAIL SECURITY

SOLUTIONS FOR - Banks - Schools - Hotels - Hospitals - Airport - Public Buildings - Retail

- Malls

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Our range of analogue and I.P closed circuit cameras, go beyond simple monitoring and extend to home automation for crime prevention and environment monitoring.

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INSIGHT RETAIL FEBRUARY | - APRIL, 2015 25 INSIGHT RETAIL #14 | AUGUST - NOVEMBER, 2016 7

RETAIL PARTNERSHIP

Retail Joint Business Partnership with Farming Solutions Ltd The JBP programme is available countrywide for retailers in major towns who wish to partner on this vital business venture for mutual benefit based on terms and condition stipulated on the JBP Agreement. The Joint Business Partnership will derive the following benefits on a highlight:Access to new markets: Joint Business Partnerships usually involve privileged access to new distribution networks and strategies. Since milk is highly consumable, a retailer has access to urban markets that include daily consumers shopping for other household products. Milk sold via dispensers are cheaper than milk packaged in 500ml packets, hence consumers will be attracted to it becoming a new product diversification within the retail space for the project is cost effective driving value preposition to the consumers

lobalization of world markets has seen retailers exposed to new, modern and suitable ways of effectively tapping into new customer bases and conducting business in general. One of the most embraced models is creating a Joint Business Partnership.

plan entails the supply of modern milk dispensers, commonly known as ‘Milk ATMs’ to the retailers under an agreement with the vendor – FSL. Retailers will be allowed to sell only pasteurized milk from the ‘Milk ATMs’ as authorized by the Kenya Dairy Board from the list of suppliers approved by FSL.

A joint business partnership (JBP) is a temporary agreement that two individuals form in order to gain mutual benefits which include sharing of costs, risks and rewards in one way or another, all according to their agreement.

Farming Solutions Ltd is working towards a complete supply chain integration from the farmers to consumers and in pipeline to have pasteurized milk from their farms.

It is important to note that one of the key objectives of Joint Business Partnerships is growth of the business. That is why Farming Solutions Limited (FSL) is offering dairy farmers and fresh milk retailers a platform through their joint business partnership plan to grow the business for mutual benefit of the industry players. The company now runs over 200 milk ATMs in various supermarkets in Nairobi, Eldoret, Kiambu, Bungoma, Busia and Machakos. These supermarkets which it operates include Uchumi, Naivas, Saltes, Eastmatt, Mulleys, Homematt, Royal seals, Thikamatt, Tesia, Chokaa Mart, Rivana’s, among other supermarkets in the retail industry. According to the CEO, Geoffrey Gitonga, the company’s Joint Business Partnership

This will be complemented by co-operative societies partnered with to sustain continuous supply of quality pasteurized milk to all retailers who will partner with FSL on the project. Farming Solutions Ltd’s aim is to provide farm fresh value directly to the consumers through their convenient and automated dispensers which will be situated at supermarkets or strategic locations. The smallest milk dispenser has a capacity of 200 litres while the largest has a capacity of 1,200 litres. Through this range of dispensing products, the business investors are guaranteed of value and growth from the level they deem will work for them with the right equipment to hold the capacity of stipulated sales growth for short and long term projections.

INSIGHT RETAIL #14 | AUGUST - NOVEMBER, 2016

No huge Capital Required: Joint Business Partnerships project entails less capital injection to business without initial investment of buying the dispenser. After the successful operation, there will be an option for the retailer to buy the dispenser or renew the JBP at the end of the engagement period. Access to Pasteurized milk: Farming Solutions Ltd has invested heavily on backward integration to farmers and cooperative society for sustainable supply of quality pasteurized milk to retailers on the partnership programme. Maintenance & Support: FSL has technicians who will install the dispensers and check in after a while for servicing of the milk ATMs at no extra cost for retailers on the Joint business partnership platform. Access to resources and technology: Farming Solutions Ltd will guarantee retailers access to resources which include specialized staff training and technology upgrade whenever needed to maintain efficiency of the equipment during the entire period of agreement without extra cost. With the above in mind, retailers are now poised to boost their milk businesses and reduce wastage; consumers are guaranteed hygienic and safe to drink milk while farmers get the most out of their milk produce.

