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Millions of small independent stores in East Africa will need to look to diversify, digitize and even partner for growth in response to a challenging and rapidly evolving landscape. These cornerstones of neighborhoods are undeniably an integral part of a country’s socio-economic system.
Representing some of the world’s most beloved FMCG and trademark brands, Smollan provides a glimpse into the dynamics of this growing industry and the challenges and opportunities that lie ahead. Seen within the context of small-scale retailing associated with history, traditions and trade preferences of consumers in a particular region.
As defined by EuroMonitor International, trading spaces can range from as little as 1 m2 to 30 m2 and due to their small footprint, traders are located closer to consumers, along transport hubs and routes, or within local communities. Proximity also extends to knowing and stocking the customer’s favorite brands and products and offering credit to loyal customers.
While this sector can be difficult to quantify as data is generally sparse across all regions that make up the East African retail community, a recent United Nations Economic Commission for Africa shows that small and local retail transactions account for 70% in Kenya alone. That said, these companies face numerous challenges despite being relied upon by the vast majority of the population. These include limited access to financial resources; the lack of ability to manage stock and inventory; technology adoption; vulnerability to economic shocks; competition from larger players, and as East Africa evolves, the unbundling of regulatory barriers. They may indeed be the dominant players in the market, but disjointed structures can make it difficult for them to effectively run and scale their business.
Nevertheless, the potential is there as increased innovation and investment become the catalyst for change. Warren Brett Cluster Executive, SEA Region, Smollan Tanzania said: “Empowering small retailers through digital and financial inclusion is definitely the way forward. In Kenya, we have done this successfully with Unilever and Mastercard under the ‘Jaza Duka Programme’, equipping small retailers to accept electronic payments and access financial services. In Tanzania, we are also looking at how we can create a technical solution to support secondary sales from the distribution footprint. In this case, it’s all about putting power in the hands of the ‘duka’ owner and supporting consumer needs through consistent availability.”
According to business news outlet Quartz Africa, the roadmap for change for small-scale retailers to get much-needed support is to formulate solutions that make business easier and more efficient for them, addressing the need for inventory management, logistics, mobility and access to credit to name a few. One cited example, which is seen as a major breakthrough in the region, is Wasoko, which is currently active in Kenya, Tanzania, Uganda, Rwanda, Ivory Coast and Senegal. A start-up that supports informal and small-scale retailers and enables them to easily stock their stores, eliminating the hassle of dealing with different suppliers and distributors. They also offer tailored lines of credit to provide retailers with working capital and data-driven insights for further analysis.
Similarly, East Africa Business Week recently reported that the East African Business Council (EABC) and the International Trade Center (ITC) have launched an online platform designed to boost the competitive advantage of the region’s small businesses. Providing them with a way to support their recovery, build resilience and drive growth through digital technology. Also in banking and financial services, Hilbret Bank launched a digital payment platform that allows Ethiopian small businesses and retailers to accept international card payments for online purchases.
“The opportunities are there – through collaborative networks, government support programs and the growing demand for locally made products. It’s a matter of shutting down the ecosystem to make it easier for retailers to be served by brand owners, and the technology to enable their businesses,” said Brett.
Distributed by APO Group on behalf of Smollan.
This press release is issued by APO. The content is not checked by the African Business editors and none of the content has been checked or validated by our editors, proofreaders or fact-checkers. The publisher is solely responsible for the content of this announcement.
Adapt to Thrive: Small-scale East African Retailers
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