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by Fredrick Ngugi, at 11:27 am, April 28, 2016, Lifestyle, Money Moves

Africa’s Growing Mall Culture: Who Wins and Who Loses?

Two Rivers Mall in Nairobi, Kenya. (Photo: www.jambonewspot.com)

The mall culture in Africa is quickly taking shape, with mega shopping malls springing up around major cities in record speed. This is a whole new marvel in a society where people are used to traveling long distances for shopping, work and entertainment.

The all-inclusive model of contemporary shopping malls appeals to a vast majority of the rising African middle-class as it allows them to work, shop and play under one roof. The mall culture in Africa also guarantees exceptional convenience since people can live, work and shop within the same establishment.

According to Oxford Business Group, there is a significant rise in consumer spending in Africa, with countries like Kenya experiencing up to 67 percent growth in spending. The group also reports that the upsurge in malls and increase in consumer spending have fueled urbanization and a boom in the retail sector.

The Flipside of It  

While the convenience brought by shopping malls is welcome, there is also a dark side to their presence, which equally needs attention.

As mega shopping malls continue to emerge, small retailers are worried that they are slowly and painfully being forced to close shop.

In Africa’s major cities, the big retailers in malls are using economies of scale to undercut proprietors of informal stores. Since small retailers buy their goods from wholesalers, they are forced to increase the cost in order to make a profit, which is different for larger retailers in malls as they get their goods directly from suppliers.

The existence of informal stores is important to the fabric of major cities in Africa; many of them are owned by low-income earners, most of whom are women. They rely on the meager profit they make from the stores to feed their families.

Local rental property owners are also crying foul as the mega shopping malls are stealing clients from them, forcing them to lower their rental charges in order to stay in business.

Foreign Investors Making a Kill

Foreign-owned brands are taking advantage of the growing mall culture in Africa to expand their businesses in Africa. If you pop in any major mall in Kenya, for instance, you will be disturbed by the large number of foreign brands occupying most shops.

Due to the high cost of rent in most of the high-end contemporary malls in Africa, small local brands are left out as multi-million dollar foreign brands scramble for space.

Additionally, most local construction companies do not have the required machinery and architectural capacity to construct modern shopping malls. Consequently, property developers are forced to hire foreign construction companies.

As Africa struggles to adapt to this new business marvel, those in leadership positions face an enormous task of ensuring there is a balance between embracing change and protecting small retailers who rely on their small enterprises to feed their families.

 

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