Our Products are now at the click of a button

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THE OIL DISPENSING CONCEPT

SING O

Value Proposition to Retailer ur dispensing machines are Our fast main aims to essential digitized providing the avenue oday, many city residents have embraced theavail concept of dispensing milk through the now all popular auto basic products to consumers for clients to getmachines range of(ADMs) dispensing which have direct given milk consumers an opportunity to purchase clean and affo at Italian significantly affordable price at Solutions Limited, a company which has dive products at an affordable rate atthe theADMfresh milk. Behind borrowed concept is Farming strategically convenient location for the dispensing concept further. click of a button. ease of consumer access in major town to Geoffrey the company’s chief executive, retailers can invest in ADMs not only for milk but al in Kenya done directly like Dispensing AllAccording that is required is to Gitonga, key in the retailing edible oil, yogurt and fermented milk popularly known ‘Mala’. This quest to diversify has seen Farming Sol stops – Milk bars or throughas industry amount one needed to spend for the ispensing milk the now all popular automated venture into through an oil dispensing pilot project. “Our feasibility studies have shown that customers are in need of affordable, partners like Retailers who will install commodity – either Milk, Oil, Yoghurt or and quality edible oil,” he explains. mers an opportunity to purchase clean and affordable our digital dispensing machines at Mala and the product will be dispensed their storehas to enable consumers access automatically. ming Solutions Limited, a company diversified During a recent retailers’ conference which held in Mombasa County, while visiting some of the local retailers, the opportun products of their choice . further roll out the concept was presented to replace the manual oil dispensing practice that the retailers have been us

enable consumers purchase the commodity.

Our Automated Dispensing Machines provide five distinct value Benefits ofin Dispensers’ retailonly include s canbenefits investto ADMs not for milk but also for Retailer as in follows:la’. This quest to diversify has seen Farming Solutions shown that customers are in need of affordable, clean

visiting some of the local retailers, the opportunity to CROWD PULLER PRODUCT PRICE NO COINS NEEDED pensingThepractice that the retailers have been using to automated dispenser REDUCTION The new automated

y nt t

increases traffic into your shop. Consider this; milk is a must-buy item for most people – this translates into increased sales of other items in the shop.

The automated dispenser eliminates the process of packaging, thus allowing for the product to be sold at a much cheaper rate.

dispensers are operated using a digital display control panel. One simply needs to input the amount required and the product is dispensed.

AFFORDABILITY Automated dispensers sell small quantities of essential commodities (like milk) for as little as Kshs. 1.00. This not only makes it affordable but is able to cater for clients on varied budgets and needs.

ECO-FRIEND The automated dispe eco-friendly as the c can reuse or refill plastic or glass con This reduces polluti environmen

Celian House, Embakasi Village Next to Total Petrol Station Mezzanine Floor, Room No. 6

+254 722 249 600 www.farmingsolutionsltd.com

info@farmingsolutionsltd.com

INSIGHT RETAIL | ISSUE 08 | OCTOBER - DECEMBER 20

ECO-FRIENDLY The automated dispensers are eco-friendly as the customer can reuse or refill using plastic or glass containers. This reduces pollution of the environment.

Village Next to Total Petrol Station

+254 722 249 600

INSIGHT RETAIL #14 | AUGUST - NOVEMBER, 2016

RETAIL INNOVATION

Jumia to launch its own mobile money wallet Jumia Pay

eading pan African e-commerce Jumia announced yesterday the launch of JumiaPay, a third party online payment solution aimed at providing a safer, faster and more convenient online payment experience. The online payment solution, JumiaPay, is a first for e-commerce Jumia and will most certainly be decisive in facilitating online payments across the 23 African countries where it operates, encouraging the progressive change to cashless societies. If the majority of payments performed on Jumia’s platforms is cash on delivery (between 70 to 90%), JumiaPay comes as a major milestone for improving customers’ online experience for the coming months and years, following in the footsteps of Chinese e¬-commerce Alibaba and its online payment platform AliPay.

