Uganda Retailers and Wholesalers Association (URWA)

Uganda Retailers and Wholesalers Association (URWA)

Uganda’s Retail Industry Analysis 2016

Background

Uganda, with the population of more than 35 million people and an increasing economy, is a potential market for the retail industry. Uganda has the youngest population in the world, with 77% of its population being under 30 years of age and about 18% of its population is between the ages of 15 – 24 years. The word retail is derived from the French word „retailer‟ meaning „to cut a piece oﬀ‟ or „to break bulk‟. The retail industry is operated by local and foreign small, medium and large scale retailers. Many international retailers are operating in Uganda alongside local companies. Over the next 10 years, about 7 million people whose age is between 15 and 24 at the moment will enter the consumer market. These figures show that Uganda is holding a “potential” retail index. Uganda is now developing and becoming one of the most dynamic emerging countries in Sub-Saharan Africa. Higher living standards and rising income have enabled people to spend more for their lives. Currently, the total retail sales of goods and services cannot easily be estimated but partial indexes show. With the exception of the last financial year, sales have been rising year after year and total turnover of retail sales in 2017 is predicted to overcome the previous year. Despite internal and external factors like political volatility, energy shortages and climatic changes threatening its economic stability, Uganda has emerged with encouraging positive real GDP growth rates throughout the previous decade. Many global analysts remain positive of Uganda‟s exponential growth potential in the coming years. For instance,Ugandais counted among the fastest growing economies in Africa. There is growth in per capita income (3.2% in FY2012), real private consumption (3.3%) and global imports (7.4%), it is likely that the global market for goods and services will draw significant contributions from it.

Importance of Retail in Uganda

All the factors thus far explained like increasing income, urbanization and consumer awareness hint at a potentially large market for goods and services in Uganda. It therefore, comes as nosurprise that within the services sector, the country‟s wholesale and retail trade sector has gained momentum in the past decade. Estimates for Uganda‟s retail market today vary widely, the industry mostly reported to the tune of USD 5 billion with annual sales in excess of USD 8 billion.Retailing involves a direct interface with the customers and the coordination of business activities from end to end. Not only has Uganda experienced a transition from small retail clusters to large wholesalers and shopping malls in the recent past, it has undergone a massive retail revolution in becoming home to a wide array of international brands (Like Unilever, Johnson, etc ) and famous international supermarkets chains (Like Shoprite,Nakkumat, Tuskys,etc). Other retail giants are expressing interest in establishing operations in Uganda.

The retail sector in Ugandais unique and although disorganized, enjoys being one of the largest following agriculture. The share of wholesale and retail trade in GDP averaged around a steady 18% in the past decade and that in services, around 47%. It is also one of the country‟s largest employers, employing around 16% of its total labor force.Since wholesale and retail trade comprises more than a third of Uganda‟s service sector which itself constitutes more than 47% of Uganda‟s GDP, a strong correlation exists between growths of the three. As it appears, Uganda‟s wholesale and retail trade bears potential to steer the country‟s overall economic growth by possessing a strong influence over contraction and expansion of services and GDP growth.Thus, given the significance of Uganda‟s retail sector in the economy‟s overall growth and the immense potential it carries, it is imperative to shed light on the sector‟s future development and the opportunities it has to oﬀer.

Uganda’s Retail Industry

An Overview

A particularly encouraging aspect about Uganda‟s growth is the increasing contribution of the services sector during recent years. Currently contributing 47% to real GDP, the services sector has maintained a majority‟s average since at least a decade. The continuous growth in Uganda‟s services sector since 2013/14 is indicative of many positive changes in the economy. It signifies overall economic growth and hints at the presence of an increasing consumer base with expanding incomes or purchasing power to enjoy a larger share of services in their consumption bundles. Uganda is a resilient economy despite its size, its real GDP, showing positive growth in recent years.

