Retail sector remains resilient despite Covid restrictions

February 22, 2021 in Business, Real Estate & Property by Editor

Turkish-owned clothing and footwear retailer, LC Waikiki, opened a 2000 square metre outlet in Acacia Mall towards the end of 2020.

Uganda’s retail trading continues to be limited by the impact of the Covid-19 pandemic counter measures, but still shows some resilience inspired by the entry of new international players and the expansion of high-profile shopping areas around Kampala. The government eased the lockdown conditions in early June 2020, but a 9pm to 5.30am curfew remains in place.

Recently, Judy Rugasira Kyanda, the Knight Frank Uganda, Managing Director told a gathering of industry players at a Kampala hotel, “The partial lifting of lockdown measures in the second half of 2020, saw on average, an 8% month-on-month growth in footfall, with July registering the highest record in the half year at 22%. This was driven by the entry of new players in the market such as the opening of LC Waikiki, 2000 square metres Africa flagship store at Acacia Mall in December 2020; Carrefour’s second store at Metroplex Mall, set to open this February and Shoprite’s 6th store, set to open in the new Arena Mall in March 2021,”

According to Knight Frank’s 2020 second half report, average turnover, footfall and occupancy levels recorded significant improvement in the second half of the year, demonstrating, the sector’s resilience and increased demand for formal retail in Uganda.

The report shows that although the economy is slowly unraveling from the effects of the lockdowns that characterised much of first half of 2020, the property sector was yet to pick up and is still reeling from the drag-on effects on both the demand and supply side across all the four sub-sectors namely office, retail, residential, and industrial property.

Knight Frank says during the period under review, spas and salons being allowed to trade from July onwards. Cinemas and gyms were opened up from mid-November albeit with restrictive standard operating procedures emanating from the COVID-19 pandemic, and curfew still being enforced. The impact of these measures on retail as a whole, is that trade in Uganda is still under severe pressure, and is further impacted by lack of consumer spending on the back of a slowdown in the economy. That said, retail activity saw a sharper fall than workplace activity in the disruptions and extremely restrictive government measures adopted to curb the spread of Covid-19.

However, average turnover, footfall and occupancy the second half of the year, demonstrating, the sector’s resilience and increased demand or formal retail in Uganda.

The report states: ‘The pandemic has prompted new innovative thinking around the retail sector moving forward in regards to space utilization, rent models and interactions with customers. Hand sanitizing, social distancing, wearing of masks and temperature checks are now accepted as part of the “new normal’’.

Several landlords considered incentives for their tenants and review of lease agreements in order to attract new tenants, and retain existing ones. Some of the timeframes especially for the months during and after the lockdown, deferred payments and rent-free months to tenants on a case-by-case basis, among others such as purely turnover based rentals’.

The sector registered expansions and new entrants into the market in 2020, with Carrefour growing its presence in Uganda (Metroplex Mall store being 2021), Shoprite set to expand its store number to 6 with the anticipated opening of the Arena Mall in 2021, and LC Waikiki, a Turkish based international fashion chain opening its flagship acacia store of 2000 square metres during December 2020.