Jeremy Hodara, co CEO of Jumia, emphasized the value added of the new payment platform for the online customer: “Jumia Pay has a very simple yet crucial objective: go even further in providing a safe, secure and convenient shopping experience to our customers, building trust along the way between us, our thousands of sellers and our millions of customers.

QUICK SALE!!

We are very proud to be able to offer this new service to our customers and participate in building financial inclusion in Africa to unbanked or underbanked populations”. JumiaPay will first be implemented in Jumia’s biggest market, Nigeria, with more innovations to come before the end of the year. The advantages of mobile money are central for e-commerce in African countries where mobile penetration is soaring and where the main challenges are to build trust for the customers and provide adequate payment systems. Indeed, already 50% of Jumia customers access the different platforms via their mobile phone, that figure reaching 70% in Nigeria. With its very secure payment system using a confidential code, mobile money payment is among the most trusted forms of payment across Africa. Mobile money also offers many perks for the customer. First, the transfer is instantaneous and cheaper than any bank transactions. Second, payments via mobile money do not require the user to have a bank account, something decisive in 19 African countries where the population has less bank accounts than it has mobile money accounts. Jumia has also collaborated with leading telecom companies MTN, Orange and Tigo to launch their own mobile money solutions on 20 of its platforms, spread across 8 African countries (Senegal, Cameroon, Ivory Coast, Ghana, Rwanda, Uganda, Nigeria). Orange Money solutions are expected to launch in Ivory Coast and Cameroon at the beginning of Autumn on Jumia’s two biggest platforms there; Jumia Mall and Jumia Market (formerly Kaymu).

• 2 metre chiller • Condola’s • Shelves CALL: 0780350690 10

INSIGHT RETAIL #14 | AUGUST - NOVEMBER, 2016

MTN Mobile money and Tigo Cash are already live on more than 20 Jumia platforms (Jumia Mall, Jumia Market, Jumia Food, Jumia Travel and Jumia Deals) across 7 crucial countries in Africa, including 2 (Ivory Coast and Uganda) where the portion of the population with a mobile money account is higher than the portion of the population with a bank account. JumiaPay will undoubtedly be a stepping stone in ensuring safer transactions between customers and Jumia benefit greatly the thousands of local businesses and vendors who sell daily on the many platforms of the company, helping them connect in a more secure and convenient way with their customers.

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SUPERMARKET SOLUTION /REFRIGERATION

GONDOLAS.SHELVES.BREAD SHELVES. CASHIER COUNTERS. PROMOTION BOX. UPRIGHT CHILLERS &FREEZERS. SUPERMARKET DISPLAY CABINETS. TROLLEYS.ACCESSORIES. CHILLERS UNDERCOUNTERS. COLD & FREEZER ROOM. SOFT SERVE MACHINE.JUICE DISPENSER

COOKING,HEATING EQUIPMENT & BAIN MARIES

GAS BURNERS.FRYERS. SHAWARMA MACHINE. SHOWCASE & DELIS.CONVECTION OVEN. ROTTISSERIE.WARMERS.GRIDDLE.

