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Retail sector suffers low footfall, turnover due to rising commodity prices

Hummel, an international fashion brand, entered the Ugandan market and is presently onboarding two locations at two malls in Kampala.

The rising commodity and fuel prices have affected affordability among consumers and led to a 5.8% drop in average turnovers for general grocery retail in the month of May.

Turnover growth for general grocery retail and average footfall in malls remained subdued, showing a negative growth of 20% and 23% compared to pre-covid numbers respectively as of May 2022.

An upward trend in inflation, has led to overall increase in cost of living and pushed everyone to cut down on how much they spend on shopping.

The factors behind the current inflation include; higher global food and energy prices, persisting global production and distribution challenges as well domestic rising food prices due to dry weather across Uganda.

In its latest assessment of the retail market, Knight Frank Uganda used footfall and turnover as the yardsticks.

While footfall and turnover improved by 6% and 8% respectively in the first half of 2022, attributed to the full reopening of the economy in January, turnover growth for general grocery retail and average footfall in malls remained subdued as of May.

“The continuous rise in inflation in Q2 2022 affected consumers’ disposable income and spending habits, necessitating prudent expenditure planning. This affected footfalls and had a correlated effect on the average turnovers in the same period,” the Kampala Market Update for the period January to June, indicates.

Knight Frank Uganda forecasts that this trend will likely persist in the short term as countries world over grapple with rising costs of commodities and fuel.

This is contrary to an earlier (January) forecast which had hoped for increased spending in the food and entertainment industry, owing to the lifting of Covid restrictions.

Meanwhile, H1 saw new retailers enter the Ugandan market and the existing retailers expand their footprint.

Hummel, an international fashion brand, entered the Ugandan market and is presently onboarding two locations at two malls in Kampala. These are anticipated to open in Q3 of this year.

Leading cinema operator, Century Cinemax, opened their third cinema in Uganda (at the Arena Mall) this month.

Cafesserie, a wellknown restaurateur, established both their third restaurant in Kampala, as well as Frango, their first chicken restaurant, at the Arena mall.

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