Low spending hurts Christmas stores sales

Patrons pose for a selfie with Jatani Hussein, "Santa Claus" at the Two Rivers Mall Santa’s station on December 21, 2019. PHOTO | DIANA NGILA | NMG Kenya’s retailers have suffered their worst Christmas in years on reduced consumer spending, reflecting cash flow problems in an economy plagued by job cuts and modest economic activity.

Supermarket chains, dealers in clothes and food items like chicken are reporting lower or flat sales, removing the festive cheer in a period that traditionally encourages over-indulgence.

Disappointment over the Christmas season sales comes at a period when corporate Kenya has witnessed reduced profitability that has ushered in job cuts, freezes in hiring and near stagnant wages in the race to protect profit margins.

The national and county governments have also delayed payments totalling more than Sh100 billion owed to suppliers, forcing some to cut back operations, shed jobs or face auctioneers after failing to service their bank loans.

As a result, the amount of cash in Kenyans’ pockets has dropped to a four and half-year low with the Central Bank of Kenya (CBK) data showing that money circulating outside banks dropped to Sh176.9 billion in October — the lowest since July 2015.

Retailers are feeling the pinch from the cash flow crunch, forcing many, especially supermarkets, to offer large discounts in the struggle to sell their stocks.

But the tourism and transport sectors have largely been unaffected during the festive season, riding on the back of increased travel that has boosted occupancy in hotels and boosted airlines, bus and matatu operators.

Supermarkets—which are perfect bellwether for measuring consumption power—say traffic has increased in the stores, but the consumers’ shopping basket is smaller.

Customers have stuck to buying basics like bread, milk and sugar, where the margins were thinnest, retailers say.

Dan Githua, the chief executive of Tusker Mattresses Ltd, said the rise in shop traffic had not resulted in increased sales.

“Basket value size has been depressed, confirming what has been said severally that consumers’ disposable incomes have come under pressure,” Mr Githua said.“Regionally, it seems Mombasa has seen the largest shrink in basket sizes, while the highest growth in spend gas continued in Western Kenya in Kisii, Kisumu, Kakamega and Eldoret.”Similar comments were echoed by clothes dealers who traditionally witness sales jump during the Christmas as consumers shell out thousands on new clothing and footwear.“Right now we can stay for over an hour without a single customer walking in. It’s been this […]

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