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Main mombasa Road Allbid house, Opp ASL, P.O. Box 49938, 00100. Nairobi. Email:info@nkc.co.ke web: www.nkc.co.ke Tel: 020 2133076 / +254 - 727 246 209/+254 - 725 351 079 - NOVEMBER, 2016 INSIGHT RETAIL #14 | AUGUST

RETAIL OUTSOURCING

Outsourcing trends in retail space needs for better customer services. Escalating operational costs - which can be minimized by using few qualified and specialized staff on their area of operations – is another crucial area of retailing that the modern retailer can use outsourcing to effectively address. The following are trending options for the retailer looking to outsource:

he retail industry is an increasingly competitive economic field with retailers looking for game-changing strategies to achieve an advantage as well as enhance the effectiveness of their operations. This fact is reinforced through challenges that the modern retailer faces such as: market saturation, high operating expenses, buyers with less disposable income and reduced consumer loyalty. In order to curb these and improve their service delivery, retailers continue to turn to contracting their business operations and responsibilities to a third-party service provider; this has resulted to outsourcing at large in retail industry. Looking at the progressively complex set up of the modern retail sector, there are layers of incorporated in-house activities that may need more attention that what the retailer may give. From logistics, marketing, IT, human resource, warehousing or customer service, modern retailers need to consider outsourcing. Coupled with consumers’ constant expectation of new products and services, innovations and modern technologies, this suggests that trends in logistics Management, Labour and IT outsourcing in retail will be of focus in the coming future. Online retailing and Outsourcing Online retailing is now booming because of the rising penetration of internet and most importantly, smartphone’s and related gadgets. This has enabled customers to quickly research and make their purchases online and naturally expect delivery to their doorsteps.

“Outsourcing is the best model which will drive retailers to their core business of retailing.” However, most retailers don’t see this coming and may run out of space to store their products. The need to upgrade storage space will introduce more warehousing costs like electricity, labour, IT systems, regulations and some more taxes. Outsourcing your business aspect on warehousing can not only help in reducing your risks as a retailer but also allow you to share such costs with other companies. Online retailing outsources 90% of the task to third parties from space hosting, warehousing of goods and logistical tracking as well as delivery of the items bought online. These tasks are given to professional firms in that industry that will provide better and efficient services, leaving the online retailer with lean operating costs. Therefore, the retailer is able to be concentrate on the core business and become competitively cheaper as compared to other outlets. Retail chain stores and Outsourcing In Kenyan retail space, outsourcing has been adopted by approximately 50% of the industry at the moment as compared to developed states. It is expected that the same will increase in the next decade due to demands driven by

INSIGHT RETAIL #14 | AUGUST - NOVEMBER, 2016

• Labour sourcing – this is where retail store outsources its labour to a management firm which will be able to operate efficiently and manage all related matters of human resources from leave management, labourers’ unrests leaving the retailer with a concentrated mind on core business of retail. Labour in Kenya is already outsourced in some retail stores for: • Guarding. • Pilferage management/Loss Prevention staff. • Floor Supervisors, Shelf stockers and managers. Some of the key areas not outsourced so far are the branch management and all the management staff at the head offices. Individual on these levels are deemed to be core employees of the company but can still be outsourced depending on the interests of the retailer. • Warehousing and logistical – this is where retailers outsource services regarding storage of goods and their delivery to the retail outlets to a third party who is doing it as a core business. Apart from the advantage of experience, the outsourced partner can go the extra mile of tracking of goods from central warehousing to the branches and to consumers. • IT Solutions - Software and support services is becoming another area where retailers have also exercised the model of outsourcing. Although not so much undertaken in Kenya’s retail sector, it’s a model that is already practiced in the developed economy. In addition to these, focus on analytics by business leaders has grown to become an important trend in modern retail. With these analytics, retailers can map trends, make more accurate forecasts and eventually realign their strategies. With retailer outsourcing agreements on the rise, the outlook for retail is positive and is set to see more and more partnerships develop in the future in an increasingly technologyenabled and dependable business world.

RETAIL OUTSOURCING

INSIGHT RETAIL #14 | AUGUST - NOVEMBER, 2016

RETAIL INSIGHTS

Retail Expansion Insight area for the business will depend on the shoppers or consumers for the sustainability and growth of business in that mall. • Mall marketing strategies – these should enable the mall traffic to grow on footage to the mall in the located areas to improve and create a business hub within its locality hence making retail stores make sales and remain afloat to breakeven their costs.

