How Small retailers can improve profitability by adopting digital technology - Survey

Small shops can greatly improve their profits through the adoption of digital technologies, says a report by TechnoServe.

TechnoServe says that small shops that had invested in Point of Sales (POS) systems were able to capture accurate data that enabled the retailers to understand their shop’s performance, record their transactions and manage their customers and suppliers better.

“Through the POS, Duka owners were able to monitor goods with the highest turnover helping them quickly ascertain which products contributed most to their revenues and determine their stock levels at any given time. As Duka owners could digitally record debtors on the POS, they also significantly improved debt collection. At least 23 per cent of the Dukas that used the product were able to recover 30 per cent more from credit sales,” the Smart Duka Program report.

Additionally, the Smart Duka Program report found that cash management, proper record keeping, good shop displays, and good customer service resulted in retailers increasing their profits by as much as 44 per cent.

Launched in 2016, the Smart Duka program targeted Duka owners, managers, and employees grow their businesses through providing business & financial management skills. The skills include shop management practices, supply chain management & financial management.

TechnoServe in partnership with Citi Foundation, Elea Foundation for ethics in globalization, MasterCard Centre for Inclusive Growth (MCIG) and Moody’s Corporation through the Smart Duka program has worked with close to 8000 shops located in Nairobi’s informal settlements.

The retail sector can be divided into informal and formal retail sub-sectors. The informal retail sub-sector is predominantly populated by Micro-SMEs (or micro retailers). Although ‘small’, they generate 70% of Kenya’s retail revenue with 95% of all shoppers frequenting these small businesses, otherwise known as ‘Dukas’, to stock up on day-to-day products (Nielsen 2015).

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