Highlights

• Uganda‟s retail sales are likely to increase by 30%in the next 5 years

• Retail formats in Uganda are transforming rapidly - the share of community small shops (mom and pop) and general stores is expected to decline by 50% in future years in favor of large wholesalers and retailers

• In 6-7 years, retail giants like Nakumatt, Tuskys, Mega Standard and Shoprite have established more than 12 branches in Uganda with immediate expansion plans for at least 10 more

• Demand for such is driven by individual characteristics like income, education and household size and external factors like quality, quantity, variety and convenience of shopping

• Innumerate retail investment opportunities exist in a range of sectors in Uganda like food, apparel, footwear, health &beauty, consumer electronics and home furnishings

• Retail developments are also fueling the demand for commercial real estate. Low share of organized retailing, comparatively low real estate rents and growing consumer aspirations

are attracting investments in both retail and real estate

• A growing population size with more than 35 million people dominated by youth which will boost the environment to develop the retail industry

• Uganda is one of the African emerging marketswith an increasing income index, people to spend more for consuming, andtherefore boost the retail market in the future.

• There is an increasing urbanization which is an important factor increating a convenient environment for the development of the retail market.

• There is a growing number of female workers with increased purchasing power.

Such growth in Uganda‟s retail industry is crucial to maintaining its competitiveness compared to other African giants and neighboring countries. Trends in Uganda, however, remain quite encouraging in the development of new retail formats and establishment of an increasingly large number of international organizations‟ retail outlets all across the country.

Retail Formats in Uganda

1. Small Retailers

Historically, the retail scenario in Uganda‟s major cities has been dominated by a large number of small sized retailers. Traditional „Dduuka‟ (mom and pop) stores have overshadowed consumers‟ grocery shopping experiences in Uganda. However, after a long absence of large retail chains, new preferences emerging among consumers indicate the advent of important developments at the country‟s retail front.The distribution of Dduukashops per thousand populations decreased during 2002-2010whereas that of supermarkets and hyper-supermarkets rose over the same period. Moreover, the combined share of Dduuka is expected to decline to 50% in future years. On the other hand, supermarkets and hyper-supermarkets are gradually replacing traditional small scale retailers and gaining popularity by providing a wider array of services under one roof. More recently, a number of international wholesalers like Nakumatt and Tuskys have established large centers within the country and are operating successfully. Such evidence, therefore, points to the decline of traditional stores and small retailers and the shift in consumer preferences in favor of large departmental stores, supermarkets and hyper-supermarkets centers.

2. Supermarkets and Hyper-Supermarkets

Amidst popular local stores, like capital shoppers, mega standards and quality supermarket in Kampala and suburbs, the metropolitan cities of Uganda recently witnessed the advent of huge international wholesale chains that proliferated rapidly in the following years. Uganda has become home to three of these large supermarkets chains with approximately 12 branches flourishing already and expansion plans underway for many more. Shoprite, the first modern supermarkets chain to establish in the country, oﬀers high quality products at competitive prices for 20,000- 25,000 varieties of food and non-food items under one roof. The Kenya based supermarkets chains Uchumi and Nakumatt established their first centres in Kampala in 2010 to oﬀer retail solutions to professional buyers for upto10,000 food and 30,000 non-food items. The most recent addition to the retail market, Tuskysis another hyper supermarket shelving up to 30,000 items, running successfully in Kampala and suburbs and already planning expansion

through more stores.

While it is hard to contest the success of such strategic retail solutions with convenient one stop shopping, eﬃcient concept designs and competitive pricing, it is important to analyze demand drivers and changes in consumption habits and preferences that have fueled their growth at the same time. In addition to large-scale factors explained in the previous section, many micro or household level factors have influenced the shift in consumer preferences towards modern retail and wholesale purchases.

Demand Drivers

From individual traits like age, gender, education and occupation to household characteristics like family size, average monthly household income and ownership of transport modalities, a range of factors are aﬀecting buying decisions today.

Household size, education and income, in particular, have a significant influence over retail shopping. A Kampala-based sample study revealed that majority of the households with 6-8 family members shopped at “mom and pop”shops whereas those with smaller family sizes (3-5) shopped at large supermarkets. Cross studied with income, it may be observed that larger families are associated with lower income levels and smaller families with higher ones. A majority of the sampled population with average monthly household income beyond UGX 4,000,000 shopped at supermarkets. The study also established that large stores were preferred by individuals bearing higher education levels like Bachelor‟s degree as opposed to intermediates who typically chose “mom and pop” shops.

