Massive Scope for Mobile Growth in Kenyan Retail Market

Editorial Team
Editorial Team

A new Nielsen Study on Kenyan retailers and technology reveals that despite the massive uptake in mobile usage in the country, there is still significant scope for growth in the market, particularly in the retail environment.

The study utilised face-to-face interviews to gauge the technology adoption rates of 300 retailers across a wide spectrum of channels and functions. Based on these interactions, the research revealed that the Kenyan retail arena remains dominated by direct dealings in terms of both transactions and communication, with 96 percent of customers still preferring to use cash in-store, and 88 percent of retailers relying on face-to-face interaction to inform customers about new products.

The mobile channel seems hugely under utilised, with mobile money being used by only 12 percent of customers, and only three percent of retailers using SMS to inform customers about new products, and one percent using WhatsApp. Nielsen East Africa Managing Director Jacqueline Nyanjom commented: “In a country with 96 percent mobile penetration, the findings are somewhat surprising, but they do point to enormous potential for growth.”

Perhaps the most surprising avenue of growth is in the mobile money market, which is already one of the largest of its kind worldwide, with 43 percent of the population actively using a mobile money application. Incredibly, however, only 12 percent of retail transactions are currently conducted via mobile money; an unexpected finding given the benefits of safety and ease of use that mobile money has brought to the African continent. This points to enormous potential for growth in a sector that has already outperformed all expectations.

The mobile money market in Kenya is dominated by Safaricom’s M-Pesa, which was launched in 2007 and already boasts more than 25-million subscribers and nearly 130,000 retail agents. In 2013, it was estimated that a staggering 43 percent of the country’s Gross National Product flows through this channel.

But according to the Nielsen study, the majority of Kenyan consumers still pay with cash in a retail environment, while only 12 percent make use of mobile money, and just two percent use credit or debit cards. “In the Kenyan retail environment, ‘cash remains king’,” emphasised Nyanjom, who further explained that M-Pesa is used primarily to transfer money from consumer to consumer, as opposed to consumer to retailer.

The study went on to explore the reasons for the lack of mobile money penetration in the retail environment: From a retailer perspective, 32 percent claim that customers don’t like using mobile money, while 25 percent have not been approached to register as a vendor.

From the customer perspective, 38 percent claim to not like using mobile money in a retail environment, 25 percent believe that the transaction fees are too high and another 25 percent believe that it is too expensive to set up.

“These perspectives are very revealing, as they expose areas where mobile money operators might be missing a trick. The potential to expand the use of mobile money services into the retail environment is therefore huge,” said Nyanjom.

“Mobile phones are ubiquitous in Kenya. They are highly interactive, always on, and always in hand. With greater brand owner collaboration, the mobile platform could dramatically increase awareness and consideration of products in the retail environment, building demand and generating increased sales,” she summarised.

Couple this with an increased usage of mobile communication between retailers and suppliers, and possibly the usage of mobile applications to improve supply chain and stock management, the potential for growth multiplies exponentially.

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