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Dumisani Nsingo, Senior Business Reporter
THE existence of small players in the grocery retail sector is under threat owing to the emergence of large shops doubling up as wholesalers and retailers, selling their products at lower margins compared to their minute competitors.
Bulawayo Traders Association president Mr Rodgers Hove said the association was concerned about the increasing number of wholesalers venturing into the retail sector stating that it created unfair competition to retailers.
“Nowadays you get a consumer buying straight from the wholesaler or sometimes the manufacturer and in this case, the retailer loses business as these consumers are buying without a licence and can even buy a single unit.
“We believe some of the wholesalers have two licences, one to operate as a wholesale and the other one as a retailer on the same premises meaning that they have the right to sell directly to the consumer,” he said.
Mr Hove said the association had since engaged the Ministry of Industry and Commerce and the Consumer Council of Zimbabwe (CCZ) to address the anomaly, which threatens to diminish indigenous owned shops.
“We engaged the Ministry at provincial level and CCZ and the two said a meeting was going to be arranged between wholesalers and manufacturers, where the issue was going to be ironed out but three months down the line nothing has taken place,” he said.
Mr Hove said the bigger shops have over the last few years encroached into high density suburbs, which have been largely been preserve for small retailers over the years.
“To make matters worse these big shops-cum-wholesalers have penetrated into high density suburbs and selling products at very low margins and most small shops have since closed.
“In the old days these big players weren’t allowed to operate in those areas as it was a preserve for the local business community. As it is having bigger players operating in high suburbs defeats the logic of empowering indigenous businesses in line with Government ethos,” said Mr Hove.
Competition and Tariff Commission (CTC) chairman, Mr Dumisani Sibanda acknowledged the growth of big retail players in the high density, which was previously serviced by small to medium-sized businesses.
“The new trend is that large retailers and wholesalers doubling as retailers are penetrating these (high- density) markets. The large supermarkets and wholesalers have the capacity to retail at lower margins thus seemingly squeezing smaller players who in most instances source their wares from wholesalers,” he said.
Mr Sibanda said the large supermarkets and wholesalers had the capacity to retail at lower margins thus squeezing smaller players who in most instances source their wares from wholesalers.
“This is a trend that is unstoppable which will require small players to be capacitated as their market share will certainly diminish making their business unviable . . . it is trite that there is no law that prohibits wholesalers from retailing. It is important to highlight that competition promotes efficient players and punishes the inefficient ones. In every competitive environment, the inefficient players would be eliminated,” he said.
Mr Sibanda said the involvement of wholesalers in retailing enhances the process of competition and associated benefits of low prices to consumers.
“The effect of low prices will affect the individual inefficient smaller player and not the competition process though this might not auger well with the affected party. The folding trends do not harm competition, the smaller players are seemingly finding it too difficult to adapt to the new order in the market,” he said.
The CTC boss however, said there was a need for policy intervention to ensure the viability of traditional or small shops in the high-density.
“The intervention of the Commission would require evidence of abuse of market power by large players. The evidence could be selling products at below cost prices, price maintenance; wholesale and retail price being the same and activities that undermine fair competition, for example promotions that distort fair play in the market. There should also be evidence that the smaller shops do not have other alternative suppliers of products,” Mr Sibanda said.
CCZ Matabeleland regional manager, Mr Comfort Muchekeza however, said there was nothing amiss about wholesalers venturing into retail but hinted that smaller players needed to come up with competitive prices for their products to withstand competition.
“There are two types of licences, a wholesalers’ and retailers’ but a wholesaler can have both licences which enables it to engage in dual pricing whereby it can sell to an individual consumer at a retail price,” he said.
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