Retailers have seen this gap and are now in the process of tapping it through opening their own labels and brands.
The supermarket-owned labels are gaining popularity in Kenya with these cheaper products creating competition with local manufacturers and well known brands.
“Private label is not a new idea, it’s been happening in the rest of the world for over 50 years. We got it from the foreign market and tried to create a formula that will work for the Kenyan market with the Nakumatt Blue Label; the idea is to reward our customers who have stood with us for many years by giving them a product that is the same quality as any other brand in the category but at a much cheaper price,” Nakumatt Holdings Business Development Manager Neel Shah told Capital FM Business.
Shah says they shortlisted products that they wanted to start out with that are all made in Kenya among them flour, sugar, water, rice, coffee, grains, bread, disposable cups, milk, tea and cleaning materials among others.
“Thereafter we shortlisted manufacturers that we want to work with based on quality of their products, the processes, people behind the business – to make sure they are able to manufacture up to the standards we require, we benchmark against our national brands, and see if our manufacturers can produce products of the same quality and then we give it to our customers at a lower price,” he explained.
Among the manufacturers they use include Aquamist for their water and Kenblest for their flour.
“What we have done for a few manufacturers is, rather than listing their product on the shelf as an additional product, we have asked them to manufacture for blue label so that we don’t end up putting too many brands and confusing customers and since we have a reputable brand, the sales that they are able to achieve through blue label is much more than what they can achieve if they are on their own,” he stated.
Shah says that their first priority is to work with Kenyan manufacturers to promote local industries which create new jobs in the country.
Shah explained that they have removed the cost of marketing and brand awareness that is implicated to the customer in other brands retail price, thus making their products cheaper.
“But this doesn’t mean that we will stop stocking any brand that is there – at the end of the day we are trying to give our customers a diverse shopping experience,” he said.
He pointed out that since its inception in March 2013 the retailer has earned 10 percent increase in transactions.
The question is will this inhibit the growth of the industry?