Subway on Kenyatta Avenue, Nairobi

n the recent past months, we have noted that retail chain stores expansion is getting a notch higher.

In Q2/2016, however, slow expansion has been noted especially on Tier-01 Kenyan retailers (those with over 31 branches) as compared to those of Tier-2 (with between 15-30 branches). These same slow paces of expansion is seen in retailer chain stores with 14 branches and below while expansion strategies for multinationals like Carrefour, Game and Choppies are yet to take off. Other retail chains like pharmacies, agrovets as well as some Tyre stores have also changed their growth strategies with new retailers like Farm Shops taking up new business models to have more stores coming up in agricultural towns. Sidai, a Kenyan livestock sector enterprise aims to revolutionize provision of livestock and veterinary services to farmers by implementing the franchise business model with over 150 franchised and branded Livestock Services Centers are opened all over the country. This model seems to be the next frontier for the near future even on new and upcoming retail convenient stores such as Seven2Seven.

This model seems to be the next frontier for the near future even on new and upcoming retail convenient stores such as Seven2Seven. In the fast food industry, there has been entry of food chains to the local market KFC, SUBWAYS, DOMINOS among others - and have adopted the franchise model which is working well for them so far. We foresee the same being replicated throughout the retail industry with upcoming and strategically located malls being the most likely answer to their concern of where to set up these additional stores. Mall developments have sparkled retail expansion in the past few years and what retail owners need to consider before engaging on lease contracts with mall developers include the following:• Target customers – Retailers should understand their shoppers and foresee that where the mall will be located will hub their clientele in that

INSIGHT RETAIL #14 | AUGUST - NOVEMBER, 2016

• Lease agreements – Tenants engaging with mall property managers should be able to anticipate business growth in the location of the mall before entering such agreements. They should also ensure that they have a good exit clause incase the business doesn’t work out for them. Alternatively, they should also pay attention to anything concerning the provision for sub-tenancy agreements in case of having joint business within the same space to reduce the overhead cost of rental expenses. • Security – Tenants on the mall should also consider the security of the mall which will relatively reflect the consumer’s perspective on shopping at secure places. • Power Back-up – Tenants should also consider availability of power back up within the mall where they are going to locate their businesses. Alternatively they should inquire in advance whether there will be permission for the business owners to have their own generators within the mall. • Mall Location & Parking Area - Tenants should ensure the convenience of their shoppers entering and exiting the mall. Target customers’ conveniences at the mall, the area of parking and related factors are important before one makes the decision of locating their business in a specific mall.

OUTSOURCING IN RETAIL

CLUB 2013/14

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INSIGHT RETAIL #14 | AUGUST - NOVEMBER, 2016

RETAIL & MALL TRENDS Garden City Mall

New malls in Nairobi are here to stay By Peter Clarke, Garden City Mall General Manager

hile traditional informal retail remains a strong competitor to the formal retail in Kenya, the need for formal retail among the growing middle class and upper class is still growing as disposable incomes grow annually. As Kenya only contributes to 30% of the formal retail space in Africa after South Africa, we believe this percentage will continue to grow over the next eight years as more international brands enter the Kenyan and East African markets. Kenyan consumers desire a larger variety of retail offerings as the current local retailers have limited product offerings even as they expand to the various up and coming shopping centres. This this can only be satisfied by international brands such as H & M, Terranova, Mango, Rocomamas, Planet Fitness, F & F fashions among others. Furthermore, there is a gap in the market for international best practice retail marketing as the current model is out dated and old fashioned. Within the Garden City Mall, certain elements such as lighting, window display, layout designs, realigning products and customer service among many others have been changed to ensure retailers and customers