Overall, convenient and quality shopping has steered consumers towards modern retail shopping options. A majority of Ugandan consumers seek a wide array of quality products in adequate quantities under one roof. For about 55% of the sampled survey, convenient and attractive display was also a strongly agreed upon driving factor. The study also establishes how consumers normally regard crowded shopping places and long queues as major shopping stressors. There is no surprise, therefore, that consumers have increasingly resorted to spacious, organized retailing stores with a wide assortment of products. The fact that these are „one stop‟ shopping solutions also implies that consumers have started making more „planned‟ purchases as opposed to needs-based ones. In fact, for many, a trip to modern retail and hypermarket centers may even mean a pleasant family outing where all family members can shop together, and with convenience and ease.

Modern Retailing

IMPORTANT SECTORS

1. Foods& Beverages

It is estimated that the average Uganda consumer spends up to 64% of his income on food. As far as fresh food produce is concerned, consumers have historically preferred to shop at traditional wet markets, obtaining the satisfaction of hand-picked fruits and vegetables and negotiable prices. The trend, however, gradually shifted towards local mini-supermarkets and more recently, towards hypermarket centers like Nakumatt, Mega Standard, Capital Shoppers, Quality, Shoprite and Tuskys, where consumers now increasingly shop for better quality, quantity, variety as well as competitive prices in a much more consumer-friendly environment. The development of such supermarkets is still in infancy though, and carries much potential for future growth. Apart from individual and household consumption, these big retailers have also experienced great interest from commercial/professional buyers including bakeries, restaurants and hotels.

The market for processed foods is also booming. With life becoming fast-paced in Uganda, food on the go and ready to cook has become increasingly popular, being reflected in the popularity of bakers and brands like KFC, Chicken Tonight, Mr. Tasty. With increased trade and a better taste for quality products, the demand for imported items is also on the rise. Only a decade ago it was estimated that a good fifth of Uganda consumers were already consuming imported products. This ratio is expected to have enhanced significantly in the past decade. Items like juices, canned fruit, sauces, honey, coﬀee, candy, condiments, nuts, dressing, snack foods, chocolates, powdered milk and other dairy products, particularly ice cream, are becoming increasingly popular. Dietary foods and other imported products are also in high demand as a result of the growing emphasis on health and changing lifestyles in Uganda. Although many international brands are popular, there is good potential for new ones, particularly if they are price competitive and marketed well. Imported items may also be made available at traditional stores, albeit in smaller quantities and fewer varieties. Since traditional markets are small and independently owned, they generally purchase imported products from community focused wholesalers rather than agents and distributors.

Perhaps the biggest surge in the food industry has come across in the form of restaurants and cafes mushrooming in Kampala. Their demand is simply insatiable, explaining why many local restaurants remain profitable even in the presence of popular international food chains. Locally, very few local restaurants have sensed the opportunity and diversified their operations to provide catering and dining services with bigger expansion plans.

Apart from their love for traditional Ugandan food, consumers in Uganda have also come to appreciate a variety of cuisines like European, Japanese, Chinese and Korean through a number of exquisite and modern restaurants. International food chains like, KFC and Domino‟s, on the other hand, have already long enjoyed the booming consumerism in Uganda and have more recently attracted other players like Java to join the league.

2. Apparel – Clothing Industry

Having experienced a fashion revolution in the last couple of decades, Ugandais dominated by used clothing industry by both the middle class and third class citizens. The Ugandan clothing industry sector deserves a special practical body/association to plan and represent this retailsubsector which is always attracting attention from tax authorities, policy makers and regulatorsresulting in a well-informed, rather transformed industry. The local apparel market partly centered in Kiyembe business centre is growing slowly facing competition from increased demand for used clothes and other textiles. The market is segmented, providing for men, women and children of all ages and oﬀering a range of lines, from casual to semi-formal, work, school uniform,traditional wear, cultural casual and bridal wear. Generally Uganda has not yet attracted international designer brands in the industry compared to other countries in the region.While traditional wear is one obsession, casual lines of jeans, T-shirts and tops are another favorite amongst the youth of Uganda. Moreover, most of the local casual wear stores - boutiques have spread rapidly in major cities and towns of Uganda selling both new and used clothes.

