How shrinking wallets are pushing Kenyans to brand switching

The majority of Kenyan consumers are now in survival mode as wallets shrink, reducing disposable incomes, a new study shows.

Consumers are increasingly spending less on essentials, with millennials and boomers increasingly shopping at discount, value, and lower-priced stores.

The study shows that survival instincts continue to dominate consumers’ spending on education and childcare. Also, consumers are spending less and less on beauty and personal care, fresh meat, beverages and alcoholic beverages, and canned groceries.

According to the Nielsen IQ consumer outlook report, millennials and boomers have been found to monitor the cost of the overall basket of goods to manage expenditure.

Further, millennials are more price-aware and promotion-driven than all other generations.

The older generation – Gen Xers – are the most pragmatic and deliberate in their shopping behaviour, prioritising value, essentials, and buying in bulk sizes to save money.

"Approximately 35 per cent of Gen X remains brand loyal," Nielsen IQ consumer outlook report 2025.

The study has, however, shown that 66 per cent of Kenyan consumers are not loyal to brands. This is 14 per cent higher than the global consumer average, which stands at 54 per cent.

Given this, Nielsen IQ has advised that manufacturers and retailers need to understand the needs of consumers.

“Anything that touches on offer and promotion is an attraction point. Millennials are considering the amount of money and value for money,” Pauline Achayo, the Strategic Insights Lead at Nielsen IQ, said.

Kenya’s youngest population in the job market – Generation Z – are concerned about job security, while millennials and Gen X are mostly worried about the economic downturn. Other concerns that inform spending are political unrest and increasing utility bills.

According to Faith Wanderi, Managing Director, Nielsen IQ, millennials are more concerned about the economic downturn because they are the working capital and can feel the pinch of the taxes in the country.

She, however, notes, “From the retail side we have seen that the market has grown in both value and volume, to USD 3.1 billion.”

She notes that consumers have downsized to the smaller versions and packs of commodities. “People are buying the smaller sizes because pockets have become tighter, but people are still consuming, hence the growth in volume and value.”

The rising cost of food, economic downturn, and job security have been identified as key issues that millennials, Gen Zs, and Gen Alphas are concerned about.

Pauline Achayo, the Strategic Insights Lead at Nielsen IQ, notes that consumers are shifting their mindset to cope with what is happening in the market. “The boomers and Gen X are very concerned about the economy.”

With consumers being price-sensitive, a notable shift is seen as Kenyans are now saving and investing more, and spending more on financial services like insurance and transport costs.

The report has also shown that more than half of Kenyan consumers are projected to save with banks in the next 12 months.

"While banks continue to hold a dominant position, mobile apps are rapidly gaining traction, particularly among Gen Z consumers. Gen X and millennials prefer SACCOs," NIQ report.

“There is a lot of trust within the banking institutions, but among the older generations, they have solid perspectives and proportions towards saving with the SACCOs and are warming up to mobile money apps,” Ms Achayo said.

However, with the use of mobile apps as a savings channel on the rise, this positions them as a more popular option compared to traditional savings channels like SACCOs.

“This shift highlights the growing trend of digital financial management and the convenience it offers for users,” Nielsen IQ consumer outlook 2025.

Faith Wanderi, Managing Director, Nielsen IQ, said that Kenya’s Fast-Moving Consumer Goods (FMCG) basket is growing by value and people are consuming more, however paying more for less, against the backdrop of high inflation.

“The reality on the ground is that inflation has slowed down; people are consuming more,” Ms Wanderi said. “Kenyans are willing to let go of even breakfast cereals.”

With new tax measures, the wallets of many Kenyans have shrunk, and Kenyans are switching completely towards utilities. “The average take-home is lower than what it used to be.”

In the report, consumer goods such as petroleum jellies, milk, fabric softeners, and coffee were ranked top by growth in value.

While the consumption of flour, soft drinks, cooking oil, liquid milk, laundry bar and detergent, yoghurt, nappies, and toilet soap were ranked top in volume growth.

Ninety-one per cent of Kenyans currently think they are living in a recession, 63 per cent project there will be a recession in the next 12 months, and 58 per cent only have enough for basic needs.

To manage expenditure, consumers are monitoring the cost of their overall basket of goods, shopping more often at discount stores, buying in bulk when things go on sale, and focusing on essentials.

They are also buying whatever brand is on promotion, switching to a lower-priced option, substituting for a lower-priced alternative, and using digital technologies to find better deals.

The report projects that consumers will spend more on education and childcare in the next 12 months, as well as health and wellness, utilities, and financial services. On the other hand, outdoor dining, holidays, clothing and apparel, memberships, entertainment, telecoms, and rent will see a deep cut.

In the report, brand loyalty has declined, and brands can no longer rely on loyalty for growth. “Cooking oil, laundry, and skincare lead in brand switching.”

“Kenyan Gen X and the boomers are the most likely to switch brands in essential product categories such as toothpaste, telecom services, body care, and cooking oil,” Nielsen IQ Consumer Outlook 2025.