SOUTH AFRICAN retail giant SPAR says its Zimbabwean business is struggling due to the country’s uncompetitive nature coupled with low consumer demand and lack of disposable income.
SPAR chief executive officer Graham O’Connor revealed at the weekend in Johannesburg that doing business in Zimbabwe was challenging compared to other regional countries like Mozambique and Angola.
“While our African expansion into Botswana, Namibia and Swaziland has been successful and we continue to make progress in Mozambique and Angola, business in Zimbabwe has been challenging,” O’Connor said without further elaborating.
A number of retail outlets, particularly South African ones, have closed shop after finding it tough to operate in Zimbabwe.
In 2013, Shoprite closed the shop at the Bulawayo Centre after selling its interests to local mogul Raji Modi.
The exit, according to analysts, was as a result of a “high cost of doing business in the country”.
The Bulawayo Centre Shoprite had been the only business interest of the South African retail giant operating in Zimbabwe. The supermarket had been opened at the centre in 2000.
A snap survey by the Southern Eye Business revealed that SPAR operations in Zimbabwe were struggling and most of its branches had either been franchised or closed down. Economic analysts said the supermarket chain was struggling because of tough economic conditions as well as policy inconsistences in the country.
Economic analyst Godfrey Kanyenze said SPAR was struggling because the cost of doing business in Zimbabwe was very high compared to other regional countries.
“There is low demand and lack of access to capital. Businesspeople end up using generators due to regular power outages and you cannot compete when running a supermarket using a generator,” Kanyenze said.
“The other issue is that some of these supermarkets are getting their inputs from South Africa so there is the issue of transport costs. If you see chains like SPAR joining the book of lamentations, then you can see that things are not normal in the country,” he added.
Veteran economist John Robertson said there was no disposable income in Zimbabwe and businesses were finding it hard to operate.
“In South Africa they (supermarkets) would be selling a wide range of products, but in Zimbabwe the product margin is very small. Due to small income, people end up buying from vendors,” Robertson said.
SPAR, which services independent retailers trading under the SPAR, Tops at SPAR, Build It and Savemore brands, has in the past year opened 19 SPAR stores across the region, below the target of 23, and closed 17 that either failed to meet standards or for financial reasons. The group opened 51 new Tops at SPAR stores in South Africa, well ahead of the target of 35.