Executive Summary of a one-day workshop held in Mauritius on the 27 march 2017 and organised by Kantar TNS Indian Ocean (Ex TNS Analysis)

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Contents
The Market Environment – key takings..................................................................................................2
The People – key takings.........................................................................................................................6
Population profile & Pen Portrait – Key takings .....................................................................................9
Purchasing behaviours & trends - Key takings.....................................................................................11
Retail environment – key takings..........................................................................................................13
Money, Banking & insurance – Key takings..........................................................................................16
Opportunities - key takings...................................................................................................................22
CONCLUSIONS.......................................................................................................................................24
Decoding the Kenyan
Consumer
Executive Summary
Workshop organised on 27th March 2017
Key Speakers: Eric Reingewertz, Bilkiss Jownally and Virginie
Villeneuve
We can help you to go further in your project : How?
Before the launching of the project:
Analyse the opportunity for your product and service and Improve your offer
1. Market potential survey – qualitative and quantitative
2. Competitive Analysis
3. Concept and Product Test Survey: to estimate the acceptability of your service,
product, brand and price
4. Develop a Brand and Marketing Strategy (retail and communication)
5. Identify local partners for retail and communication
After the launching of the project:
Evaluate the impact of your marketing and retail strategy and Re-align:
a. Monitor your market penetration / share
b. Monitor your advertising impact and brand presence
c. Evaluate the consumer / customer feedbacks
d. Audit the retail and communication organisation

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The Market Environment – key takings
1. Kenya is one of the most promising countries in Africa : a GDP growth above 6%, a
GDP per capita of 1400 USD (Ethiopia = 600, Tanzania = 880, Madagascar = 400,
Uganda= 800, Cote d’ Ivoire = 1400 and Mauritius = 9200), a young population of
more than 52 million (41% <14 years old)
2. 42% of the GDP is still derived from natural resources
3. We note a significant growth in some key sectors over the period 2011-2015:
Agriculture; Construction; Finance & insurance; Real Estate
4. The urbanisation in Kenya is quite strong: the population of Nairobi and Kiambu
(close to Nairobi) represents more than 4 million people.
5. 83% of registered employment (excluding agricultural and pastoral activities) are
connected with the traditional sector (essentially trade).
6. Food and Beverages are the main expenses category for Kenyan households (36%)
followed by housing expenses (18%, incl. electricity, rent) , transport (9%) and
clothing and footwear (7%)
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The People – key takings
“In Kenya we are not taught to answer questions which
have not been asked”
• There is a true & different Kenyan character
• Since 2013 (riots post-election) Tribalism – renamed
“community” => sensible issue
• Out of the 43 tribes existing in Kenya, daily
interaction is limited to approx. 8/10 tribes.
• People in Nairobi have now developed their own
character
• Overall, Kenyans are open to foreigners, seen as “opportunities”
• The national motto of Kenyans is “what is it in for me”
• Welcoming by nature, the Kenyans cannot support aggressive language (never
shout!), but understand / respect authority
• Corruption is everywhere, despite continuous calls for action from all part of the
society and foreign partners, nothing seems to change and nothing will probably
change soon. Most of the money (corrupted money) is reinvested in the country.

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Population profile & Pen Portrait – Key takings
 First of all, this is important when retailing to Africa not to confuse Wealth and
Development. Most of the Kenyans do not have money in bank but own cows or lands.
For this reason, figures (such as Socio-Economic group) should be analysed with caution.
 4 key customer segments have been identified:
1. the Rural (they depend on their production to eat and pay the school fees –
their quality of life depend on rain season),
2. the BOP – Below of Poverty line (casual workers living in Nairobi slums,
fighting every day to ensure that kids eat something before going to school),
3. the Middle-Class Urban (living in Nairobi, in flats, shopping twice a month at
Nakumatt or Tuskies, have invested in land or trying to buy land in their
village) and
4. the Top Level (top executives or business owners, have a large house,
children studying abroad, have large plot of land in the country side).