These developments will be a great success in East Africa as they offer the ideal layout, that is, eat, work and play lifestyle concept practiced in many developed countries. have a much better experience of the mall. While many may regard the management of shopping centres in East Africa as an easy venture to undertake, shopping centre management and the retail sector is a science that is changing dynamically in Africa and globally. From an African perspective, the number of retail shopping centres per square metre per annum is on the rise, to date, Kenya only provides 199mÂ˛ of Gross Lettable Area (GLA) per 1,000 people, this indicates that as disposable income rises annually, Kenyans will need more sophisticated small scale retail centres in less densely populated areas in

INSIGHT RETAIL #14 | AUGUST - NOVEMBER, 2016

Kenya. Nevertheless, developments such as Garden City, The Hub and Two Rivers still play a critical role in the Kenyan retail space. These developments will be a great success in East Africa as they offer the ideal layout, that is, eat, work and play lifestyle concept practiced in many developed countries. However, the retail sector is not without its challenges, to date security remains a key area of focus for shopping centre managers. One must ensure the right technology and security techniques are applied without negatively affecting the customers stay at the mall. In addition, while local and international retailers want to space to trade at malls, landlords need to be realistic, be more accommodating to retailerâ&#x20AC;&#x2122;s terms and conditions and be more willing to share in liability and profits through a mutual beneficial revenue share agreement. This agreement ensures both parties remain in business irrespective of the economic climate. Overall the retail sector in Kenya is vibrant and promising. We will continue to work closely with landlords and tenants within our managed malls to ensure we they adapt to the ever changing retail landscape.

RETAIL & MALL TRENDS

Understanding the science of shopping centre management By Karen Koigi, Broll Kenya Head of Research Email: kkoigi@broll.co.ke

etail property management has become a science, with well-thought of management expertise and strategies on how an asset will be managed. Gone are the days of shopping centre owners sitting on site and collecting rent from tenants. While this hands-on involvement by owners brought a personable touch to the centre environment, the global retail landscape has become very scientific and fiercely competitive. Retail now requires active management and close analysis of key metrics relating to the centre. Tenant selection and positioning is fundamental at the early planning stages of the management of the asset. Globally, a new profession has emerged, that of Retail Architects are specialist Architects involved in the Architectural design of retail centres. Brolls role is specialist Retail Property Manager , we specialize on finding the best and innovative ways of managing a shopping centre, however, while some practices may be similar, no one size fits all when it comes to management as each centre is different, has a different (and sometimes similar tenant mix) but also caters to different shoppers.

be analysed, the same applies to foot count and parking count to observe and analyse these trends. Ultimately, the modern day landlord needs this information along with advice and analysis thereof. The collection of this data has resulted in software developments that slice and dice and charts the various property performance metrics. This however, needs to be backed by solid experience, a vast database and trend analysis. Broll Property Group manages third party property assets of over 40 million square metres across all service lines in SubSaharan Africa. Broll Kenya manages two shopping centres, Garden City and The Hub in Nairobi.

These specialists talk about heat mapping zones in a centre where there is consistent poor tenant performance thus highlighting the need to place the right tenant in the right location paying the right rental price.

Research bases and statistical data in some parts of Africa are still fairly new concepts and credible databases and trading behaviours are not readily available unless you have your own database and analytical skills in place, as Broll has.

Furthermore, trading densities based on individual tenant trading figures need to

Many analysts and industry critics are very quick to point out the challenges

in the local industry but the proper and accurate analysis of these challenges and a solution oriented approach allows a rapid competitive advantage to be gained. The Broll model has allowed the employment of experienced retail expats to bring in their mentorship skills however, the idea is always to impart and develop the local talent base. In the past 12 months, the Broll Kenya team has grown to include seasoned property managers who bring their invaluable local knowledge to the mix and solution matrix. We are seeing that landlords are no longer taking a back sit, rather, they are partners who actively engage with shopping centre management to achieve the best results. In addition, we have taken a proactive approach to management and have introduced global tenant skills training to educate and appraise their landlords looking at how to best sell and to position their merchandise plus a few tricks to ensure they make money.

