Safaricom; Barbarian at the E-commerce & Retail sector Gate

Digital disruption has quickly become a critical concern for business leaders in Kenya and Africa.

The retail sector in Kenya has struggles over the last decade with main players Uchumi , Nakumatt and Tuskys all struggling to get a strong footprint due to a barrage of challenges including corporate governance, weak systems, and family feuds among others.

Pan African and even International retailers such as Choppies, Game and Carrefour smelling blood have made significant inroads taking advantage of struggling local retailers.  To date all scaling and growth strategy across the different players has been largely brick and mortar with location being the main competitive advantage. While this strategy has worked in the past and most recently; it may not be prudent for retailers to continue to deploy it in future as it is too costly and cognizant of shifting consumer preference for convenience e-commerce may well be the future.

Having observed the disruptions in various sectors made by Uber, AirBnB and most recently Safaricom that started off as a telecommunication company that went on to significantly disrupt the financial sector through its flagship Mpesa. It’s quite obvious that Safaricom is a company to be watched carefully by industry players in virtually all sectors in the economy.

Imagine a startup such as Twiga Foods; a mobile-based supply platform for Africa’s retail outlets, kiosks, and market stalls that enables vendor orders stock from Twiga and is delivered for the next day at their shop with a low-cost, better quality, product than informal markets can provide. This is the back end of the retail value chain being streamlined into the digital economy despite the fact that the informal market in Kenya is a tough nut to crack.

To bring the point home take a look at Amazon that started off as an online book store that has morphed into a giant and is worming itself into any sector it wants by applying its infrastructure and service. Amazon has disrupted the American Grocery sector, Banks, Real Estate Brokerage, Ticketing and entertainment industries.

Based on these cases, we can observe that retail sector in Kenya is still very lucrative with a population of over 40Million, formal retail penetration of 30% and a struggling retailing sector forms the perfect condition of a perfect disruption storm. The million dollar question is; is the launch of Masoko a forerunner to Safaricom going for retail? Only time will tell

For now let us help your company build resilience and prepare for the inevitable disruption; contact victor@wyldeinternational.com /victor@viffaconsult.co.ke