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By Steve Umidha
More than half of micro-retailers (small shops) in Kenya, like the retail industry itself are finding it difficult to access financing in the wake of Covid-19, a survey by TechnoServe shows.
The survey released last week and covered the second half of the year, from August, found that 52 per cent of the surveyed entities across the country were hit by cash flow crisis, with 31 per cent of such shops facing challenges in accessing suppliers.
As a result, the report notes that the pandemic has exposed such businesses that are now staring at potential bankruptcy with millions of jobs and livelihoods at risk.
“Many micro-retailers depended on customers coming to their shops, but after COVID-19, they were forced to look into new ways to engage with their customers as these buyers were no longer streaming in. Micro-retailers that used digital solutions to reach out to their customers were able to maintain them during this crisis,” said Alice Waweru, the entrepreneurship portfolio lead at TechnoServe.
She made those remarks during a virtual Fourth Micro-Retail Stakeholder Forum, which brought together private sector and civil society who urged micro-retailers to adopt digital solutions if they are to help shopkeepers navigate the COVID-19 pandemic and recover from the crisis.
The survey conducted between May and August of this year, also found that micro-retailers who adopted digital strategies recorded a 52 per cent increase in sales, enabling them to weather the COVID-19 pandemic.
Micro-retailing refers to businesses that are moving from having giant superstores to smaller, demographically targeted stores that focus on a small selection of popular products ordinarily small, independent, family owned businesses in developing nations
Consumer’s shift to digital has been accelerated since the pandemic was first reported in Kenya and continues to influence to whom the consumer turns to build those new habits.
That has forced merchants to break their own habits, and to meet consumers where and how they want to shop, pay, order and eat their food, according to Safaricom’s chief financial services officer Sitoyo Lopokoiyit.
“With regard to COVID, we’ve had quite profound changes in how merchants as well as businesses have migrated to digital,” and described how the M-PESA platform has supported virtual payments and financial services during the pandemic,” he said.
Overall, the Kenyan retail sector is expected to bounce back in the next 12 months, helped by the gradual reopening of the economy and slow return to normalcy that had cooled due to the novel coronavirus pandemic.
A recent survey by the Retail Trade Association of Kenya (RETRAK) in its Retail Industry Outlook Survey 2020 released two months ago on Trends, Challenges and Future Outlook, projected a modest growth in the months ahead despite the pandemic pushing key players like Tuskys to near insolvency.
It found that the majority of major retailers were optimistic of the future growth with a good number also looking to open additional stores and business units as well as venture into ecommerce to complement their brick and mortar stores.