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Uganda’s retail sector worst hit by Covid-19 pandemic

The retail sector has been worst hit

The retail sector has been worst hit

Ugandans love to spend their money.  As 2020 began, things were looking up for retailers. When news came that owners of South African retailer Shoprite announced they were reviewing their existence in East Africa, Uganda’s unit was not among those. In fact, Shoprite plans more expansion in the country, writes ALON MWESIGWA.

Then came the pandemic. Knight Frank Uganda, an estate agent, says in its latest property market update that “the retail sector has been the hardest hit as it couldn’t quite capitalize on the “work from home” option that office occupiers did.”

The sector closed down in phases from March 20, 2020, starting with leisure and entertainment operators being shut down. By the start of April 2020, all retail was shut down, save for essential services such as supermarkets, financial institutions, pharmacies and medical facilities.

Now Knight Frank projects rent rates in the sector will fall by as much 30% as retailers reduce space they rent or take break on planned expansions.

This can be observed with new entrants too. Turkish fashion retailer LC Waikiki will delay its launch into Kampala for at least five months until December due to disruptions occasioned by the Coronavirus (COVID-19) pandemic.

Knight Frank Uganda says LC Waikiki was supposed to open at Acacia Mall next month in what would have been the largest LC Waikiki store in Africa.

The Turkish retailer, whose majority stake is owned by Turkish dollar billionaire Mustafa Kucuk, will make Uganda the 45th country where it is doing business when it finally launches. For the retail sector, the fact that LC Waikiki still has confidence in the economy is a vote of confidence for Uganda.

The prospect that Uganda will be producing oil in the coming years has created hope for a huge consumer class that would support such global brands. A growing middle class of Ugandans and expatriate community is the main target for these brands.

Also, Skechers and Clarks, two international footwear brands, are still lined up to open shop in the country with stores to open in The Arena Mall in Nsambya. The mall is still scheduled to open by start of December 2020. Woolworths, the South African cloth retailer, also says it will go ahead to open it’s fourth store at Village Mall in Bugoloobi.

Meanwhile, according Knight Frank reporting, Metroplex Mall in Naalya, which was earmarked to open its first phase in April 2020, will also be delayed to later in the year. This is also because of the disruptions by the COVID-19 pandemic.

Knight Frank says the outlook for the retail sector is bad and uncertain – Ugandans even after the lockdown, they may not spend as they did in pre-pandemic days. Many have either lost jobs and seen their pay cut as employers struggle to survive. A lot of retail purchases are considered luxury and people can do without.

Retail rental rates, which had stayed stable in the lockdown, will fall by approximately 30% post lockdown, the agency says. Can the retail sector wither the storm quickly? It will depend on how fast the country can control the spread of the virus. A second lockdown will spell doom for retailers. 

amwesigwa@gmail.com

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