Middle class Kenyans splash cash on trendy gadgets and new clothes [Business Daily (Kenya)]
(Business Daily (Kenya) Via Acquire Media NewsEdge) Kenya's middle class is prioritising spending on electronic devices and clothing, a new survey shows.
The survey by Standard Chartered Plc and UK-based global research consultancy Globescan shows that 66 per cent put tech devices at the top of their buying list over the past five years, while 64 per cent bought clothes.
As personal wealth increases over the next five years, the report says that even more middle class Kenyans will first buy devices (75 per cent) and clothes (71 per cent).However, a larger percentage will be looking to invest in improving their housing situation.
Of those surveyed, 46 per cent are self-employed compared to 23 per cent who are in formal employment, indicating that entrepreneurs are moving up the economic ladder faster than their employed counterparts.
The survey was carried out in Kenya, Ghana, Nigeria, India and Indonesia, with 1,000 respondents in each country.
"The rapidly growing middle class is a key driver of economic growth across emerging markets. Based on the findings of this research, we should expect to see a considerable shift in spending patterns across emerging markets in the next five years, as economic power continues to shift eastwards," said Standard Chartered Kenya CEO Lamin Manjang.
READ: Kenya's shifting middle class tastes draw in luxury brands
Tech gadgets are considered by many middle class Kenyans to be important social and work tools, hence their popularity.
Out of the respondents, 92 per cent said that the use of technology had made their lives easier, while 85 per cent said access to technology was important for Kenya's development.
A further 85 per cent said they would increasingly use technology to organise their finances over the next five years, pointing to the growth of use of innovations such as mobile banking and mobile money.
The demand for smartphones is likely to go up once the use of Near Field Communication payment systems becomes entrenched in the country.
For the 2013/2014 financial year, leading mobile services company Safaricom reported that the number of third generation (3G) devices on its network stood at 3.1 million, of which 1.9 million are smartphones.
The other supported devices include tablets and Internet dongles.
READ: Smartphone hunger pushes electronics revenues to $204bn
This was an increase from the previous year's 2.3 million 3G-enabled devices, of which 1.2 million were smartphones.
TV manufacturers have also been launching high-end sets in Nairobi, with brands like Sony, Samsung and LG offering TVs worth millions of shillings.
International fashion brands have also flocked to Nairobi, keen to take advantage of the increase in demand for designer clothing by the fashion savvy.
A report by New World Wealth titled ''Wealth in Kenya 2014'' said brand stores like Armani, Burberry, Gucci, Zegna and Hugo Boss are the most likely to set up shop locally over the next decade.
South Africa-based retail chains Foschini and Edgars are also planning to set up shop at the upcoming Garden City Mall on Thika Road by the end of 2014.
Clothing chain Deacons Limited entered a distribution agreement with Spanish clothing retailer Zara in July last year, while at the same time launching the Italian high-end Massimo Dutti clothing line. British shoe retailer Clarks has also opened outlets in Nairobi in partnership with supermarket chain Nakumatt.
READ: Deacons courts new brands and strategic investors
The current heightened security situation in the country does, however, present challenges to the growing demand as a result of reduced traffic in the shopping malls.
"It is a difficult time, but Nairobi is a growing hub with strong trading conditions. Once security is in order, we expect the demand to pick up again. We are in discussions with more international brands for our stores, especially for the upcoming Garden City and Two Rivers malls," said Deacons managing director Wahome Muchiri.
Dutch fashion retailer Suitsupply recently added M-Pesa, Airtel Money and YuCash to its online payment options – in addition to credit cards and PayPal – targeting Kenyan shoppers even though it has no brick and mortar establishment in Africa.
Kenyans, however, are less optimistic their personal fortunes will improve compared to residents in the other four countries surveyed.
Only 54 per cent said they expected better economic fortunes in the medium term, compared to 91 per cent of Ghanaians, 86 per cent of Nigerians, 88 per cent of Indians and 85 per cent of Indonesians.
As they become wealthier over the next five years, nearly half of middle-income Kenyans plan to increase their savings, and prioritise essential spending on housing, bills and childcare as opposed to holidays and personal finance.
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