About 15 years ago, Kenyan businessman Nasser Ahmed started distributing mobile airtime vouchers from the boot of a car parked in the basement of the Hilton hotel in Nairobi. He would move around with a backpack distributing to shops in the city centre.
“In the morning I would have airtime equivalent to millions [of shillings] and I’d distribute to supermarkets, fuel stations, shops selling cameras… and by the end of the day it was all gone. There was never dead stock. The profit margins were small but volumes were high. I knew this was the best business to do,” he says.
Today Ahmed is a top distributor for Samsung Electronics and telecommunications company Safaricom. He operates over two dozen Safaricom shops across Kenya, selling airtime, SIM cards and mobile money services. And he also has four Samsung retail shops in Nairobi and two in Mombasa. Altogether he employs over 300 people.
“All the phone brands have approached me, but I prefer to associate with Samsung,” he says.
In recent years some of the phone makers operating in Kenya have focused on online sales to avoid the costs of brick and mortar outlets, and curtail counterfeiting.
But Ahmed says the majority of consumers still want to physically touch the devices before purchasing.
“They want some sort of security. People are concerned about the return policy [of e-commerce platforms]. So they prefer to actually see and feel [the device] before buying. Most people buy mobile phones in a shop, so having a strong physical presence still matters.”
Samsung has 23 branded shops across Kenya, operated by distribution partners such as Ahmed.
Doing retail in a ‘different way’
Last month Ahmed opened the Samsung Delite store in Nairobi’s central business district, the phone-maker’s largest retail outlet in Africa. The shop is part of a new concept of ‘experience stores’ Samsung has launched. These outlets have state-of-the-art design, the latest in consumer tech devices, improved product display as well as extra amenities. For example, at the Delite store, shoppers can explore a wide range of devices, play games, and experience virtual reality as they enjoy a cappuccino from the in-house coffee bar.
“We wanted to create a relaxing environment… We want customers to feel relaxed and have a glass of juice or a cup of coffee as they do their purchasing. If we treat you well, you will tell your friends,” says Ahmed. “We open every day, and even on Sundays we get a lot of traffic. Some day we will do a 24-hour shop. We want to do retail a different way.”
Ahmed notes the offering at the experience store was inspired by feedback from customers. He opened his first Samsung retail outlet in 2007. Although the shop was profitable, shoppers complained about the cramped environment.
“Almost 20% of all customers had complaints. The store was small and congested. You would have someone buying a cheaper feature phone queuing with someone buying an expensive device for several hundred dollars. People spending a lot of money wanted to be treated special,” he explains.
Low to mid-priced devices dominating sales
Every day, each of Ahmed’s retail shops receive up to 300 people and sell between 30 to 50 devices.
“These are devices costing between Ksh.6,000 and Ksh.30,000 (about $60 to $300). The Galaxy J Series is doing really well. Yes, there are people who buy an $800 device, but they are few,” says Ahmed. “But we are seeing consumers upgrading.
“The person buying a J5 today will come back someday to buy the J7. People don’t want to risk a lot of money, especially if they are new to the brand. So they will start with a cheaper device and as they get more money and gain confidence in the brand, they upgrade.”