3. Footwear

Uganda‟s footwear industry is dominated by new and used shoes leaving little space for the local producers. The Ugandan Bata Shoe Company used to produce locally but seem to have diversified to more cost effective production methods. The local craft shoes industry also produces mainly for the local casual footwear and women shoes.

4. Beauty and Cosmetics

In Uganda, there is as much emphasis on beauty as there is on health, if not more. Uganda has emerged as a huge market for both local and international cosmetic brands in the past two decades. Few local companies; Avis, Movit, Nivea and Samona possess a majority of the local market share. International brands of the highest order like L‟Oreal, Dark & Lovely, Revlon, Ultra Sheen, etcare also extremely popular among females.

5. Electronics

According to recent surveys, Uganda‟s consumer electronics market is expected to grow by an annualized increasing rate. To some extent, this expected surge can be attributed to the overall shift in trends and consumer preferences from a clustered group of small retailers to large, exclusive retail outlets also well reflected in Uganda‟s consumer electronics sector. For instance, while Luwum Street in Kampala has historically been the hub of all trade and retail activity in the electronics market for audio/video devices like DVD players, televisions, video cameras and flat screens, a number of market players like Samsung, LG, Sony, Panasonic and other brands have, over time, established exclusive display centers which oﬀer complete customer satisfaction in genuineness and quality as well as convenience of shopping. Many have also set up after sales customer care centers which guarantee solutions to problems regarding return, exchange, maintenance and repair. Such outlets with their customer care services have encouraged sales in the recent past.

The most booming subsector within the electronics market, however, is telecommunications. With an increasing mobile subscriber penetration rate, Uganda is home to more than 15000 cell phone retailers where early players like Nokia, Samsung, Tecno, Itel, HTC and Huawei continue to possess significant market share. However, more recently, the potential of the telecommunication industry in Uganda has invited top notch brands like Sumsung and Tecno to operate under franchises across towns of the country. Mobile handset sales are expected to grow at a compound annualized increasing growth rate.

The demand for desktop computers and laptops in Uganda is also on the rise and accounted for around 25% of its consumer electronics spending in 2015. With increasing consumer awareness and expanding incomes, many storesespecially on Kampala Road continue to record encouraging sales. Forecasts of Uganda‟s domestic market computer hardware sales (including notebooks and accessories) are expected to be on the rise. It is forecasted that this segment of the market will grow by an average of about 10%.

5. Home Furnishings

The emphasis on home furnishings retail in Uganda has grown tremendously in recent years. With an improvement in living standards and better awareness, excess demand for quality bed linens, curtains, cushion covers, towels etc has spurred the growth of these product lines. Uganda‟s wood industry, too, is developing and captures 70% of the country‟s total market for furniture. The market is divided into home use and contract markets, constituting supplies to hotels, restaurants, oﬃces and public facilities.

The demand for quality furniture, like other quality home accessories in Uganda, is constantly on the rise and a number of state of the art showrooms have been devoted to it. Foreign owned companies from Asia are leading furniture companies in Ugandaoffering one-stop solutions for several products including oﬃce furniture, home furniture, kids furniture, kitchens, doors, wardrobes, sideboards and flooring.

6. Hardware and Building Supplies

An overall increase in residential building investment, commercial buildings, household discretionary income, and growth in the number of households have supported the hardware and building supplies retailing industry over the past years. Households undertaking DIY (Do It

Yourself) home improvement renovations and repairs have also boosted the industry's performance. An undersupply of affordable housing and rising house prices have deterred many home owners from moving, instead choosing to improve their existing homes through DIY renovations. This has contributed to industry revenue growth over the past years. The industry has undergone structural changes over the past years as large national retail chains have fought to capture more of the expanding DIY home improvement market. The industry‟s performance depends on private capital expenditure trends for new and existing properties. The largest market for industry operators is DIY customers who undertake renovation, maintenance and building projects on existing homes.

7. Fresh Grocery Retail industry

Ugandan fresh grocery sales and supplies have increased along with the consumer interest in eating and living well. With a growing middle class population in Uganda, the perception of losing weight is always followed by more fresh foods and even using such foods as medicine. Most fresh grocery products are sold in temporary structure wet markets, stalls and others on the streets. Fresh grocery stalls are continuously being fixed on supermarkets and retail shops. Uganda is known to be an agricultural country but there is a total disconnect between the agricultural officers, economists, local governments, health officers, nutritionists, sociologists, policy makers and urban planners to adequately plan for this sector which sometimes makes the industry violent and neglected.

