Lifestyle feeling the heat?

The furniture group, working towards delisting from the Zimbabwe Stock Exchange, has over the past few months closed down its First Street/Nelson Mandela, George Silundika, Speke Avenue and Borrowdale branches, apparently to realign operations.

Lifestyle’s holding group is to be registered in Mauritius to avoid capital raising constraints associated with “Zimbabwe’s risk profile”. The group also plans to close down its Victoria Falls branch, with Beitbridge next on the list.

But group chief executive Mr Tawanda Nyambirai on Monday said the group would not continue to scale down its branch network. Yet a climb-down might be inevitable because of shrinking disposable incomes.

“We have not closed down any more branches since the closure of our First Street, Borrowdale and Amato (Speke Avenue) branches,” he said.

“These were opened to increase our distribution network centred on the bank (TN Bank, an Econet Wireless’ subsidiary)”.

But TN Bank was recently acquired by Econet Wireless and has been refocused to anchor, largely, the fast growth expected in its EcoCash operations.

Earlier, Mr Nyambirai told local media the group would review its operations and rationalise operations to cut down on costs. He said the group would adopt the latest technology for a virtual distribution model and leave a handful of branches for the touch-and-feel experience.

Mr Nyambirai said in the face of the shift in the initial strategic growth thrust of the furniture business and synergies expected from sharing infrastructure with the bank, the group had to review its network. The company has also ventured into the retail sector through a chain of supermarkets around the country. He said the company planned to reduce its branch network by shutting down the least performing outlets.

Mr Nyambirai said the group would instead boost its fast-food business, TN Grill units. New outlets are expected soon in Harare, Masvingo, Chivhu and Gweru.

The group increased its fast-food and retail footprint after selling TN Bank to Econet. Whatever the reasons for the rationalisation of Lifestyle Holdings branch network the group was always going to feel the pinch of this expansion.

It was apparent that the cost build-up was always going to weigh down heavily on the furniture group, even assuming that the initial growth modelled around TN Bank acquired by Econet was still in place in view of low demand due to low  disposable incomes.

Aggregate demand might have seemed strong in the first few years when people could make little savings and buy the furniture they could not during the economically unstable period to 2008.

Analysts questioned the wisdom of opening numerous outlets within the radius of especially Harare’s CBD, unless the fewer existing branches had failed to cope with demand.