NAIROBI, Dec. 10 – Business people selling non-essential commodities are recording low sales or even losses as Kenyans tighten their purses in response to rising inflation. Top on the list of those affected are traders selling electronic items, such as computers, music systems and TV sets.
Most of them are experiencing a considerable drop in sales as consumers shun their products, focusing on basic items to survive. Kenya’s inflation in November was at 19.72 percent, according to the national bureau of statistics, up from 5.4 percent in January. The high cost of living has bitten consumers’ purchasing power. Prices of most items, particularly essential commodities, in the East African nation have increased sharply, with some rising by more than 150 percent.
For instance, in January this year, Kenyans could buy a kilo of sugar at an average of 1.3 U.S. dollars and a 2kg packet of maize meal at 0.9 dollars. The same commodities currently retail at an average of 2.3 dollars and 1.5 dollars, respectively. The situation has pushed many Kenyans to the edge as they also struggle with the high cost of housing, energy and transport. “We are barely selling any computers. Each day, business is becoming tough,” said Gilbert Ojiambo, a businessman with a shop at Jamia Mall, a major shopping complex in Nairobi’s Central Business District.
Ojiambo said sales had been low for the past five months. “The worst times started in October. We experienced a drop in sales in that month, then in November and now December is turning out to be the worst for us,” he said. The trader said sales often dropped off in December, but this year things were turning out worse than expected. “Mostly, when December holiday begins, people shift their attention to food and clothing items as they plan for festivities.
In previous years, we have been selling computers despite the shift but this time, the trend has changed,” he said. A look at stock in the shop, which includes printers, CPUs, monitors, scanners, cameras and other related accessories, points to the misery of the business. Some of the items have gathered dust, an indication they have been in the shop longer than expected. “We brought in new stock in early August from Dubai. Often such stock takes three months to clear, but we are now stuck with it four months later.
We have barely sold half of it,” he said. “In fact, we have lowered the prices of most of our items, reducing our profit margins, as we try to attract customers but this seems not to be working. It appears people are hard-pressed with other needs that computers are no longer basic items,” he said.
The price of a used HP or Compaq Pentium IV computer at the shop goes for 200 dollars. Pentium III computers are sold at around 88 dollars, depending on specifications, such as size of the hard disk and memory. Bernard Kariuki, an attendant at an electronic shop in Luthuli Avenue in Nairobi, shared similar experiences. Kariuki said the number of customers visiting the shop had fallen. “Since mid-November, I serve at most 10 customers.
Most of those who come here just pass by to check prices, perhaps to compare with those in other shops,” he said. The shop specializes in electronic items that include TV sets, DVD players, music systems, loud speakers and mobile phones. “If you sell goods worth 444 dollars, you count yourself lucky,” he said.
The attendant said most consumers in need of electronic items were going for cheaper unknown brands. “People are turning to cheaper brands to save money. We have seen the trend in television sets, where people are shunning Sony, Samsung and Philips items and going for unknown brands like Aucma and Sany, which cost half the price of the highly valued brands,” he said.
In a survey across Kenya released in October, Consumer Insight, a marketing research firm, found a sharp increase in the cost of living had made Kenyans turn to cheaper brands of even basic commodities. These included brands of soap, cooking oil, toothpaste, margarine, maize meal and cooking fat.
“Big brands are losing out to their smaller rivals that charge lower prices. Consumers are cutting their spending as they try to save.Brands that were initially perceived as inferior have become popular as consumers try to cushion themselves from expensive commodities,” said Ndirangu Maina, managing director of Consumer Insight. (Xinhua)