RETAIL TRAINING

Who is a highly successful retail manager?

o start with I would like you to rate yourself as a Retail Manager and decide whether you qualify to be given the honorable title of A HIGHLY SUCCESSFUL RETAIL WHO IS A HIGHLY MANAGER (HSRM). SUCCESSFUL Rate yourselfRETAIL based MANAGER? on the following parameters:

o start with I would like you to rate yourself as a Retail Manager and decide whether you qualify to be Checklist – Give yourself 5 for best and 1 for not ven theHSRM honorable title of A HIGHLY SUCCESSFUL RETAIL MANAGER (HSRM). Rate yourself based on “best” avoid a “3”philosophy! he following parameters:

SRM Checklist – Give yourself 5 for best and 1 for not “best” avoid a “3”philosophy! No.

Parameter I know my Customer and I Practice 1. Exemplary Customer Service I train my staff continuously 2. I am the role model lead by example 3. I Motivate my staff and boss 4. I am a good coach 5. I manage time well 6. I am a good communicator 7. Absolutely honest and 8. unquestionable integrity I am accessible to all 9. I Manage Performance 10. I like to see growth in my staff 11. I appreciate staff and show it 12. I manage my bosses 13. I have good Industry Networks 14. I am Energetic, Ambitious and 15. Enthusiastic I am an expert at Merchandising 16. I know how to smile 17. I Work Hard for Results and team 18. I go all-out for Both Quality and 19. Quantity I am an action oriented decision 20. maker

Jasper Ouma

Equips

Enforces

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Educates

•

Equipping Skills that produce unique and delightful service  Equipping Skills that produce unique and delightful service • Encourage ownership and self-pride • Educate on Responsibility and self-management  Encourage ownership and self-pride • Edify Performance measurement and management • Enforce Professionalism  Educate on Responsibility and self-management

This training leads to:and management  Edify Performance measurement • Competently handling all customers both internal and external  Enforce Professionalism • bestdo interest of the Company at all times n the test above, the highest score would be 100 and lowest would be 20,Keeping so where you belong and • Openly communicates at all levels This training leads to: would you liketest to belong elsewhere? Can would you test else? In the above, the highest score besomeone 100 and lowest • Becomes an open “password” to cashiers as well as would be 20, so where do you belong and wouldyouCompetently like to customers handling all customers both internal and external belong elsewhere? Can you test someone else? • Develops ownership, honesty and integrity  Keeping best interest of the Company at all times People Training that leads to HSRM eople Training that leads to HSRM All these trainings can be developed for a discerning Apart from natural talents that individuals have, training can upcommunicates client. at all levels  Openly skill natural a retailertalents to Excellency. The picturehave, belowtraining gives youcan a visual part from that individuals up skill a retailer to Excellency. The picture over view followed by a brief explanation.  Becomes an open “password” to cashiers as well as customers elow gives you a visual over view followed by a brief explanation. Article by JASPER OUMA, CHIEF TRAINER AT DMS LTD jasper@dms-train.com Tel contact: 0722726055  Develops ownership, honesty and integrity

INSIGHT RETAIL #14 | AUGUST - NOVEMBER, 2016 All these trainings can be developed for a discerning client.

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INSIGHT RETAIL #14 | AUGUST - NOVEMBER, 2016

TECHNOLOGY INNOVATIONS & TRENDS

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INSIGHT RETAIL #14 | AUGUST - NOVEMBER, 2016

RETAIL & MALL TRENDS

Knight Frank Insights on Mall Trends

night Frank Kenya has a wealth of specialised retail centre management and marketing expertise, developed for over 15 years. This vast experience ensures that occupiers get high footfall and conversion rates in the shopping malls. As a result, Knight Frank Kenya is the market leader in retail leasing, management and marketing – with major malls such as The Junction, Capital Centre, T-Mall, w, Rosslyn Riviera, Cedar Mall, Mtwapa Mall, Lunga Lunga Square and Oasis Mall in its portfolio. Ashmi Shah, Knight Frank Kenya’s Retail Portfolio Manager, shared the following:

