Now that you’ve thought of starting a retail business in Kenya, you need to understand the dynamics/economics of starting and running this business into success. Just like any other business, a retail shop in Kenya will need an organized entrepreneur. For this reason, this article will take you through all the requirements needed to launch and manage a successful retail shop in Kenya. take keen note, as you get answers and a firm strategy for the business.
Let’s dive in…
What is a retail shop?
A retail shop (also known as ‘duka’) in Kenya, is a store that sells products to customers in small quantities. These products are usually sourced from wholesalers or intermediate sellers who offer them at a cheaper price. From there, the retail shop owner sets his/her prices, being keen not to overcharge customers, while at the same time, maximizing profits.
This venture is a good stream of income, especially in this age where academic qualifications are piling up with no employment in the country.
Requirements needed to start a retail shop in Kenya
Here are the most important requirements you will need to fulfil as you start your retail shop business in Kenya:
#1. Business Plan
All startup businesses need a good business plan.
This is because a business plan, as discussed in our earlier post, helps you understand the following:
- The market dynamics and competition
- Your goals to be achieved
- Your capital plan and investment strategy
- Your business SWOT (strengths, weaknesses, opportunities, threats)
- Your Unique Selling Proposition (USP)
With a business plan, you will likely increase your chances of success by up to 260%. This is according to a survey done by Webinar Care on the Business Statistics of 2023.
Designing your business plan could take anywhere between two weeks to a month. Here is how to write a good business plan for your business.
#2. Select a good location
Location for your business is paramount!
You can’t start a business in the middle of a village of a hundred people and expect to thrive. Further, starting your shop in a rural area will only frustrate you.
Retail shops, just like any other business, require traffic, and purchasing power. Without these two, you are fighting a losing battle.
As you choose a location, select a high-traffic area like:
- Residential areas
- Small to large towns
- Near bus stations
- Near academic institutions etc.
You will notice that the closer you are to a town or a city, your maintenance costs increase. Therefore, you should do a wise location selection.
#3. Capital Requirements for a retail shop in Kenya
So, how much capital do you need to start a GOOD retail shop in Kenya?
You will need between Ksh.200,000 to Ksh.500,000. Note that depending on your budget, you could choose to invest more in your business.
Nevertheless, nothing is stopping you from spending less than Ksh.100,000. However, this will limit your business and growth will take a little bit longer.
In this article, we will use a working capital of Ksh.200,000.
Here is the breakdown:
|Task||Expenditure in KSH|
|Rent||20,000 × 3 months|
|Complements of your retail shop e.g., shelves, retail counter, etc.||25,000|
|Branding and marketing||5,000|
#4. Obtain business licenses and fulfil legal requirements
All businesses in Kenya have a legal requirement for registration. To do this, you will need to visit the e-citizen website and register your business. This will cost you around Ksh.1,000 to Ksh.1,500.
Further on, you will need a single business permit that may cost you anywhere between Ksh.2,000 to Ksh.10,000. This will be determined by many factors, mainly:
- Type/size of the retail store – Small retail trader, medium retail trader, large retail trader.
- The county in which you choose to launch your business.
For supermarkets, licenses may cost you up to Ksh.90,000.
For more clarity, you will need to visit your local Huduma Centre offices.
Do retail shop owners pay taxes?
As you register your business, you will need to fill out your tax records monthly. This is possible online on the official KRA website.
For more information about taxes, look at this tutorial.
#5. Identify reliable suppliers for your inventory
For a retail shop, all you have to do is approach wholesale shops and offer to buy their products. To build a good business-to-business relationship, you will need to show them that the products you buy are fast selling on your end. That way, they can offer to loan you some of their inventory.
In such a case, you sell their products and pay for them after you make your profit.
Of course, some legal documents will need to be signed here and there.
Here are some of the top products you will need as you start your retail shop in Kenya.
|Snacks and Beverages||Soft drinks, bottled water, packaged snacks, biscuits|
|Household essentials||Cleaning detergents, toilet paper, hand sanitizers|
|Personal care items||Toothpaste, shampoo, soap, deodorant|
|Stationery||Pens, notebooks, rulers, staplers, erasers|
|Phone Accessories||Earphones & phone cases etc.|
|Cosmetics||Makeup, lotions, hair products|
|Kitchenware||Plastic utensils, pots, pans|
|School supplies||Textbooks, exercise books, pencils|
|Small electronic gadgets||Torches, calculators, batteries|
|Toys and Games||Playing cards, board games, puzzles, balloons|
#6. Market your business
To market your business, you will need to offer exceptional services to your customers as you will need marketing through word of mouth.
Further on, you could sell your products through WhatsApp Business. This will broaden your client base. Note that for a retail shop, selling online is not mandatory for success.
Invest in good branding. Have a memorable shop name and pay a good designer to paint your retail shop banner.
Is a retail shop profitable?
Retail shops are very profitable. However, before you can realize profits, you will have to find a way of beating the competition and managing an unhealthy competitor environment. This is made possible by working on your retail shop business plan.
How can you increase your retail shop customers and profits?
- Offer promotions and discounts – Customers love an occasional discount on products they purchase regularly. Setting this up will build a stronger relationship between customers and your business, beneficial in the long haul.
- Provide excellent customer service – Learn how to manage your customers, even the annoying ones. Treat them with respect and your business will grow daily. No one wants a cranky shop proprietor – cool off, listen to your customers and thrive.
- Expand your product offerings – Plough back your profits and increase the lines of products you sell to capture new clients.
- Improve your store appearance – Working on your brand, visual aesthetics and hygiene will boost sales and consequently, profits.
As you venture into the retail shop business, remember that all hustles take time to reap profit. This is not a get-rich-quick scheme. Invest your time and resources into a stable financial future.