Staff Writer 
ZIMBABWE’s formal retail sector endured a challenging year in 2024, characterised by stiff competition from the burgeoning informal traders, working capital constraints and high cost of operating ― all threatening the viability of most businesses.
This was compounded by a drastic decline in consumer spending as authorities’ tightening of liquidity in the economy weighed heavily on money circulation.
Resultantly, the big players in the sector, notably OK Zimbabwe, TM Pick n Pay, Choppies and FoodWorld admittedly felt the pinch.
In November last year, Botswana-headquartered Choppies Enterprises Limited announced it was exiting Zimbabwe citing, among other reasons, stiff competition from the informal sector.
South African retailer Pick n Pay Group Limited then announced it had written down its investment in TM Supermarkets to zero.
Pick n Pay, which partners with Zimbabwean giant Meikles Limited and holds a 49 percent stake in TM, cited Zimbabwe’s unstable economic climate, characterised by hyperinflation, fluctuating exchange rates, and increasing economic instability, as the reason for the decision.
Others like FoodWorld scaled down branches, particularly in Harare.
While headwinds swept across the entire formal retail sector, there are positives to hold on to that could turn the fortunes of retailers for the better in 2025.
The departure of Choppies Enterprises from Zimbabwe has not left a vacuum but created an opportunity for locals in the sector to expand.
SaiMart, owned by deputy Industry minister Raj Modi, is set to take over a portion of Choppies’ 30-store network for an undisclosed amount.
SaiMart hopes to expand from its small footprint of six stores in Bulawayo, which will see it growing its market share.
Similarly, the two publicly traded grocery chains on the local capital markets, OK Zimbabwe and TM Pick n Pay, have already expressed interest to expand their store network across the country.
In the past two years, OK Zimbabwe added a few new stores and grew its store footprint to 64 retail and eight hypermarket stores countrywide together with five subsidiaries.
To survive competition, the group has had to be innovative to drive volumes upwards.
“The growth in volume was bolstered by a successful OK Grand Challenge promotion which included the OK Mart stores for the first time and resulted in growth in the contribution of bulk sales compared to prior period,” OK Zim chairman Herbert Nkala said in a statement accompanying the company’s half-year results to September 30, 2024.
The group posted a half year profit of US$3,7 million profit, up five percent above prior year comparable period.
Similarly, TM Pick n Pay has been driving its store expansion, bringing its business much closer to customers.
“The group focuses on adapting to evolving economic conditions, including the new currency, the Zimbabwe Gold,” Meikles chairman John Moxon said last year.
“The group will continue with the planned development projects, primarily in the supermarket and properties segments.”
The group has benefitted from substantial investments from its shareholders following the disposal of some assets and the remodelling of its business to focus on retail.
Additionally, its partnership with Pick n Pay South Africa has come in handy in terms of supply of merchandise, giving it an edge over competitors, including some informal players.
More positively, the fight against informal players has attracted government efforts, which should start to bear fruit in 2025.
The Zimbabwe Industrial Reconstruction and Growth Plan (ZIRGP) 2024-2025 is set to tackle the challenges of informalisation in the economy by simplifying tax models and new businesses registration.
In addition, the government will strengthen compliance, which should create a level playing field for all retail players.
This came as the Retailers Association of Zimbabwe (RAZ) has been pushing for the formulation of favourable policies to protect businesses from unfair competition and exchange rate distortions.
“Implementing a pricing model that reflects real-time market exchange rate fluctuations can help us remain competitive while managing costs,” the association said as part of recommendations to Finance minister Mthuli Ncube last year.
“This keeps the official exchange rate constant while formal retailers offer differentiated discounted pricing by product to reduce inflationary impacts in US$ terms, incentivise purchases, and stimulate demand.”
The formal retailers also flagged the tax burden they face in the wake of uneven competition from unregistered businesses that do not pay taxes or comply with regulations.
“To operate a single supermarket in Zimbabwe, one needs more than 25 licences and permits — a tall order for some of our members who operate over 50 branches each,” the retailers said. By Kudzanai Gerede
Companies and Markets Editor
newsdesk@fingaz.co.zw
