Retailers Urged to Rethink Business Models Under ‘New Normal’ as Sector Reels from Covid Blow

Acacia Mall, Kampala

Retailers have been advised to consider restructuring their business operations to cater for Covid safety measures and trading time variances if they are to cope with the changes in customer sentiment and behavior resulting from the Covid pandemic.

Uganda’s retail is among the most hit sectors of the economy owing to the four-month lockdown and curfew by government to slow the spread of coronavirus. 

Many businesses were closed and demand was subdued because consumer incomes were under pressure due to furlough, along with reduced salaries and redundancies leading to reduced  spending.

Retailers in Kampala who prior to Covid were open for an average 14 hours a day have now been forced to trade for only 9 hours as a result of daily curfew (which starts 7pm), according to Marc Du Toit, the Head of Retail at Knight Frank Uganda.

“Kampala’s retail market has undergone a transition from 1960s, 70s and 80s where retailers traded for short hours. This has extended to 14 hours by bringing leisure into the mix,” Marc Du Toit said during a recent webinar organized by Knight Frank Uganda on the impact of Covid on retail.

He however added that due to Covid measures, “Retailers need to look at 7am – 4pm or 8am – 4pm since people can’t go out in the night. We can’t afford to wait for the situation to normalize”.

“There has been unbelievable footfall turnover. Retailers have to change the way they operate – customer care and safety precautions – for people to feel comfortable. This will make a difference in this period. People will be more comfortable going to where they feel human-to-human transmission is limited,” he added.

Brett Exner, the Real Estate Manager for Woolworths too cited the short trading hours as one of the challenges the British fashion retailer’s businesses in Uganda have suffered. Woolworths stores in Kampala now trade 9am – 3pm as opposed to closing at 8pm pre-Covid, Brett said.

“Travel into Uganda is also a challenge. We have lost the backbone of winter trade. Seasonality is key for us as a clothing retailer. We might have to consider promotion of discounts which affects business”.

But there are bigger problems for Kampala’s retail. Everest Kayondo, the Chairman Kampala City Traders Association (KACITA) said that some landlords have not appreciated the nature of the pandemic as a calamity and have failed to give concessions to their tenants.

He said some landlords are demanding rent for the lockdown period even when it’s clear their tenants were not working. This, he says, could force many businesses to go under.

“If we keep working hours down and borders closed, that’s going to be a problem. If there’s access to foreign markets, volumes will pick up and trade will again pickup. Travel restrictions have made it hard to place orders especially in cases where traders have to physically be present to approve the quality of stock they want,” Kayondo said.

Similar to Marc’s submissions, Jamil Alibhai, the Director of Eye Care Centre said retailers must “ride the storm and hang in there”, before urging that government, banks and landlords review taxation regimes, interest rates and rent terms respectively

Internally, he said, businesses must invest in hygiene protocols in line with Ministry of Health guidelines as well as other factors such as renegotiating terms of supply, reassessing insurance policies and integrating online platforms in their businesses.

According to the Knight Frank Property Market report for the first half of the year 2020, closing of manufacturing and supply chains saw retailers struggle to get product on shelves. 

In its previous report, Knight Frank had confirmed entry of Turkish based international fashion chain LC WAIKIKI into the Ugandan Market with a 2000m² store at Acacia Mall (the largest LC WAIKIKI store in Africa). The store was due to open in July but this has been pushed back to later in the year to Covid.

The property management firm predicts retail rental rates which remained stable in the first quarter of 2020 will probably contract by approximately 30% post lockdown, depending on the ability of the general economy to bounce back, and consumer spending to return to pre-Covid 19 levels.

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