Kudzanai Sharara Assistant Business Editor
The country’s formal retail sector has not seen major expansion projects this year as the challenging economic environment has seen most consumers spending less on basic products.
Responding to emailed questions, the chairman of the Retail Association of Zimbabwe and Truworths chief executive Temba Ndebele, said the industry was stagnant as the consumer is currently constrained.
“The retail industry is not expanding at the moment due to the distressed consumer,” said Mr Ndebele adding that there is more activity in informal retail. There are, however, a few chains that are still expanding and refurbishing their outlets, with OK Zimbabwe having recently opened a new and much bigger outlet in Waterfalls, probably to capture church goers at PHD ministries, which is directly opposite to the new outlet.
Others are closing though, with Mr Ndebele’s Truworths having closed one of its branches in the Harare CBD. Edgars chain also reported that it is now operating from 27 stores from 28 prior year, while sister store Jet is also one store down from prior year comparative.
Of late consumers have been turning to informal retailers and street vendors where basic products are much cheaper than what is prevailing in formal outlets. Mr Ndebele said the advent of informal players represent unfair competition as they don’t pay rent, rates and taxes. Observers say formal retailers have only managed to sustain or even record volumes growth due to the cash shortages that have forced formally employed workers to use electronic modes on transaction.
This week clothing retailer Edgars, recorded growth in both revenue and sales with observers saying the company had only capitalised on consumers failing to access cash and have no option than to buy from formal outlets where Point of Sale machines are readily available. Mr Ndebele confirmed that most shoppers are now using plastic money but added that spending was largely restricted to basics.
“High unemployment levels also have a negative impact on consumer spend,” said Ndebele. Commenting on the issues senior executives in the retail sector are grappling with, Ndebele said shortage of foreign currency is at the top of the agenda.
Importers of finished products such as retailers are also not on the RBZ’s priority list number one, making it difficult for retailers to access foreign currency. Edgars is one such company, which has since said the prevailing currency shortages will impact on its product range, particularly for the fourth quarter.
Mr Ndebele said shortage of foreign currency in itself is a symptom of a non-productive economy. RBZ governor Dr John Mangudya, is on record saying Zimbabwe’s currency solution lies in production.
“Let’s rise up and work as Zimbabweans. The shortage (of cash) is a reflection that as Zimbabweans, we are not making use of the resources that God gave us.,” said Dr Mangudya at a University of Zimbabwe media academic and business interface in July.