Njange Maina @NjangeWaEunice
Last year, a market research by Oxford Business Group placed Kenya’s retail market among the top thriving in the continent, only second to South Africa. In Vision 2030, Kenya’s retail sector is prospected to be a major contributor to the Gross Domestic Product (GDP).
The potential in Kenya’s retail market inspired Devan Shah among others to start Seven 2 Seven, a business enterprise that distributes consumer goods to appointed rural kiosks directly from manufacturers.
Through a franchising model, the company stocks fast moving household goods in their appointed kiosks for consumers to buy.
Franchising is not new in Kenya. Some soda and milk companies use it, though on a smaller scale. Through franchising, Coca-cola, Pepsi, Daima Milk and several others companies provide refrigeration services to traders on an agreement they will not stock competing brands in the fridges.
“Kenya’s retail sector is thriving. However, most domestic goods reach consumers at exorbitant prices because of a long distribution chain,” says Nishant Bhant the operations manager for Seven 2 Seven.
An interested investor approaches the company for consideration to become a partner. If successful, the person gets a kiosk.
“We first vet any interested partner to gauge their appropriateness to become our partner, if contented we sign the agreement,” says Nishant
Before entering into an agreement, Seven 2 Seven has to check the intended set-up location. The specific location choice for the kiosk must satisfy the company.
If the application is successful, the proprietor becomes a ‘Seven 2 Seven franchisee’ and pays Sh150,000 as deposit and then receives a kiosk with approximately Sh300,000 worth of stock.
The franchisee is afterwards entitled to other business benefits such as free marketing, regular stocking, tax remittance, business skills among others.
The company also gives a Point of Sale (POS) machine to the franchisee. The POS machine helps ensure that the franchisee adheres to the pricing set by the company.
All the prices are regulated by the company and are universal to all franchisees’ kiosks across the country.
Although the franchisees cannot take stock from outside sources, they are allowed to sell goods produced locally that are not supplied by Seven 2 Seven such as greens and fruits.
“In the franchising models of business, one cannot stock outside the parent company. In Seven 2 Seven, we have more than 450 items stored in our warehouses” adds Bhatt.
After selling, the franchisee remits all the sales revenue, but gets back the profit. Normally, the company supplies the stock at a factory price which leaves the franchisee with a bigger profit margin.
Seven 2 Seven has partnered with different manufacturers from whom they acquire the consumer goods at fairly cheaper prices.
“We get goods directly from our partners such as Bakex, Broadway, Bidco, Kapa Oil, Coca Cola, Menengai, Unilever and several others. This actually reduces costs which would have otherwise be incurred in the normal distribution chain,” Says Bhatt.
So far, Seven 2 Seven has leased 25 kiosks since they began operations in April last year. Among the areas they have set up are Murang’a, Kiambu, Kajiado and Nairobi Counties.
Bhatt says that the retail model has picked beyond the expectations and the company will expand to other markets.
Seven 2 Seven is hoping that the retail model will also reduce unemployment by providing competitive business opportunities.