Kisumu’s retail property segment on a wondering path to recovery

The retail segment of Kisumu’s property market has in the past few months reported a flurry of activities with players in the sector upbeat that this trend could be an indicator for the much-needed turnaround for a sector ravaged by the effects of the coronavirus pandemic that saw business shut down and the following economic downturn.  

Worst hit were malls across the country that experienced a slowdown in business owing to measures put in place by the Ministry of Health to contain the spread of coronavirus, such as social distancing and reduced hours of operation by restaurants and bars resulting in reduction in human traffic in shopping malls. 

 The overall glaring effects of the pandemic have equally been felt on other  segments of property market in the country.

However, some of the malls in Kisumu town, have signed up new anchor tenancy with leading supermarket chains a move expected to bring the much needed traffic into these premises attracting other businesses to set up shop.

Notably, the recent few months have seen an expansion trend of the retail segment in Kisumu town with various international and local retailers, such as Carrefour and Naivas supermarket chains taking up new retail spaces, as well as vacant spaces previously occupied by troubled retailers, such as Nakumatt and Tuskys supermarkets.

United Mall located along the busy Kisumu-Kakamega highway has secured the tenancy of French giant Carrefour supermarket, months after the departure of Tuskys supermarket, which closed shop under the weight of debt.

The retailer has taken up approximately 5,600 square metres of space at the mall’s first floor and is expected to fully open its doors for shoppers in November.

Currently, the supermarket chain is operating a small outlet at the space within the facility.

In a bid to tap into the fast growing middle class population, Carrefour opened its first new store in August at the Mega Plaza shopping mall sitting in the Central Business District (CBD).

In July, Naivas supermarket also opened a third outlet at the Simba Club hall, which is adjacent to United Mall property where Carrefour opened a second branch. 

The opening of Naivas supermarket’s third branch came months after the retailer extended to a second outlet at Mega City Mall strategically positioned along Kisumu-Nairobi highway in a bid to strengthen its dominance in the lakeside city.

A new entrant, Quickmart supermarket also expanded to three outlets in Kisumu town recently.

The supermarket chains are banking on their strategic location at malls along busy Kisumu streets to get a slice of the growing shoppers population with in the county and its environs.

Consequently, the management of the malls is optimistic that supermarket chains will pull in crowds to the shopping facilities, hence create business blueprint for their other tenants and ultimately enhance rental revenue inflow.

Ordinarily, major retailers are the anchor tenants in most malls. They draw shoppers to the buildings and eventually smaller businesses in the facilities benefit from the numbers.

Increase human traffic

The malls proprietors are expecting the expansion of the retail market will inspire business at their various facilities and eventually contribute to a blossoming economy in Kisumu.

“We hope the coming in of anchor tenants to the mall will increase human traffic leading to a thriving business going forward,” said a business manager at United Mall. 

At the United Mall, renovations are being undertaken in some parts of its premises as it readies to welcome new clients and more branded shops. Premises at the mall, including retail shops, commercial offices, banks and hotels up and running.

The multi-million facility owned by United Millers Ltd is hoping to get full occupancy at the end of the year.

Currently, the shopping mall according to its management is approximately 96 per cent occupied.

Another clientele base has booked the facility and is yet to take up physical retail space.

Other clients that have taken up space at the mall, include Vivo Ltd, Goodlife Pharmacy Ltd and Optica Ltd.

“We have quite a number of our shops booked and we expect clients to take up physical occupation soon,” the manager adds.

Naivas chief commercial officer Willy Kimani says opening of their new stores in Kisumu town is in line with a strategic mission to grow retail segment chains across all major urban centres.

Kimani says the retailer seeks to grow the retail market in the entire Western Kenya region.

“Kisumu is on our radar with the three stores and a few more regional locations under review.

We believe Kisumu and the larger Western region is underserved,” he told Boma.

Linah Onyango, a real estate research assistant says introduction of devolved governments has initiated the need for more retail spaces to host the growing investments and this has in return led to the improved performance of the sector over time.

“The retail investment opportunity in Kisumu lies particularly in the vacancies created by the troubled retailers exiting the market hence going forward, the outlook of the retail sector in Kisumu in the coming months is neutral,” she says.

She says the recent vast infrastructural developments experienced in the town is stimulating retail sector expansion. 

“Moreover, infrastructure developments have also boosted trade activities, prices and retail rates for the existing establishments.

Various road projects have eased access of customers and tenants to retail stores and thus improving the uptake of goods, services and spaces,” she explains.

High population growth

Further,  Linah points out that Kisumu’s high population growth rate of 2.9 per cent against the country’s average population growth rate at 2.3 per cent has also been a key factor driving the growth and performance of its retail sector as a result of the increased demand for goods and services over time.

She states that Kisumu city has always been prone to seasonal political uncertainties particularly during the general election periods, which has a huge negative impact on the retail sector business. 

“Despite the aforementioned growth influencing factors, there are issues that hinder further expansion of the retail sector in Kisumu such as financial constraints, which has led to reduced consumer purchasing power, coupled with the inadequate access to credit services as a result of tedious transaction timelines and high interest rates causing other prospective investors to pull away from the opportunity,” Linah says in conclusion.