Abbie WestfallNelson Gahadza
Ok Zimbabwe says the shortage of foreign currency in the formal channels continues to exert pressure on exchange rate dynamics, with a significant impact on pricing, consumer behaviour and long-term financial planning.
This comes as the country’s production-to-retail value chain is struggling with pricing as the exchange rate premium continues to widen while accessibility of foreign currency has become a headache for many businesses.
As a result of the dynamics, retailers have increased prices both in local currency and US dollar sales in order to cover the premiums.
Manufacturers are also believed to be accepting only between 10 and 20 percent of orders in the form of the Zimbabwe currency (ZiG) as they try to raise foreign currency for working capital importation of critical raw materials.
Ok Zimbabwe, in a trading update at its recently held annual general meeting, said strengthening relationships with key suppliers will remain top of its strategic imperatives.
“The business looks forward to continued engagements with the monetary authorities to enhance strategies to improve the availability of foreign exchange on the formal market.
“Our fortunes are tied to the stability of the foreign exchange rate, and our fair price movement campaign is anchored on promoting price stability and volume growth,” reads the update.
In order to build supply chain resilience, the company will strengthen relationships with suppliers to ensure consistent product availability as well as develop contingency plans to mitigate risks associated with supply disruptions.
“We will execute in-store merchandising strategies to improve product visibility and accessibility,” the company said.
During the group’s first quarter 2025, volume grew 20 percent while basket size grew by 28 percent and business performance was driven by the effective implementation of the group’s volume recovery strategies, which also saw the improvement in the performance of the group’s premier promotion, the OK Grand Challenge.
The company said the introduction of the ZiG brought about relative stability in the economy, although currency risk remained a key risk during the period.
OK Zimbabwe, in its recently published annual report, said it is extending its sources of supply to countries like Turkey and China with the goal of diversifying its product assortments and landing the products cheaper for shoppers.
It noted that erratic supply of essential products was the biggest challenge in our supply chain during the financial year.
“The financial year saw an increase in the level of direct imports mainly from South Africa, with additional sources of supply coming onboard such as the Shoprite Group, Tradeport Group, and Food Lover’s Market Distribution.
“Going forward, we will be extending our sources of supply to countries like Turkey and China with the goal of diversifying our product assortments and landing the products cheaper for our shoppers,” reads the group’s annual report.
The company said its house brand strategy continues to grow as it seeks to close gaps in its assortments with its own products, which helps to improve product availability and also gives shoppers cheaper alternatives on the shelf.
“Our distribution centres are increasingly becoming more important as we centralise our procurement, helping us to have greater control over the movement of stock within our business,” Ok Zimbabwe noted.
Bongani Ndlovu