8. The Craft Retail Market

Tourism brochures often describe Uganda as “the Pearl of Africa.” Visitors think they will find a unique craft market teeming with entrepreneurs. The Craft Market mainly on Buganda Road and National Theatresells goods from fashion to home products, decorations, traditional tools, antiques and curios to leather goods. However, more than 40% of the craft products are imported from neighboring Kenya, Tanzania, DRC Congo and West Africa. Most craft businesses are ran on a small scale and the infrastructure housing most retail craft businesses are in frugal temporary structures despite the craft industry being a key component and supporting sector of the tourism industry in Uganda which generates a lotto the national GDP.

9. Stationery and Office Supplies

This industry mostly found on Nkrumah Road and Nasser Road in Kampala comprises businesses engaged in Stationery, school supplies, and office supplies; Office equipment, furniture, and supplies; and Office equipment, furniture, and supplies in combination with selling new computers and consumables. There is growing decline of sales in the retail market of stationery products which has been ushered by digitalization of the economy and the rise of electronic communication forms such as e-mail and electronic invitation, websites, which have drained demand for traditional paper products. With electronic communication quickly becoming the most popular medium for interaction, stationery products are increasingly becoming obsolete. In the coming years, stationery product retailers will contend with intensifying competition from substitute forms of communication.

10. Auto Parts Retailers

The auto parts retailers are concentrated at Kisekka Market business centre, Ben Kiwanuka Street, Nabugabo Road, Industrial Area, Katwe and Ndeeba in Kampala and is comprised of two kinds of markets: those that sell replacement automotive parts and accessories to "do-it-yourself" customers and to commercial "do-it-for-me" clients; and those that sell a wide assortment of new and used vehicles over the networks of national franchised dealerships. The Auto Parts Stores industry is expected to grow slowly over the coming years. Per capita disposable income and corporate profit have bolstered demand for auto parts. Moreover, favorable car usage trends have led to growth in demand for auto products in the short term. However, advancements in motor vehicle technology have made it increasingly difficult for vehicle owners to repair and maintain vehicles without professional help. In the coming years, industry revenue is expected to grow. As the national level of per capita disposable income continues to rise, more consumers will increase their spending on vehicles and automotive products.

10. Online Shopping

Ugandans are not very active in online shopping. The transaction amount is still very low as compared to the entire retail industry. Online sales only accounts for less than 0.5% of the total retail sales in Uganda with olx, hellofood and other few companies are trying to penetrate the market.

11. Wholesale Distribution Industry

Major wholesalers and distributors are mainly based in KikuuboBusiness Centre in Kampala and others in industrial area and suburbs. Companies in this sector mainly distribute durable and nondurable goods. For most distributors, demand is closely linked to local economic activity and the industry is highly fragmented. The major segments of Uganda‟s wholesale sector are distribution of nondurable goods (about 70% of industry revenue) and durable goods (about 30%). Leading categories of nondurable goods are groceries, personal care products, cosmetics and drugs. The largest durable goods categories are electrical goods and electronics, professional and commercial equipment, machinery, auto parts and stationery.

Retail Formats by Regional Concentration

The contemporary retail sector in Uganda is well reflected in Kampala and its suburbs in the form of sprawling shopping centers, malls and complexes. Ushering the shopping revolution, local and foreign large scale real estate investments in these cities have remained crucial in developing the required infrastructure and buildings for such shopping areas. Kampala‟s recently developed Garden City Mall, for instance, stands tall and broad above a number of small to medium sized malls. However, further real estate investments in these retail-concentrated cities remain the need of the hour and new shopping complexes need to be built to meet consumers‟ insatiable demand, with wide parking spaces, clear paths for pedestrians, wide corridors, maintenance contracts, completely facilitated shops, central air conditioning and numerous other amenities.

