Walmart is set to open its first store in Kenya, but it didn’t come without a few tough points. The US retail group has spent the past few years trying to crack the east African market.
This 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 350 million by some metrics. Accelerating growth in the continent, forecast at 4.5% this year and 5% 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 240 million people.
At $53 billion, Kenya’s economy is far smaller than Nigeria’s $509 billion economy – Africa’s largest – where Game already has stores. But it holds the retail crown for the continent. While only 5% of Nigeria’s retail sector consists of formal shopping, rather than open-air markets and small kiosks, in Kenya the proportion is 30%.
“The middle class in Kenya is really growing. It’s more appealing, it’s more sophisticated and it’s ready for formal retail,” says Mr Turner.