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Purchasing behaviours & trends - Key takings
 In Kenya, shopping is an activity on its own and is highly planned, if not ritualized.
For most people, it is planned with limited impulse purchase, done with a list
 Most often done by the wife, with the kids over the week end. Smaller shopping can
be done by the maid or children. Kenyans use informal sources of supply for milk,
meat, veggies, etc.
 Kenyans are loyal to their main brands (based on trust and respect relationship),
however affordability is key.
 There are differences in shopping behaviours according to the Consumer Segment
and Revenue. See slides below.
READ: TOP 10 Brands in Kenya
https://softkenya.com/kenya/top10-brands-in-kenya/
A List Of The 20 Biggest Brands In Kenya In 2017 Has Been Unveiled
http://omgvoice.com/news/list-biggest-brands-kenya-2017/

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Retail environment – key takings
Only recently, modern distribution has reached over 50% volume share across most
categories
 Modern distribution is now developing very fast. We are using the presence of a
supermarket in a town to define it as Urban center
Traditional distribution is progressively shrinking
 Kiosks and “Dukas” used to be handling a huge volume of daily consumption and
are now declining sharply: almost disappearing in urban residential centers
 Driven by development of large estates/gated communities, proximity stores are
progressively taking over in mid and upper classes locations
 Police checks, alcohol blows and attempt to control consumption of alcohol by
restrictive laws encourage this trend from consumption & shopping in the close
neighbourhood
 In the meantime, hard push from the government to collect taxes discourages
informal retail
Modern distribution: Convenience stores
− Petrol station & service bay are important location/retail for small shopping . These
places are important meeting points for friends and families: to eat & drink nearby (
bar & Nyama Choma place), with bouncing castle over the week end for children ,
and place to clean and wash the cars (a low middle class “ritual”).

We have identified two opposite trends in shopping habits (see details in the following
slides)
1. Small SKUs -Increase affordability
2. Big quantities - Reducing prices/costs
READ
Nakumatt closes branch in city centre, blames poor sales
http://nairobinews.nation.co.ke/news/nakumatt-closes-branch-city-centre-blames-poor-sales/
East Africa’s biggest retailer has sold a 25% stake to an international investor
https://qz.com/890060/kenyas-nakumatt-just-hired-a-tesco-veteran-after-selling-25-stake/
Ouverture du 1er hypermarché carrefour au Kenya
http://www.carrefour.com/fr/actualites/ouverture-du-1er-hypermarche-carrefour-au-kenya
Kenya: first carrefour hypermarket store opens at the hub mall, karen
http://allafrica.com/stories/201605180106.html

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Money, Banking & insurance – Key takings
 Overall there is a complete lack of trust toward banking industry :
 Every now and then, some banks collapse, most of the time fraudulently (Imperial
Bank & Chase Bank in 2016 only)
 Rates of transaction are perceived as prohibitive
 Banks are too formal. Complicated, not helping enough & Arrogant
 International Banks are less accessible and have long and tedious process for
financing or account openings
 When it comes to investment: low return while other options can provide higher
return
 Financing projects: Generally Kenyans don’t like borrow money formally (loans &
mortgages) and will avoid doing so as much as possible.
 Deeply rooted mistrust toward the banking system and what is perceived as big
institutions
 High cost perceived: why paying twice the price of the asset?
 Feeling of uncertainty about the future
 Use as far as possible, other solutions such as the tontine system (Harambee)
 Insurance (except car insurance) are not in well anchored in the local culture/habits.
The concept of anticipating the risk is not widely spread: the attitude is to save
money – not to cover risks. Furthermore there is no trust toward the institutions.

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Mobile phone market – Key takings
 Safaricom has been leading the market now for about 15 years
 Mpesa is a key factor but the company has been diversifying its activity: TV box,
Optic fiber, Applications, Finances, Etc. Overtime, Mpsea has become the backbone
of the economy and daily life. “When Mpesa is down, it is like the entire life is on
standstill…!
 Some of the benefits of Mpsea :
 Can reach anyone across the country, including in the very remote places
 “ Before we used to send money through the bus driver to the village”
 Trustworthy, convenient, widely accepted across the country
 No security issues, no scams
 Competitors have been trying to file a case against Safaricom for dominant position
– so far with no success. The government tried to force a separation between
Safaricom and Mpesa –so far with no success.
 However, new initiatives are now coming out which could potentially challenge
Safaricom: Equitel, PesaLink, etc.
 Mobile phone has become the key access to internet and its
services. In people’s mind, Safaricom and Mpesa have
both been contributing to this success. Both brands are
actually recognised and appreciated. Both actually did
make a difference in people’s life and this cannot be
forgotten.
 The convergence and the services attached are even
more critical in Kenya as many of these services were
just not available before: they come and are discovered
for the first time through the mobile phone
READ: Safaricom tops the list of most influential brands in Kenya Read more:
https://www.tuko.co.ke/109978-top-10-most-influential-brands-in-kenya-number-one-
seems-obvious.html

