Review
of Uganda’s Retail Industry (Summary)
Uganda's
retail sector is largely dominated by small
traditional trade, although modern retail channels are expanding in response to growing consumer
demand. Overall economic growth, the increase in
disposable income, and a sizeable young
population, are driving changes in consumption
patterns.
With
lower rental and operation
costs, traditional retailers benefit from offering convenience, package-size
flexibility and low
prices, they are persistently facing extreme regulation from municipal councils
especially in Kampala by KCCA enforcement officers.
According
to Uganda Retailers and Wholesalers Association (URWA) provisional report traditional retailers
accounted for 80 percent of sales (with modern retailers only taking 20
percent. There is no doubt that traditional retailers remain the dominant
retail channel; however, most modern retail industry contacts estimate that the
modern retail channel accounts for around 20 percent of sales in Uganda.
Modern
retailers (supermarkets, hypermarkets and mini-marts) dominated by
multinational supermarkets chains (like Uchumi, Nakumatt, Tuskys, Shoprite, etc
and a few local Chain Supermarkets like Quality Supermarket, Capital Shoppers,
Payless Supermarket, Super Supermarket) appeal to a growing number of consumers
in many key urban areas (Kampala central business district, Kampala suburbs,
Mukono, Jinja, Masaka, Mbarara and Mbale). URWA estimates that modern retail
market share has increased accounted for as much as 20 percent of grocery
retail. Many indigenous supermarkets have relocated from their original
premises to other suburbs due competition from the multinational supermarket
chains.
A
young population, rising middle-class incomes and female labor force
participation are driving Ugandan consumerism. 72 percent of Uganda’s
population, which surpassed 35 million in 2013 and is growing by 3 percent
annually, is under 30 years of age. Uganda now has a large female
working population, making the female consumer ever more important.
Sales
in Uganda’s retail sector are expected to grow 50 percent by 2016. Meanwhile, more rapid
growth is expected for modern trade outlets given the preferences of urban
consumers for more product diversity, higher quality standards, and a more pleasant shopping
experience. Supermarkets, Shopping Arcades and Hypermarkets have proliferated in
urban areas over the past five years providing ease of access to a wider
consumer base.
Almost
all existing large
retailers in Uganda have committed to further expansion, not only in larger
cities like Kampala central business district and surburbs, but also in many
towns like Entebbe, Mbale, Jinja, Masaka, Mbarara, Hoima, Fortportal, Gulu,
Lira, Arua, Kabaale, etc.
Over
the next few years, these prominent trends will shape the growth of Uganda’s
modern retail sector:
- A growing number of western-minded consumers, especially large numbers of young consumers in urban areas.
- A growing middle class, where both parents are working.
- A high number of women in the workforce, with increased disposable incomes to purchase higher-value food products for their children and families.
- Wide range of products offered by large supermarkets, attracting even lower-income consumers.
- Increasing consumer acceptance of processed and packaged products. Many products traditionally sold in bulk are now readily available pre-packaged.
- More concern about and willingness to pay for nutrition, quality, hygiene, and food safety.
- Brand loyalty, but still receptive to new products.
- Weekly shopping at modern retailers versus daily shopping at traditional markets.
Similarly,
growth in the traditional food retail channel is a function of these realities
for the Ugandan
consumer:
- Preference to shop daily for fresh food items.
- Preference for fresh products.
- Still-low percentage of households has refrigerators and microwaves.
- Tight living conditions/small kitchens with little room for storage.
- Traditional markets have cultural value.
- Upgrading traditional grocery retailers has been a government priority, especially in peri-urban towns and low-income towns. Projects involve markets renovations and facility improvements in order to ensure better hygiene and food safety.
NB: This is a summarized report a full one will be provided later and on request.
Uganda Retailers and Wholesalers Association
(URWA)
P.O.Box 29324 Kampala,
Uganda.
Kampala Road, Ambassador House
www.ugandaretailersandwholesalers.blogspot.com