1. Share insights of mall development in Kenya and if any idea on East Africa. With East Africa attracting investor interest into real estate, the region’s retail sector is a major focus for development activity. While this focus has been on major cities, developers are also looking at second-tier cities with a view to getting the first-mover advantage. In Nairobi, the existing formal retail sector was estimated at about 391,000 square metres at the start of the year, with a further 470,000sqm in the pipeline. Some of the developments in the pipeline have since opened for business and others will open before the year ends. In Tanzania, Dar es Salaam had approximately 107,000sqm of existing formal retail space and a pipeline of 235,000sqm; while Kampala, Uganda, had about 182,000sqm existing formal retail space and a pipeline of about 128,000sqm. 2. How do you foresee the trends for the next 5yrs and 10yrs? As outlined in Knight Frank’s Shop Africa 2016 report, which reviews shopping centre development trends across Sub-Saharan Africa, the region is experiencing a wave of modern mall development on the back of the consumer markets’ growth. The demographic is young and the middleincome class is growing. This group offers brand-conscious, tech-savvy consumers who are increasingly demanding more sophisticated retail formats as demonstrated by the new malls coming up. In the major cities, the trend now is towards bigger and higher quality malls. In secondtier cities, outside of the current hotspots,

developers are seeking the first-mover advantage in locations that lack modern malls. 3. The population of Africa is growing. How do you foresee the current growth of mall development impacting retail business in the medium to long term, especially for retailers? The current wave of mall development has attracted interest from more international brands, which complement local retailers. In addition, new shopping centres are incorporating leisure facilities. Essentially, retailers can now boast of an upscale consumer experience. 4. How would you advise retailers on taking anchor spaces on the mall to consider? For any retailer, the location within a mall has to be strategic to draw more shoppers walking through the mall. 5. Rental is the key component cost in retail business, how will you advise retailers on taking leases for such spaces to consider? Exit clauses / terms & Conditions / Sub – leases agreement to enable sub-lets etc The lease term by law is 5 years and 3 months. Most leases do not permit sub-letting. Therefore, tenants need to be sure that their businesses will work for at least that period. 6. Are our malls marketed well enough to drive numbers (shoppers) to shop in the malls or will the traditional shopping model still drive the shoppers to enable businesses to be sustainable? Marketing is definitely key for all malls.

There will be some malls, especially the neighbourhood malls, which may not need to market a lot since footfall is driven by the demographics in the area. 7. We do foresee urban towns embracing the culture and changes on mall developments – where do you foresee the traditional shopping centres ending up to? In Nairobi, places like Valley Arcade exist with its business model while malls around the place are mushrooming i.e. Yaya Centre, The Junction etc. The business owners and landlords to such places should do what to drive shoppers to their places? Other places is Muthaiga shopping centre etc. Marketing is definitely key for these type of shopping centres, which helps highlight the uniqueness of the shops or the fact they are one-stop models. 8. Insurance in mall is taken by landlord and tenants separately to cover their interest - how best could this be handled for mutual benefit and interest to reduce the cost of Insurance? Landlords can possibly negotiate on behalf of the tenants and re-charge them. This may be cheaper than the individual tenants negotiating separately. 9. Security in the mall is also key – advice briefly on how it should be handled. Security is definitely key in all malls. Mall developers invest heavily in equipment and hiring professional security services providers, and so on. Security is a combination of the various factors and should serve as a deterrent against potential detractors, and shouldn’t be disruptive to shoppers.

INSIGHT RETAIL #14 | AUGUST - NOVEMBER, 2016

RETAIL TRENDS

3RD EDITION

in pictures

2016

RETAILERS CONVENTION 2016 NAIROBI