Commercial Real Estate in Uganda

Despite Uganda‟s rapidly expanding population and noticeably improving infrastructure, the demand for commercial real estate in the country remained nearly unaddressed in previous years. However, the sector now assumes growing importance with increased liberalization in the country combined with the economic growth. With a torrent of international brands establishing footholds in Uganda in recent years and tremendous business opportunities for local & foreign players, the demand for commercial space in the country is rapidly on the rise. Retail sector developments are now strongly influencing those in the real estate market.If industry experts are to be believed, the prospects of both the retail and real estate sector are mutually dependent. Retail, one of Uganda‟s leading sectors, has presently emerged as one of the most dynamic, fast paced and booming industries of its time attracting countless local and international players. The trends driving the growth of retail in Uganda are

• Low share of organized retailing

• Comparatively high real estate prices & rents

• Increase in disposable income and customer aspiration

• Increase in expenditure for luxury & branded items

• Un-monitored pricing policy of real estate prices and rates

• Low share of locally produced products

• Lack of a national retail charter

The low share of organized retailing further fuels the demand for commercial space and indicates prospects for growth in both sectors. To cater to such growing demand, a number of initiatives are under way and are likely to attract huge investments.

Currently being in its nascent stage, the scope for Uganda‟s commercial real estate market for modern retail is simply unlimited. Shopping today has become much more than just that- it is increasingly a source of family fun, entertainment and recreation. Thus, plazas and malls not only require space to host supermarkets and local and international brand outlets but also food courts, children‟s play areas, cinemas and other recreational facilities. Since Uganda already lacks in the provision of such services, the pressure on building such spaces, particularly in Uganda‟s urban cities, is very high. Unfortunately, Uganda‟s retail real estate rates are increasing charged in foreign currencies especially US Dollars making it hard for the indigenous local retailer to effectively plan for his business as he cannot easily track foreign economies‟ currencies which is a bit more speculative in nature and predisposes them to loss of their national economic sovereignty. The excessive use of foreign currencies when paying for retail real estate rent puts Uganda in a transitional state like other new young nations which many retailers say is a violation andlaxity of the national monetary and financial policy.There is need for a commercial rent policy which will cater for commercial tenants‟ rights. Tenants argue that small businesses have no legal power against immediate evictions. Commercial tenants have less protection against sudden rent increases and rent in foreign currency.

Kampala’sPotential

Highlights

• Buganda, Uganda‟s most populous province, is the investment destination for most local and foreign companies

• Kampala, the capital of Uganda, with a population of over 1.5 million is the largest city of Uganda followed by Mbale, Mbarara and Jinja and ranks 3^rd amongst the East African cities.

• Much of Kampala‟s commercial activity is developed along important streets like Luwuum Street, Kikuubo business center, Nabugabo road, Ben Kiwanuka Street, Market Street, Owino Market, Kiyembe business center, William street and Kampala Road, and in suburb pockets like Ntinda, Kawempe, Nateete, Kamwokya, Bwaise, Nankulabye, Kasubi, Nansana, Bugolobi, Luzira, Kabalaga, Kansanga, Gaba, Najanankumbi, Namasuba Zana, Wandegeya, Katwe, Nakawa and Ndeeba.

• Kampala‟s traditional multi-storeyed plazas, however, are no longer fit to serve the purpose of retail in the city. The city is in serious dearth of large shopping malls and hyper supermarkets and many building are restructuring to meet the current needs and tastes.

• Lucrative real estate investment opportunities therefore exist in the construction of large shopping complexes in Kampala with thousands of square feet of floor area to attract international chains, and amenities like escalators, wide corridors/walking spaces, clean toilets and ample covered parking to attract consumers.

Being Uganda‟s most populous province with several major divisions like Kampala, Kira, Mukono, Masaka, Wakiso, Mpigi,Masaka, etc, Buganda is currently the ideal destination for retail and real estate investments.Buganda‟s capital, however, remains the strategic city of Uganda, which has historically been the province‟s center of economic, political, entertainment and cultural activities. Kampala, with a current population of over 1.5 million, is the largest city of Uganda and ranks 3 amongst the East African cities. Showing consistent intake of various international chains despite riots, real estate experts and businessmen have come to believe that Kampala is a breeding ground for multinational companies, banks & international brands.Kampala‟s geo-strategic location along with its level of infrastructure, hospitality and logistic facilitiesmake it an ideal location for companies to base their wholesale and retail trade operations to serve local and regional markets.

