daniel chigunwe
Michael Tome
BOTSWANA – headquartered retailer, Choppies, says it is considering various options with regards its operations in Zimbabwe owing to imposing financial burden on its local subsidiaries.
The company has indicated that the ongoing economic challenges in the country have led to sustained losses, prompting the management to reevaluate its presence in the Zimbabwean market as the company assesses the situation to determine the best course of action for the sustainability and profitability of the entire group.
According to Choppies, its primary challenge lies on the ongoing instability of the ZiG currency whose fluctuation in value has created uncertainties for businesses, affecting pricing, investment and overall planning.
As a result, retailers are struggling to adapt to the unpredictable financial environment and are concerned about the long-term implications for their operations and profitability.
Choppies’ recent contemplation of exiting the Zimbabwean market reflects a broader trend within the retail sector, where various companies are grappling with challenging economic conditions.
Several other retailers are also facing the need to reduce their operational footprint owing to persistent low consumer demand and harsh market dynamics that have made sustainability increasingly difficult.
Zimbabwe’s high inflation and currency instability have considerably reduced consumers’ purchasing power, impacting on demand.
Some supermarkets in Harare’s CBD, in particular, have shut down owing to a myriad of factors associated with the harsh economic conditions and shifts in consumer behaviour.
Several retail chains in Harare’s CBD have closed in recent years, and prominent retail shops including OK Zimbabwe and Truworths have closed shop in multiple locations around the country.
A growing number of consumers are choosing to avoid traditional retail outlets as many customers seek alternatives that offer better value for their money.
Consequently, this shift in consumer behaviour, is leading to a decline in foot traffic at traditional stores, as individuals look for more affordable shopping options that provide competitive pricing.
“The economic situation in Zimbabwe continues to be a threat to the Choppies Zimbabwe segment.
“The Group is weighing various options in Zimbabwe given the stress it is placing on our overall performance.
“We do not expect to provide any material cash support to the Zimbabwean segment from Botswana or any other segment.
“The long-term focus of our strategy is to reduce debt.
“We have exited all loss-making areas apart from Zimbabwe which is something we are currently considering,” said Choppies in its annual financial statements for the year to June 2024.
During the financial year, Choppies reported that certain stores in the Zimbabwe segment incurred losses, leading to an impairment of goodwill valued at BWP 15 million.
One of the significant challenges facing businesses today is the rising competition from informal vendors.
These vendors often operate outside of traditional regulatory frameworks, allowing them to offer goods and services at lower prices.
This creates a difficult environment for established businesses, which must adhere to regulations and incur costs that informal competitors do not.
These combined factors are making it increasingly difficult for retailers in Harare’s CBD to thrive, leading to visible closures across the area.
One of the significant challenges currently facing retailers is heavy dependence on imported goods which necessitates the use of foreign currency for transactions and the ongoing limited access to foreign currency is impacting their ability to maintain stock.
Bongani Ndlovu