Entrepreneurship Zone: 28 May 2020: How Kenya’s Wandia Gichuru has tackled the business of fashion

Thu May 28 04:45:11 CAT 2020

“I don’t come from a fashion background, so I tend to approach things purely from a business perspective,” says Wandia Gichuru, co-founder and CEO of Kenyan fashion manufacturer and retailer Vivo.

She started the company in 2011 after quitting her career as an analyst and advisor for development agencies such as the United Nations Development Programme and the UK’s Department for International Development. Vivo currently has 14 shops throughout Kenya and owns the ShopZetu online fashion store.

Gichuru has a passion for clothes but maintains a practical business approach when it comes to running her company. “We try to focus on what the market wants. We work backwards, starting from a price point we think will work and then calculate whether we can produce the garment within that price. We strive to be competitive in terms of our pricing and keep in close conversation with our clients to understand what they want and how much they are willing to pay. We are constantly looking at the numbers and adjusting our targets and respond to whatever is happening on the ground.”

During Vivo’s early days, Gichuru established a company board and brought in retail experts. She and her team also regularly attend training programmes. “I don’t want to sound overly confident … but we invest a lot of time and energy to try and really understand the business of fashion.”

Many times luck has also played a role in the company’s growth. For instance, Vivo was fortunate its first store was in a good location. According to Gichuru, it is not always possible to predict whether a particular site will work. “Had we started with a poor location, I don’t think we would have had the runway to open the second, third and fourth stores.”

Manufacturing: Made in Kenya

Initially, Vivo imported a lot of its clothes but these days almost all the garments are made in Nairobi. The cost to manufacture in Kenya can be higher than to produce large volumes in a country such as China. However, Gichuru says there are advantages to local manufacturing. The company has a strong focus on first testing the popularity of a product before rolling it out in bigger volumes; operating its own factory allows Vivo to do small runs of a garment. It also means less time waiting for products to arrive from abroad. “The cost of waiting that long and trying to predict what people will want three, four or five months in advance was just too much. We want to offer more variety in smaller runs and, if something works well, we can make more of it as opposed to having to buy in volumes.”

While many Kenyans used to perceive imported products as superior to those which were locally produced, this is no longer the case. “If you put two similar products of similar quality and similar price next to each other, I think the majority of people will happily buy the local brand,” Gichuru explains; although she doesn’t believe Kenyan consumers are prepared to compromise on quality just to support local manufacturers.

As Vivo’s reach has grown, one of the challenges is to keep its products exclusive. Most consumers don’t mind wearing the same basic items as everyone else, but when it comes to unique pieces, customers don’t want to share the same look with hundreds of other Nairobians. For this reason, Vivo does small runs of certain garments and will not place these in all its stores.

E-commerce growing slowly but surely

Vivo has had an online store for years but about 18 months ago, it began to meaningfully invest in e-commerce. In December 2019, it went a step further with the launch of the ShopZetu online store. Through the website, Vivo sells its own brands together with a handful of other African-owned labels. ShopZetu is not a marketplace like Amazon or Jumia; instead, Vivo handpicks the brands listed on the platform and keeps the products in stock at its warehouse.

Vivo has tapped into a need for ready-to-wear clothes that are both affordable and stylish.

While commentators have been punting the exponential rise of e-commerce in Africa since the early 2010s, Gichuru’s experiences show Kenyan consumers have been relatively slow to embrace online shopping.

For many years, a large portion of Vivo’s online sales weren’t true e-commerce in the sense that customers completed the entire transaction online themselves. Instead customers preferred to call the customer care desk with product queries and have the customer sales rep place the order on their behalf. Up until relatively recently, almost 95% of online orders were paid for in cash on delivery as opposed to online.

Vivo has however invested in making its website more user-friendly and is actively weaning customers off the extensive hand-holding. “If they call the customer service desk, we walk them through the online order process, instead of saying, ‘No problem, tell me what you want and I will make sure it gets to you.” These days 70% of online customers process the orders themselves and direct online payments have increased to around 40%.

ShopZetu saw a sharp spike in sales – from 20 to 150 orders per day – after Vivo closed its stores for a month due to Covid-19. However, when the stores opened again at the end of April 2020, e-commerce daily sales settled at about 40 orders. Gichuru believes many more Kenyans have now grown accustomed to online shopping because of the coronavirus.

Competition from all corners

Competition in Kenya’s fashion industry continues to heat up. While second-hand clothing imported from abroad still accounts for the majority of sales, the industry has seen numerous local and international entrants in recent years.

Gichuru highlights Turkish fashion retailer LC Waikiki as an international brand that has found strong traction, largely due to its low prices. “Its prices are still maybe triple what you would pay for second-hand clothing but significantly cheaper than European and South African brands on the market.”

Vivo has 14 brick and mortar outlets in Kenya.

A growing number of Kenyan brands are also now competing with international labels. Not all of these companies have physical stores, preferring to sell through their websites or social media pages. “More and more young designers are starting their own brands … and because they have low overheads, their prices can be quite competitive,” notes Gichuru.

Then there are those who import small volumes of new clothes. Although these traders sell their garments through social media or informal channels, they account for a meaningful chunk of the market. She also highlights supermarkets as a significant player, particularly for basic items and children’s clothing.

The pan-African opportunity

Gichuru sees opportunities to expand her brand to other African countries and hopes to have a presence in Rwanda and Uganda by next year. However, logistical costs and high taxes are some of the challenges of moving products between countries. “It’s easier for me to bring products from China than from Ethiopia, even though Ethiopia is right next door.”

She plans to add other African brands to the ShopZetu platform. “I would love to see hundreds and hundreds of brands on it and for ShopZetu to be a one-stop-shop for all things fashion, beauty and accessories.”–Howwemadeitinafrica

Wandia Gichuru

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