Low season of promotions

As Christmas nears, Kenya's marketers are aggressively enticing consumers with year-end promotions, but the global financial crunch has forced shoppers to spend less. Commodity prices have risen over 50%. Basic goods, like a 2kg packet of maize flour (a staple food in Kenya), cost KSh47 in January. Today, the same packet costs KSh90.

Thiagarajan Ramamurthy, Operations Director Nakumatt Holdings - one of Kenya's biggest retailers, says consumers are tightening their belts, but he's optimistic that 2009 will see an economic recovery.

“Generally, consumers have changed their purchase patterns but not reduced uptake. Many products affected by inflation are basics such as foods, and not luxury items. Hence, consumers may have changed brands but not reduced uptake of particular categories,” he adds.

Recently the cost of electricity has risen drastically, raising the prices of consumer goods. This has also affected businesses. “On a general and overall scale our business is 5% below projected targets. This is due to various reasons, some related more to operational costs than to basic economic reasons and we are paying a heavy cost for power, packaging and transport,” says Ramamurthy.

Compared to the same period in previous years, there are very few consumer promotions. Many companies have partnered with retail outlets to boost sales. Uchumi supermarkets and Unilever are promoting Royco spices while Nakumatt launched two customer reward promotions with Reckitt Benckiser East Africa and wines distributor Viva Productline.

Ramamurthy is optimistic, however, that the economy will recover. “Even with the global crunch, this market is likely to sustain growth as we are not overly dependant on credit. The future of the retail industry is bright... Competition is getting stiffer with more players entering the market. The winners will remain the consumers,” he notes.