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3 February 2010
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| CONSOLIDATION VS. COMPETITION |
| Keywords:
Kenya
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markets
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treadle pump
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motorcycle
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I was in in Kenya in early December for a conference put on by a part of the UN Development Program. It was my first time in Kenya, so of course I was fascinated on the ride from the airport to my hotel. The biggest thing I noticed was the consolidation of stores of a particular type right next to each other along the street. A string of fruit vendors followed by three used car lots (something I've never seen in Ethiopia... can't quite figure out why), followed by five (I think) distinct stalls selling the same overstuffed couches.
I have to assume that some balance has been struck over the past decades of market activity in Nairobi. If you set up a furniture store too close to too many other furniture stores, then you're going to constantly compete on price, and therefore not have as high a margin. But if you go solo and set up your shop far away from other furniture stores, then (unless you're very lucky and hit a wholly untapped market) people won't know where you are. If I ask where to go furniture shopping, a helpful Kenyan would rather send me to a place with lots of choice than the one shop off in the boonies (unless, of course, his brother owns the shop).
So is there another way to consider this balance? Everything is in flux as markets go up and people have more money (and buy more furniture) or they go down and people make do with what they have. So what's the lag time of furniture store density along the ring road in Nairobi? It all depends on turnover and the amount of capital the furniture shop owners can have sunk in their stock of overstuffed couches. You're not going to find any answers here... just musing questions. Anyone want to set up a research project?
It's been a while, and I have lots of photos, so I'm breaking them up into three posts. Here's the first set, up to about the second week of December, 2009. On to the photos...
Parting shot...
For more updates go here. |
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| Comments: |
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3 February 2010
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This effect happens often: there are 6 snowboard shops within a block in Vancouver.
I believe I remember the following: You're right in saying that disseminated stores could charge a higher price, but they could gain, as you guessed, much more traffic if they coexisted. I remember a statistic like an additional 10% of revenues overall if they bunch together. If they can help from knocking the knees out of each other on price, then it's a good move to congregate.
B |
| - Brendan |
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28 February 2010
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Ah, I've wondered occasionally how a whole string of similar businesses managed to survive. 10% is reason enough to tolerate rivals in such close proximity.
I LOLed when I read about water being thrown on your "human windshields" to break them up. Wonder if that was a last resort measure when hand waving and yelling failed.
Ziway has a lake, too? Sigh! |
| - Victoria |
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My name is Mark. I was born near Chicago, have lived in the US, Germany and Nepal, and am starting a new job and a new adventure in Ethiopia. This site is a way for me to keep friends and family updated on my progress, share some pictures, and perhaps offer a bit of reflection along the way. Please look around, and enjoy the ride!
Herumwandernder Cavetroll... heisse Mark. Ich habe in den USA, Deutschland und Nepal gewohnt, und jetzt geht es weiter nach Äthiopien. Mit diesem Website halte ich meine Familien- und Freundeskreise informiert über wie es mir in meinen Abenteuern geht. Schau mal 'rum, und viel Spass dabei!
-Mark, September 2008
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