June 18, 2015
Even as Walmart raced to open its first store in Kenya, there were snags. The retailer was forced to import the trademark bright magenta ink that adorns its brash price offers and doorway décor because nobody in the country could produce it.
It was one of several obstacles the world’s largest retailer has run into in Kenya. The US retail giant has spent the past few years trying — and failing — to crack the east African hub, whose growth is fuelled by aspirational consumption.
Walmart’s move into Kenya highlights the sea change in the continent, as a nascent consumer class expands and draws in foreign investors who had previously overlooked the African middle class — estimated at a total 350m people by some metrics. Accelerating growth in the continent, forecast at 4.5 per cent this year and 5 per cent next, outstrips that of all global regions bar developing Asia.
“We should have been here a while ago but we just couldn’t get the deal right — unfortunately it’s taken us too long,” says Mark Turner, marketing director at Massmart, the South African group in which Walmart bought a controlling stake in 2011.
Massmart’s chain Game already has 172 other outlets in 11 African countries, but Kenya has long been the prize beyond its reach. It is also a potential pathway for expanding Walmart’s existing presence in east Africa, a region of 240m people.
At $53bn, Kenya’s economy is far smaller than Nigeria’s $509bn economy — Africa’s largest — where Game already has stores. But it holds the retail crown for the continent. While only 5 per cent of Nigeria’s retail sector consists of formal shopping, rather than open-air markets and small kiosks, in Kenya the proportion is 30 per cent.