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Rising Commodity and Fuel Prices Impact Retail Sector

The Retail Sector is suffering from lower footfall traffic, according to Knight Frank Uganda. Image source: Plugged Daily.

UGANDA, Kampala | Real Muloodi News | The rising commodity and fuel prices have affected the retail sector by reducing the rate of consumers who afford the goods on the market.

This is according to Knight Frank Uganda, who recently assessed the retail market using footfall traffic and turnover as the yardsticks.

There was a 5.8% recorded drop in the turn-up of people purchasing items from groceries and retailers in May.

The number of general grocery retail purchasers has remained small, showing a decrease and constant percentage between 20% and 23% compared to the bigger percentage before the covid-19 outbreak.

The rise in inflation has led to a general increase in the cost of living, forcing most people to reduce their expenditure on shopping for their homes.

The factors influencing the ongoing inflation include; higher global food and energy prices, persistent global production and the challenges associated with the distribution of goods. The domestic rise in the cost of food has also been associated with the scorching sunny weather in Uganda.

In the first half of 2022, the footfall and turnover had increased by 6% and 8%, respectively, attributed to the full reopening of the economy.

However, the turnover growth for retail and average footfall in malls remained small and stagnant in May.

“The continuous rise in inflation in Q2 2022 affected consumer’s 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,” as per the Kampala Market Update from January to June.

Knight Frank Uganda reveals that this current situation regarding the commodity prices shall persist for a short while since countries all over are suffering economically.

This report contrasts with Knight Frank’s previous report in January, where consumers were expected to increasingly spend on food and entertainment owing to the full reopening of the economy.

In a mini-survey conducted in various towns across the country, interviews with shop owners reveal that retailers and other shop owners are presently making fewer sales compared to what they were making two months ago.

Mr Patrick Okumu, one of the retailers in Masindi Town, says that he is thinking of turning his retail shop into a bar which he thinks can earn him more money than what he is currently collecting from the shop.

“I always see people in drinking joints taking beers. It seems it is the only business making money now. I am going to try it and close the shop,” Okumu says.

Another retailer in Njeru Municipal Council, Oliva Kateme, says she has stopped stocking some of the items since they no longer have the market. Many buyers have stopped buying items such as soap and cooking oil.

“A client who used to buy a bar of soap currently buys half or a small piece,” Kateme says.

However, some players in the retail sector have pushed on and are prospectively doing well. The leading cinema operator, Century Cinemax, opened its third cinema in Uganda at the Arena Mall this month. Cafesserie also established their third restaurant in Kampala and Frango, their first chicken restaurant at Arena mall.

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