Kenyan retail sector seen through consumer data

The retail sector accounts for about 30 per cent of Kenya’s Gross Domestic Product.

By 2016, Kenya’s retail spending had reached Sh1.8trillion a report by P&G shows. This was broken down into 30 per cent supermarkets, 67 per cent traditional retail, and three per cent special channels.

According to the study Kenyans spend about 60 per cent of their finances on food and beverages.

Over the last couple of months there have been numerous articles that talk about big data and how various industries can use big data. In the banking industry data can help monitor the risk, where in the insurance sector, data can help create and sell new insurance products for different customer segments.

While all these are huge gaps in the marketplace (and opportunities for the smart individuals), data and analytic can revolutionize one sector in Kenya, the Retail & Distribution sector.

For large retailers all around the world the use of data is applied at every single stage of the complex distribution value chain. From sales forecasting to tracking of most popular products, the use of data is no longer an option but THE only option to survive in a very competitive environment.

So why has Kenya lagged so far behind? Why is it that large retailers, including some of the biggest supermarket chains have not realized the opportunity that lays in their hands? Here are some strategic areas where retailers can identify a ready to use for consumer data and data analytics.

Price optimization

Through the historical data that majority of retailers in Kenya already have sitting in their systems, algorithms can be formed to perform functions such as tracking demand of products inventory levels and responding to the different challenges the market may face in real time.

This allows decision makers to make informed decisions based on the insights given. Price optimization will guide retailers on when the price is to be increased or dropped based on the market and consumer’s behavior.

Predict Demand

Consumer data can help track consumer buying behavior. Thus, insights on when your product will be on demand in the Kenyan market will allow you to stock and market products appropriately.

Intelligent Discount

Kenyans love getting deals and it is not uncommon to see many promotions run throughout the year in restaurants, supermarkets and popular retail stores. With this in mind, exactly how do these retailers come up with the discounts or promotional packages they give? Furthermore, while the promotion is on going customers will rush to be take advantage of the offers, but is it an effective strategy to sustain long-term customer loyalty?

Retailers can use historical data on consumer transaction data against sales during the periods to offer a personalized reward scheme to increase the ROI of the discount campaign and improve customer experience.

Smart Loyalty Program

Loyalty programs in Kenya are extremely common but how often do consumers use them? Majority of Kenyans have supermarket loyalty cards from their preferred supermarkets, but when it comes to redeeming the points on the card, that is a different story.

If retailers would provide an open smart loyalty program that helps brand to provide incentives to consumers by awarding them with loyalty points on every purchase of their products, then consumers would eagerly redeem their loyalty points.

This would mean increase in consumer spending of specific brand products, increase in market share and ultimately growth in consumer loyalty.

The above is just a couple of some of the many uses of data in the Kenyan retail sector. It is imperative for the Kenyan Retail & Distribution sector to wake up and realize the goldmine they are sitting on.