Kampala’sReal Estate and Retail Potential

Administrative	Major Localities
Divisions
Divisions
Central Division	Kampala	Nakivubo
Central Division	Kampala	Nakivubo
	Wandegeya	Kololo
	Wandegeya	Kololo
	Town	Kamwokya
Rubaga	Mengo Town	Kasubi Town
Rubaga	Mengo Town	Kasubi Town
	Nankulabye
	Town	Nateete Town
Nakawa	Nakwa Town	Ntinda Town
Nakawa	Nakwa Town	Ntinda Town
	Bugolobi	Mbuya
Makindye	Kibuye Town	Kabalagala Town
Makindye	Kibuye Town	Kabalagala Town
	Kansanga Town	Nsambya Town
	Kansanga Town	Nsambya Town
Kawempe	Kawempe Town	Mpererwe Town
	Kalerwe Town	Bwaise Town
	Kalerwe Town	Bwaise Town

Much of Kampala‟s commercial activity has developed along some major roads in the city.

The Changing Face of Kampala

Of the earliest retail traditions in Kampala, outdoor markets and bazaars still remain pervasive and are resonated by shopping places like Owino Market, Kikuubo and Luwuum Street. Kampala began the culture of shopping plazas and has, today, rapidly progressed to become home to some magnificent multi-storeyed ones for modern retail top floors. While plazas currently represent most of the commercial real estate activity in Kampala, the demand for huge shopping complexes with amenities like escalators, wide corridors/walking spaces, clean toilets and ample covered parking remains unmet.

Traditional Central Business Districts (CBDs) including those identified above have begun to gradually lose their sheen against alternative locations because of their inability to oﬀer Grade A buildings at competitive rates. Among the newer commercial areas and markets in Kampala that are marked with heavy retail activity, Kikuubo andKampala streets are on top of the list especially for branded stores but still lack the amenities which especially the international brands require.

One reason why plazas can no longer serve the purpose of commercial activity in the city is the rapidly changing, dynamic character of its retail sector. With the proliferation of international brands within the city, plazas have suddenly become unattractive with their limited floor space and selling area. International departmental store chains would require at least 3,000 sqft to 20,000 sqft of floor space for display if they go ahead with their intention of operating in Uganda. This means that lucrative real estate investment opportunities exist in the construction of large shopping complexes with almost entire floors reserved for such international chains.

Map of Commercial Activity in Kampala

Retail Ownership Formats in Uganda

Independent Retailer: An independent retailer is one who builds his/her business ground up. From the business planning stage to opening day, the independent retail owner does it all. He/she may hire consultants, staﬀ and others to assist in the business endeavor - the opportunities are endless. This model also suits large retailers and is one of the most prevalent in Uganda.

Franchising: Franchising is a continuing relationship in which a patent company provides the right to use its trademark and management assistance in return for payments from the owner of the individual business unit. There are two types of franchises:

(i) Product and Trade Name Franchises, a distribution agreement under which the supplier (franchiser) authorizes a dealer (franchisee) to sell a product line using the parent company‟s trade name for promotional purposes. Historically, this has been a dominant franchising arrangement in Uganda‟s automobile industry e.g. Toyota.

(ii) Business Format Franchising, where a successful retail business sells the right to operate the same business in another geographical location. Much of franchising growth and publicity over the past three decades in Uganda has involved a similar setup. The concept has gained tremendous acceptance in recent years, as can be felt from the presence of international chains in various sectors. In addition to food outlets such as KFC, Javas, Chicken Tonight, Mr. Tasty, Domino‟s, nonfood sectors such as retailing, convenience stores, hotels & motels, courier service, security services, and educational training centers are going to be the growth areas of the future

(iii) The Government of Uganda promises an encouraging business environment for franchise deals. It does not impose any restrictions on investors who wish to establish a franchise in the country- foreign investors are only required to inform the Investment Authorities and the Bank of Uganda about their business primarily for the purpose of repatriation of franchise fee or any profits accrued. However, the Government has not done much on issues of local content.

