Retailers’ experience starting a business in low-income neighbourhoods

Establishing a non-food and beverage retail business in a low-income neighbourhood is not often a priority for most enterprenuers as it is deemed to be less profitable.

The low entrepreneurial confidence in such locations is largely driven by the low purchasing power of those who reside in such neighbourhoods as the significant share of their income is spent on foodstuff products.

This is among the main reasons why low- income areas are often dominated by food and beverage retail businesses.

Ephraim Mutuyimana and Frank Hategekimana, however, decided to start a venture in a low-income neighborhoods availing relatively cheaper fashion wear.

To begin with, their business was about availing affordable clothes with prices as low as Rwf 1000.

This, they figured, would be ideal to suit the target markets disposable incomes.

Mutuyimana, who has been running cheap first fashion wear retail shop in areas such as ‘Mukabagari’ in Kacyiru sector for the last two years, told Business Times that he started the business with a capital of about Rwf 70,000 in Kimisagara Sector in 2014 before moving to Kacyiru in 2016.

“I started the business in 2014 in Kimisagara sector, then moved to Kacyiru in 2016. The startup capital was about Rwf70000” he said.

According to Mutuyimana, the business got a boost following the government’s  decision of stopping them from importing about second-hand clothing and footwear as people gained a preference for new clothes driving up demand.

Hategekimana, who has been in the business beginning this year operating from Rukundo Village in Kacyiru sector, said that though every business has its own challenges, they have found a reason to remain in retail of affordable fashion wear.

Mutuyimana said that the market has been responding moderately as people still have the stereotype belief that the new clothes are not as quality as second-hand clothes which were previously more popular.

Hategekimana said that by avoiding to give in to the temptation to quit when times were hard eventually saw him gaining market confidence over time.

“With time the perception will change,” he said.

The beauty of the business, he said, lies in the fact that not much capital investment is required and that there are varied options to present to the market.

Mutuyimana, who started his business with Rwf70, 000, now says that the business has an estimated value of over Rwf2,000,000 and has since acquired a motorcycle for logistics purposes.

Mutuyimana added that the secret of the business lies in understanding the market which one intends to serve to be able to have an idea of fast-selling products.

Hategekimana said that, for him, stocking various products with a complementary feature appealing to various market segments enables one to have multiple revenue streams and product options.

“My stock has various clothes for different ages, sizes and sex. The same applies to footwear, this gives an opportunity to cover each customer needs,” he said.

editor@newtimesrwanda.com

 

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