Opening a retail shop in Kenya is a debatable business idea. Why? Some shopkeepers thrive, educating their kids with this venture, while others close down due to unending losses.
How can you ensure you record massive profits in this business?
To open a small retail shop, you need an initial capital of Kshs 50,000 and above. Setting up this business in a densely populated area will earn you a 30% profit.
Whether in estates or villages, residents in your area have a favorite shop where they purchase consumables daily—for instance, bread, milk, cooking oil, and soap. You can set up a shop that matches their needs and preferences to enjoy maximum profits.
In this piece, I will cover
- The ABCs of a retail shop
- The process of opening a retail shop in Kenya
- Tips to establish a profitable retail shop
Let’s dive in!
The ABCs of a Retail Shop
Before setting up your business, you need to understand a shop’s basics.
So, what is a retail shop, and what does it cover?
A retail shop is a business that offers products to customers in small quantities. As a duka owner or shopkeeper, you will source these goods from wholesalers at a lower price and then sell them at a profit.
Although this business allows you to set your goods’ prices, it is highly recommended that you ensure you do not overcharge your customers, or else they will find a cheaper shop. So, always keep updating your prices depending on the different market factors.
What should you sell in a retail shop?
A retail shop in Kenya covers the following items:
- Cooking oil
- Soap and detergents
- Maize flour
- Wheat flour
Some shopkeepers supplement their businesses with other products such as mali mali, cooking gas, and MPESA businesses. As a result, they provide a wider variety for consumers to explore, boosting their returns.
Steps To Open a Retail Shop In Kenya
What do you need to open a retail shop in Kenya?
To open a retail shop business, you will need the following:
Step 1. Prepare a Retail Shop Business Plan
Starting a retail shop may seem like a walk in the park since you’re familiar with the requirements. However, not writing a comprehensive business plan that outlines a strategic location, risks, and strategies to mitigate them, the advantages of this business, and the competition can lead to business failure.
Fortunately, you don’t have to struggle to craft a relevant plan. You can consult professional business plan writers to help you prepare an excellent document outlining essential aspects of your new business.
Step 2. Identify a Strategic Location
Your retail shop location is a fundamental factor in your business profitability. It determines the visibility and accessibility of your business. It also defines the competition you will face from the existing businesses.
Hence, you must choose a strategic premise that allows you to reach a massive audience. Some of the best-performing shops are located in markets and shopping centers. However, you must note that these areas can pose stiff competition, demanding you find a market gap that will give you a competitive advantage.
Step 3. Acquire Retail Shop Business Legal Documents
Registering your business is the first legal process you should fulfill. You can complete this step on the eCitizen website. The government of Kenya provides simple-to-follow actions that require a few documents, including your ID, KRA PIN, and email address. At this stage, you will part with Kshs 1,000 to Kshs 1,500.
Once you’ve registered your business name, you must apply for a single business permit. The cost of this document varies depending on the type and size of your premises. The larger the premises, the higher the price. In Kenya, these sizes are categorized into three, including small, medium, and large retail traders.
The cost also varies depending on the county of operation. Contact Huduma Centre or your county authority office for accurate information.
Other legal documents you will need to run a retail shop include food hygiene, trading license, and fire clearance. These licenses feature a 6-month recurrent payment timeline.
Step 4. Find Reliable Suppliers
You introduce a new breakfast snack that turns into customers’ favorite. Then the supplier doesn’t show up after two weeks, and the clients are disappointed. Finding a reliable supplier is a common problem in the retail shop business in Kenya.
Your customers are looking for consistency and convenient shopping experiences where they can find everything under one roof. Connecting with reliable suppliers will help you match their needs and preferences, increasing your business profitability.
Here are more benefits of finding a reliable supplier:
- You enjoy cheaper buying prices
- You can get products on credit
- Timely inventory deliveries
Step 5. What’s Your Budget?
How much does it cost to start a retail shop in Kenya?
