Kenyan retail market has massive scope for mobile growth
A new Nielsen Study on Kenyan Retailers and Technology has revealed that while the uptake in mobile usage in Kenya has been significant, there is still significant scope for growth in the market, particularly in the retail environment.
The study utilised face-to-face interviews to gauge the technology adoption rates of 300 retailers across a wide spectrum of channels and functions. Based on these, the research reveals that the Kenyan retail arena remains dominated by direct dealings in terms of transactions and communication, with 96 percent of customers preferring to use cash in-store, and 88 percent of retailers relying on face-to-face interaction to inform customers about new products.
The mobile channel seems hugely underutilised, with mobile money being used by only 12 percent of customers, and only 3 percent of retailers using SMS to inform customers about new products, and 1 percent using WhatsApp. In light of this, Nielsen East Africa MD Jacqueline Nyanjom commented: “In a country with 96 percent mobile penetration, the findings are somewhat surprising - but they do point to enormous potential for growth.”
Perhaps the most surprising avenue of growth is in the mobile money market, which is already one of the largest of its kind worldwide, with 43 percent of the population actively using a mobile money application. Incredibly, however, only 12 percent of retail transactions are currently conducted via mobile money; an unexpected finding given the benefits of safety and ease of use that mobile money has brought to the African continent. This points to enormous potential for growth in a sector that has already outperformed all expectations.
The mobile money market in Kenya is dominated by Safaricom’s M-Pesa, which was launched in 2007 and already boasts over 25-million subscribers and nearly 130,000 retail agents. In 2013, it was estimated that a staggering 43 percent of the country’s Gross National Product flows through this channel.
But according to the Nielsen study, 95 percent of Kenyan consumers still pay with cash in a retail environment, while only 12 percent make use of mobile money, and just 2 percent use credit or debit cards. “In the Kenyan retail environment, ‘Cash remains King’,” said Nyanjom explaining that M-Pesa is used primarily to transfer money from consumer to consumer, as opposed to consumer to retailer.
The primary reasons cash remains the preferred means of payment include the fact that it is easy to use (83 percent) and carries no transaction fees (66 percent). But there is an acknowledgement that cash is not safe, with only 28 percent sticking with cash from a safety perspective, against 63 percent of retailers who believe that mobile money is a safer alternative.
The study went on to explore the reasons for the lack of mobile money penetration in the retail environment: From a retailer perspective, 32 percent claim that customers don’t like using mobile money, while 25 percent have not been approached to register as a vendor.
From the customer perspective, 38 percent claim to not like using mobile money in a retail environment, 25 percent believe that the transaction fees are too high and another 25 percent believe that it is too expensive to set up.
“These perspectives are very revealing, as they expose areas where mobile money operators might be missing a trick. The potential to expand the use of mobile money services into the retail environment is therefore huge,” said Nyanjom.
Growth in communications
The scope for growth in the mobile market also extends to retailer engagement with customers and suppliers. Face-to-face communications win out over mobile communications in the retail environment, with 88 percent of retailers relying on face-to-face communications with their customers when they are in-store, and 93 percent of suppliers relying on face-to-face communications with retailers.
“Point of sale material is used by around 23 percent of retailers, but as most retail environments are small in terms of square meterage, this isn’t always successful. Brand owners are largely dependent on suppliers and retailers to market their products, and as a result have very little say over the messaging,” said Nyanjom.
She adds that this adds up to a wasted opportunity in a country where advertising and promotional influence remains significantly high: 38 percent of consumers claim that they will purchase more than normal based on advertising, and 36 percent say promotions positively influence their buying patterns.
Current awareness of mobile devices as an advertising platform stands at around 44 percent, but only 2 percent of respondents can recall seeing advertising on their phones.
Small wonder then, that the primary reason for innovation failure in Kenya is insufficient consumer demand. “Mobile phones are ubiquitous in Kenya. They are highly interactive, always on, and always in hand. With greater brand owner collaboration, the mobile platform could dramatically increase awareness and consideration of products in the retail environment, building demand and generating increased sales,” said Nyanjom.
Couple this with an increased usage of mobile communication between retailers and suppliers, and possibly the usage of mobile applications to improve supply chain and stock management, the potential for growth multiplies exponentially.
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SAS: Improving the British Army’s decision making with data
SAS’ long-standing relationship with the British Army is built on mutual respect and grounded by a reciprocal understanding of each others’ capabilities, strengths, and weaknesses. Roderick Crawford, VP and Country GM for SAS UKI, states that the company’s thorough grasp of the defence sector makes it an ideal partner for the Army as it undergoes its own digital transformation.
“Major General Jon Cole told us that he wanted to enable better, faster decision-making in order to improve operational efficiency,” he explains. Therefore, SAS’ task was to help the British Army realise the “significant potential” of data through the use of artificial intelligence (AI) to automate tasks and conduct complex analysis.
In 2020, the Army invested in the SAS ‘Viya platform’ as an overture to embarking on its new digital roadmap. The goal was to deliver a new way of working that enabled agility, flexibility, faster deployment, and reduced risk and cost: “SAS put a commercial framework in place to free the Army of limits in terms of their access to our tech capabilities.”
Doing so was important not just in terms of facilitating faster innovation but also, in Crawford’s words, to “connect the unconnected.” This means structuring data in a simultaneously secure and accessible manner for all skill levels, from analysts to data engineers and military commanders. The result is that analytics and decision-making that drives innovation and increases collaboration.
Crawford also highlights the importance of the SAS platform’s open nature, “General Cole was very clear that the Army wanted a way to work with other data and analytics tools such as Python. We allow them to do that, but with improved governance and faster delivery capabilities.”
SAS realises that collaboration is at the heart of a strong partnership and has been closely developing a long-term roadmap with the Army. “Although we're separate organisations, we come together to work effectively as one,” says Crawford. “Companies usually find it very easy to partner with SAS because we're a very open, honest, and people-based business by nature.”
With digital technology itself changing with great regularity, it’s safe to imagine that SAS’ own relationship with the Army will become even closer and more diverse. As SAS assists it in enhancing its operational readiness and providing its commanders with a secure view of key data points, Crawford is certain that the company will have a continually valuable role to play.
“As warfare moves into what we might call ‘the grey-zone’, the need to understand, decide, and act on complex information streams and diverse sources has never been more important. AI, computer vision and natural language processing are technologies that we hope to exploit over the next three to five years in conjunction with the Army.”
Fundamentally, data analytics is a tool for gaining valuable insights and expediting the delivery of outcomes. The goal of the two parties’ partnership, concludes Crawford, will be to reach the point where both access to data and decision-making can be performed qualitatively and in real-time.
“SAS is absolutely delighted to have this relationship with the British Army, and across the MOD. It’s a great privilege to be part of the armed forces covenant.”