First published 20 October, 2024
In the past decade, malls have become dominant retail hubs in Nairobi, Kenya’s capital, promising all-under-one-roof shopping, dining, and entertainment experiences. For real estate developers, the burgeoning urban middle class and foreign ex-pats have encouraged them to build more extensive and upscale malls, each promising a better experience. The belief that malls are the future of shopping has attracted investors and banks.p>
The COVID-19 pandemic and the collapse of major supermarkets like Nakumatt and Tuskys–which were anchor tenants for most shopping malls—slowed the sector momentarily. A struggling middle class, the rise of e-commerce, and the fact that there were too many malls contributed to a footfall decline in shopping centres, with some, like Rosslyn Riviera in Nairobi’s diplomatic district of Gigiri, offering rent waivers of up to one year.
Between 2020 and 2022, VC-backed e-commerce startups like Copia, Marketforce, iProcure and Sky.Garden promised to kill in-person shopping. In response, retail stores like Naivas, Quickmart, and Carrefour–the three biggest supermarket chains–developed online shopping apps. Most of the champions of online marketplaces, like Copia and Marketforce, have since been buried in dust and shadows, giving a false impression that e-commerce has failed to take off in Kenya.
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According to the Central Bank of Kenya’s Financial Stability Report, Kenya’s brick-and-mortar retail could be in a slow decline. For two consecutive years to 2024, the country’s real estate has remained subdued because of low demand for commercial and residential units as merchants shift to online selling and organisations consider remote work. The sale and rental of retail and office spaces slowed in 2023 and the first half of 2024 compared to 2022, CBK said. Investors are now shunning big real estate developments like malls, even as landlords try to ensure they have a future.
The mall model has been signing up one or two anchor tenants to bring foot traffic and rent remaining spaces to smaller retailers keen to capture hundreds of shoppers who visit daily. This model has declined as small retailers shift to selling directly from home. Malls come with high overhead costs–rent, utilities, and maintenance–which weigh heavily on small business owners. One small retailer told TechCabal that selling on social media platforms like WhatsApp and Facebook cuts all these costs and helps sustain profits. Social media platforms have become popular marketplaces where retailers can list products and interact with buyers at a much lower price than maintaining a physical mall outlet.
Many small retailers are finding success in building direct relationships with their customers. Selling from home allows them to offer personalised, one-on-one service, which is highly valued. Customers appreciate the flexibility of home deliveries, a level of attention they often don’t receive in mall settings. With increased smartphone penetration and the convenience of mobile money platforms like M-Pesa and Airtel Money, Kenyans are becoming more comfortable with online shopping.
Kenya’s logistical network, particularly outside major cities like Nairobi, is underdeveloped, making it costly to deliver products to customers. Unreliable postal services make deliveries slow and expensive, which established e-commerce platforms like Jumia and Kilimall struggle with. However, social sellers reach customers in regions where last-mile delivery remains challenging.
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While challenges such as trust issues and unreliable delivery systems remain, the growing influence of social media selling is slowly eroding in-person shopping. Kenyan consumers are price-sensitive, and many prefer to buy from local markets where they can bargain and inspect products in person. Social sellers have perfected this, giving customers room to negotiate in chats, an experience that mainstream e-commerce platforms do not offer. The return and warranty policies of big e-commerce platforms have been criticised for being cumbersome. Social sellers give customers the option of returning immediately to maintain the relationship with the buyers.
As malls struggle to remain relevant, the future of retail in Kenya lies in smaller, more flexible operations. To stay competitive, small retailers have turned to technology, social media, and home-based businesses. While the death of shopping malls is not absolute, it reflects a broader global trend where shoppers seek convenience and business owners push to reduce operational costs. Some outdated shopping centres in downtown Nairobi have been converted to pick-up points, renting shelves to sellers.
Adonijah Ndege,
Senior Reporter, TechCabal.
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I am the CEO of 9JAGISTLAND.My name is Adedeji Timothy and my co-owner is Oyekola Damilare.This blog is born out of our passion to educating to people in all aspect of internet life.We are enthusiastic about writing posts and articles online.
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