You will need an initial capital of Kshs 150,000 to Kshs 500,000. The figure varies depending on the size of your shop, the location of your business, and the additional ventures you integrate into the shop.
However, it’s important to note that some people start their retail shop business with less than Kshs 100,000. While this may work, it’s quite limiting as you can only acquire a few products, hindering you from expanding your venture.
A businessperson with a capital of Kshs 200,000, can budget it this way:
- Licenses costing Kshs 15,000
- Rent costing Kshs 60,000(20,000 for deposit and 40,000 for 2 month’s rent)
- Shelves and counter costing Kshs 25,000
- Inventory Kshs 100,000
These are the fundamental elements of a retail shop business. Once you have all these in place, you can launch your business.
Step 6. Launch Your Business
Now that you have everything in place, you can launch your business. The best day to launch your retail shop is on a market day or during the weekdays if your shop is located near an academic institution.
Tips To Establish a Successful Retail Shop In Kenya
Boosting your business profitability and growth helps you accomplish your financial goals faster. Here are pro tips to help you build a successful shop business
Tip 1. Market Your Retail Business
The retail shop business highly relies on word of mouth for marketing. Hence, you must provide excellent services to your customers as they will narrate how your business handles them to their neighbors or friends.
Another great way to market your business is through branding. Choose and write a business name that resonates with your customers. You should also use colors that appeal to your clients. Avoid shades that match businesses such as butchery and MPESA if you’re not offering these services.
Tip 2. Offer Excellent Customer Service
Customers become loyal to businesses that prioritize their needs. This applies to the retail shop business too. A good example is when you serve your customers according to the order they visit your shop. Don’t show preference to some clients; you might chase others.
If you hire an apprentice, ensure you equip them with the fundamental skills. For instance, communication, work ethic, listening skills, and problem-solving.
You’ll meet difficult clients or genuine complaints as you operate your business. When this happens, solve the problem amicably to ensure they are satisfied.
Tip 3. Boost Your Retail Shop
Having a stand-alone retail shop is not a bad idea. However, you can integrate complementary products and services to boost your business returns exceptionally.
Some of the complementary businesses you can run alongside a retail store include:
- MPESA services
- Supplying and retailing cooking gas
- Selling cereals
Find a market gap in your area and integrate a business that meets your customers’ needs.
Tip 4. Pricing
Most retail businesses apply the economy pricing strategy. This means they offer products at a lower price to hit high sales volume. Since customers are more aware of the pricing difference from one shop to another, you should sell your goods at an affordable price.
However, the suppliers keep changing your buying price depending on several market and economic factors. As a result, you should ensure you update the selling prices consistently to avoid getting losses.
Tip 5. Be Consistent
Customers are looking for a consistent shopkeeper who can visit early in the morning or the evening. Opening and closing your retail business randomly can send a negative impression to your customers.
As a result, you should have a routine, say opening at 6:30 am and closing at 9:00 pm. This will give your clients a consistent schedule when visiting your shop.
Frequently Asked Questions
1. Is a Retail Shop Business Profitable In Kenya?
A retail shop business is profitable with up to 30% returns. However, you must secure a strategic location and find a good supplier who will sell you goods at a cheaper price to maximize the profits.
2. What Are The Common Items Sold in a Retail Shop In Kenya?
The main products sold in a retail shop in Kenya include the following:
- Basic items include milk, bread, flour, sugar, cooking oil, soap, detergent and airtime
- Snacks such as bans, sweets, and biscuits
- Toiletries such as toilet paper, soap, toothpaste, and sanitary towels
- Dry foods like beans and rice
Ready To Start a Retail Shop Business In Kenya?
A retail shop business is among the most straightforward ventures to start since it requires less capital, academic qualifications, and has minimum requirements. Nevertheless, you must pick a strategic location, find a good supplier, and market your business to enjoy optimum profit.
Are you ready to start a retail shop in Kenya?
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