Tuskys, Naivas to raise prices of consumer goods over Coronavirus
Top retailers, including Naivas and Tuskys, have warned that the prices of consumer goods such as clothing, furniture, mobile phones, TVs and fridges will rise this month as effects of global coronavirus epidemic take a toll on the supply chain.
The retailers, who had shipped in goods in bulk ahead of the Chinese New Year in January, reckon that they will start to run out of goods from China after three weeks.
The virus has killed more than 2,900 people in China sparking a shutdown that has seen factories close across the Asian country, hurting global supply chains in the country that fed Kenya with 20.2 percent of its exports worth Sh324.9 billion in the 11 months to November.
Kenya imports a wide range of goods from China with electronics like mobile phones topping shipment orders that also include clothing, kitchen ware, furniture, machinery, optical and medical equipment.
Now, retailers are seeking other countries for the commodities, adding that consumers will pay more for the goods because the alternative markets are costly relative to China.
“We already have concerns from suppliers, and the effects on supplies will be apparent towards the end of the month,” said Naivas chief commercial officer Willy Kimani.
“We expect the prices of key commodities especially electronics, clothing and toys to rise because of supply hitches and the fact that we are sourcing from more expensive markets.”
Naivas has now widened its source markets for consumer goods to include European countries, Turkey and Brazil.
“We have been informed by many of our overseas suppliers that there will be a shortage of certain categories of goods,” Tuskys chief executive Dan Githua told the Business Daily. “In fact we have also been looking for alternative suppliers. And we realise that prices will go up.”
Other dealers in electronic goods and clothing also echoed similar comments.
“There has been a glitch and it has affected a lot of operations back in China not just Oppo related. This has affected our product launches hence I have had to adjust the event of calendar for this year,” said an Oppo Kenya official in a statement.
Most Chinese factories are on lockdown as Beijing scrambles to contain the outbreak, which has disrupted supply chains across the world.
China’s top container ports were also hit by a backlog of cargos on their docks as workers kept off jobs after coronavirus travel curbs, jamming up global supply chains.
The flu-like epidemic, which originated in the city of Wuhan, an inland logistics hub in Hubei province, has infected more than 80,000 people in China alone, and caused massive port congestion due to labour shortages caused by city lockdowns across the country.
China is the largest container cargo handler – processing around 30 percent of global traffic or around 715,000 containers a day in 2019 – and the virus clampdown has impacted supply chains of everything from sneakers and machine parts to technology components and food items.
The Kenya Ports Authority (KPA), in response to The East African newspaper had said that four ships have not docked at the Port of Mombasa in January and February, suggesting eight ships have failed to arrive during the two months. KPA predicts that the downturn in imports from China will be felt this month.
Electronics led by mobile handsets top the list of items that traders ordered from China in 2018, underlining the popularity of the low-priced smartphones in the Kenyan market despite concerns over quality. Kenyan e-commerce site Avechi said its vendors have witnessed stock-outs for some popular electronic items like smartphones.
“Vendors who sell on our website have run out of stock because they are not able to ship,” said Charles Kimani, head of Avechi.com, which sells various electronics including smartphones, TVs and cameras.
“That means some of our customers are not getting the items they wish to acquire because they are out of stock,” he added.
China has cemented its position as the largest source market for Kenya’s imports, followed by India and the United Arab Emirates.
Data from the Kenya National Bureau of Statistics shows that Kenya’s total imports from China stood at Sh324.9 billion in the first 11 months of last year with India coming a distant second with shipments worth Sh162 billion.
But bilateral trade is heavily skewed in favour of the world’s second largest economy, denying Kenya the much-needed hard currency inflows.
Kenya exported less than Sh5 billion worth of goods to China in the review period, official data shows. Phone vendors who spoke to the Business Daily said they had run out of stocks amid high demand for the products, triggering a price rally.
“The frequency of supply of phones from the distributors has reduced since the end of January,” said Derrick Omoro, a phone vendor on Moi Avenue. “I have been forced to increase the prices by five to 10 percent.”
Mohamed Abdi, a Nairobi-based electronic goods distributor, said he was facing challenges in securing supplies from China.
“Since the outbreak, I have not been able to import phones, fridges, and TVs that I sell in my two shops on Luthuli Avenue in Nairobi. I have been selling old stock,” said Mr Abdi.
The rapid spread of the coronavirus has increased fears of a pandemic, sending global markets into a dive last week and prompting governments to step up control measures.