(iv) Strategic Licensing Agreements; A licensing agreement between two parties grants the licensee the right to market and sell the product of service of the licensor. It usually covers the cost of the license, royalty fees as well as territory rights. Compared to franchisees, licensees are typically granted much more freedom with regard to business operations, marketing and sales. However, most licensors do require that licensees adhere to quality assurance standards.

Future Outlook

There is little denying the fact that Uganda has had a troubled past, but then again, there is little denying the fact its future holds great promise. Despite the social, political and economic challenges tossed at it every now and then,Uganda has progressed to prove its resilience and undeterred vision to parallel any transitioning developing economy. By highlighting the tremendous potential and countless business opportunities in just growing retail sector, this analysis hopes to have brought forth the lighter side of Uganda and its receptiveness and responsiveness to local and foreign investments.

Uganda‟s current retail market is estimated at USD 10billion and it is expected to grow by another 30% in a short span of just 5 years. As sector profiles in the study like food, apparel, footwear, beauty and cosmetics, consumer electronics and home furnishings demonstrate the associated dynamism, vibrancy and insatiability in each sector, such forecasts for Uganda‟s retail industry do not seem to be too-far-away developments. Needless to mention, the retail revolution

is also likely to significantly influence the real estate market in various cities and build pressure for large, modern, organized retail complexes that will become the ideal investment destination for a host of international brands.

As it appears, the overall services and infrastructure developments across metropolitan cities in Uganda have already picked pace to facilitate such booming sectors of tomorrow. The surging city of Kampala, for instance, is home to over 1.5 million people with a daily demand of at least 1 million motorized trips for work, shopping and recreation. The Government of Uganda and the private sector, therefore, has undertaken numerous transport projects like the Pioneer Bus, RVR railway train, Taxis, Northern Bypass and Entebbe Express Highway to ease the pressure on roads and consumers‟ access to basic services. If the city is later to become home to a network of large, modern malls and shopping complexes, such developments in transport and infrastructure will remain crucial to facilitate access. It appears that foreign flows have, more recently, shifted focus from classic sectors like power to more vibrant ones like food, textiles and electronics. It is in the light of such developments; therefore, that one can envision Uganda as the hub of all commercial activity, retail in particular.

URWA Services

URWA is a nationwide retail trade association, representing supermarkets, community-focused retailers, home goods and specialty stores, groceries, wholesalers, distributors, chain supermarkets and retail industry suppliers. Our mission is to advance the interests of the retail industry through advocacy, communications, networking, research, innovation and education. URWA was established in 2008 as the Association of Ugandan Retailers and Wholesalers and Retailers. URWA empowers and guide members to attain global competitiveness and make the retail industry a significant contributor to, and driving force of Uganda's economic development. URWA intends to work closely together with the Government, mainly the Ministry of Trade & Industry (MTIC), the UNCCI and other private sector federations to achieve its goals and play an important supportive role to line Ministries in the execution of functions relating to retailing.

The wholesale and retail industry is an important contributor to the Ugandan economy as it accounts for roughly 15% of the country‟s total Gross National Product (GNP) and 33% of the entire services sector. It employs some 1.2Million people, representing a significant 18% of the country‟s work force, which means roughly 2 of every ten (10) workers is employed in the retail industry. Recognized as an umbrella body and a partner in nation building,URWA enjoys the distinction as the “Pulse and Voice of Uganda‟swholesale and retail Industry.” Retail is one of Uganda‟s largest private sector employers, supporting one in four Ugandan jobs, contributing Billions of shillings to annual GDP and it is a daily barometer for the nation‟s economy.

Uganda Retailers and Wholesalers Association (URWA)

P.O.Box 29324 Kampala, Uganda

Email: ugrwa@yahoo.com , urwaserv@gmail.com ,www.ugandretailersandwholesalers.blogspot.com

www.ugrwa.org

Uganda Retailers and Wholesalers Association (URWA)

Wednesday, 28 September 2016

Uganda Retailers and Wholesalers Association (URWA): Public Private Partnership in Retail (R/PPP) Strat...

Uganda Retailers and Wholesalers Association (URWA): National Retail Council (NRC)

Uganda Retailers and Wholesalers Association (URWA): Uganda’s Retail Industry Analysis 2016

Uganda’s Retail Industry Analysis 2016