How do mall kiosks sell enough product to make pay rent and make a living?
I’ve been observing many stalls in different malls from low middle class hoods (ex. TRM, Gateway etc) to high end areas (The hub, Village market). These kiosks pay thousands in rent depending on the mall, anywhere from 50k to 300k per month. However, most of them don’t seem to sell much product even on the busiest days. Sometimes I walk around and don’t see a single soul shopping especially on weekdays. The only retailers who seem to be doing legitimate business are the big name restaurants (Java, pizza hut etc) and supermarkets.
How do these people sell enough knock off shoes, clothes, cell phone accessories, cosmetics etc to cover their rent? Recently I was at a mall and saw a lady moving in to a stall in a quite upmarket area. She was unpacking her merchandise which was nothing but Chinese, cookie cutter school bags on the 3rd floor corner stall with no foot traffic. She had even employed a sales lady assistant. I was shocked.
How are these people in business? Is it a money laundering front? Bored housewives being financed by their husbands? But there are so many businesses like that.. It makes no sense to me. Or am I missing something?
They sell high profit margin items. If you check the prices on the items sold in those shops, the prices are higher compared to flea markets like gikomba and ungwaro. That’s the rent being priced in.
1.Economies of scale. The owner has multiple shops which generate enough money to offset costs of a store that is not performing. Kama optica, mr price or even smaller brand owners.
2. Branch offs/Spin offs from bigger brands within the mall: If you are an anchor tenant, you sign contract na landlord to not let competitors in, then you open spin offs. e.g. Samsung electronics au Safaricom opening a phone repair shop/space.
3. The owner of the mall might invest in retail or buy a franchise to fill up the space.
4. The shops might be just for walk ins meaning the owner already has a larger clientele and wants to get additional customers from the foot traffic kwa mall.
All in all, foot traffic matters. Look for space where large anchor tenants kama Carrefour operate from. Hiyo traffic kwa supermarket na mall will bring in a lot of other clients kwa shop yako.
It doesn’t make any sense. My hypothesis is as follows:-
A jobs program for bored housewives. One anecdote is a guy I know who established a shop for his wife to sell women handbags. She sells 1-2 bags a day, sometimes no sales and goes home. These are not loius vutton or hermes bags where the markup is more than enough to make it worthwhile. I think people just want to be occupied and have a routine of waking up, going outside the house to feel useful and network
As a tax write off and/or money laundering for expats, business moguls. Village market is one place where the business model boggles my mind. They never go out of business but there’s rarely any foot traffic. I made a mistake of entering one shop where they were selling some goat milk, eucalyptus soap for like $20/bar. Unbelievable! Other shops you find a see through shirt or dress going for $600. Maybe I’m not the intended market here but who buys these products? There’s never anyone in those shops, not a single person. Others are selling “vintage furniture” for totally outrageous figures yet they never go out of business, year after year.
Some of these shops make 100% profit, so they just don’t need to sell as many things. Even one or two customers a day are enough. This was Business Education in form one.. did you skip form one?
