Retailers worry of future as sales dip following stringent lockdown

Tuesday, April 28th, 2020 19:50 |
Retail shop store. Photo/Courtesy

Noel Wandera @NoelWandera5

Retailers are worried they will struggle to pay bills from next month on the back of stringent lockdown measures that have affected businesses.

Retail Traders Association of Kenya (Retrak) chairman Willy Kimani yesterday said they will have to make hard decisions on whether to re-stock or settle their rent obligations, as performance has been slow due to Covid-19 shocks.

“Every time new information is released by the government, retail sales decline because consumers are no longer buying non-essential commodities such as clothes, electronics and crockery,” said Kimani

Kimani, who is also the chief commercial officer at Naivas chain of supermarkets, said the Nairobi central business district is the worst hit, with a 60 per cent dip in business, adding that the first week of the pandemic saw sales go down by 12 per cent and decline by 30 per cent the following week.

Partial lockdowns

To mitigate the spread of the pandemic, that has so far claimed 14 lives with 363 confirmed cases, the government restricted movement of people by partially locking down Nairobi metropolis, Mombasa, Kwale and Mandera counties, in addition to restricting movement of people in a 42-day dusk-to-dawn curfew.

Association of Kenya Suppliers chief executive Ishmael Bett says after the government’s decision, a surge in sales due to panic buying was witnessed, followed by a drastic decline, a factor Kimani attributed to control of people’s movement and a drastic reduction in operational hours from the previous 9am to 10pm, to between 9am and 5pm.

Code of practice

This comes even as the retail trade harmonised code of practice between Kenyan retailers, suppliers and manufacturers is due to be presented to the Competition Authority of Kenya (CAK) to give it legal backing that will enable the country’s retail sector to employ self-regulation in a bid to curtail late payment.

“Adherence to the retail code of practice will result in better management of the retail sector which will enforce prompt payments, fair trading agreements between retailers and suppliers, improved SME cash flows, reduced financing costs and reduced solvency issues thereby improving job security in the sector,” said Bett.

Kenya’s retail trade sector includes several supermarkets and their suppliers. The industry has been steadily expanding despite a few hurdles in recent years.

New code comes at a time delayed payments have been an issue of contention leading to the collapse of retail chain Nakumatt, while Uchumi’s creditors in March agreed to take a 70 per cent cut on the broke retailer’s Sh3.6 billion debt in a new Company Voluntary Agreement after the first bid flopped.

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