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Opportunities - key takings
1. Traditional distribution: mitumba : An estimated $1.1 million per month, 100,000 tones
of secondhand clothes a year, Selling price: from Ksh. 100 to Ksh. 1,000
2. Cosmetic and Beauty : An estimated Euro 10 billion market in 2017 across Africa . Driven
mainly women entrepreneurs. Double digit growth over the last 10 years. Boost by the
Young population, increasing middle class with higher disposable income, increasingly
urbanisation.
3. Other interesting sectors are :
 Agro-business
 Industrial farming
 Construction (infrastructure & housing)
 Real estate
 Car import
 Transport
 ICT (Technology, programing, software, etc.)
 Fashion
 Health/Pharmaceutical
 Education
 Power generation
 Finances investment
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4. Global business is facing tough challenges while local players are gaining momentum
 After the financial crisis, many multinationals have sometime brutally disinvested
or have not invested enough when markets where growing in Africa, thus leaving
a vacuum.
 This happened while local competition is stepping up fast and is improving quality
of services and products offered to local the market.
 Large multinationals remain challenged with excessive centralization of decision:
too often key decisions are made at head office and are not best fitted for Africa
while local players can move and react much faster as they know the local
markets
 Multinational are fighting here an asymmetric warfare against local businesses
and many are actually struggling to get return, just sustain or penetrate the
market
 Furthermore, many consumer categories have seen the number of players
increasing (cosmetics, distribution, spirits & alcohol, etc. ), from both
international and local companies, increasing significantly the level of
competitiveness
READ : Nestlé cuts Africa workforce as middle class growth disappoints
https://www.ft.com/content/de2aa98e-1360-11e5-ad26-00144feabdc0
http://www.nestle.com/media/news/nestle-positive-about-africa-future
Nice & Lovely représente désormais 2/3 des ventes de L’Oreal en Afrique orientale

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http://www.agenceecofin.com/industrie/2105-20165-nice-lovely-represente-desormais-
2/3-des-ventes-de-l-oreal-en-afrique-orientale
5. Local Entrepreneurs Increasingly take the Lead :
 There is an increasing inclination toward local brands/companies: Progressively
a shift in consumer mindset is happening in favor, at least for some categories, of
local brands and local companies. Consumer word: “her fight is our fight”.
 Local Entrepreneurs have eeasier access to financing through local banking
system and access to cheaper manufacturing capabilities from China are making
possible investments & ventures which would have been unthinkable a few years
back
 They have better ability to identify/recruit & retain best resources : In the
meantime, large multinationals find it harder and harder to attract and retain
best talents who have knowledge of the local market
 And the New generation: “don’t care about the big corporates anymore…” :
While previous generation was more concerned about a career in formal business
or an international company, the young generation is eager to become
entrepreneurs, is ready to drive innovation and to take risk to succeed
READ : The female Kenyan brewer taking on a global drinks giant
- http://www.bbc.com/news/business-32495853
- Kilimall courts local brands to grow its market in Kenya
- https://businesstoday.co.ke/kilimall-courts-local-brands-to-grow-its-market-in-kenya/
Kilimall launches global shopping service in Kenya
https://www.standardmedia.co.ke/business/article/2000221755/kilimall-launches-
global-shopping-service-in-kenyamarket-in-kenya/
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CONCLUSIONS
Few points to remember on KENYA market and consumers
Economic Environment:
- A pretty stable environment and pretty protected legal with strong ambitions: it is progressively
happening!
- A fast growing economy, progressively becoming more sophisticated, improving infrastructure
- The economy is becoming progressively more formal
Customer and Market Environment
- Copy pasted solutions don’t work: African situation require African solutions + need to balance with
global solutions
- Heritage is not enough anymore: need to make a change in people life to get credit
- New generation is ambitious but has no time, want to make money fast…. !
- Local entrepreneurs are now extremely aggressive; depending on sectors: distribution is critical
- Almost 50% of the population still leaves below the poverty line: this requires adapted strategies….
More information and quotations:
Nathalie JOB – Analysis Group / Kantar TNS / nathalie@kantartns.io
Katouskia SAWMY – Kantar TNS / Katouskia@kantartnsio.io
T + 230 202 00 55