Large-scale retailers in Zimbabwe are struggling to remain viable due to competition from “tuck shops”, informal shops that sell exclusively in US dollars and do not pay taxes to the government.
According to one of the country’s biggest retail chains, OK Zimbabwe, unregulated informal shops now dominate the retail space.
While larger supermarkets are full of goods, customers prefer to buy products from tuckshops which offer competitive prices compared to supermarkets.
Big supermarkets are forced by the government to price their stock using the official exchange rate, making their prices exorbitant in US dollars.
Added to that, larger supermarkets also pay taxes, rates, and other regulatory fees.
Manufacturers and suppliers now sell their goods directly to informal traders who pay in USD upfront.
OK Zimbabwe, which has over 60 outlets nationwide, says most supermarkets battling for survival.
In a press advertorial for its “DollarDeal” promotion, which seeks to drive sales by offering customers bargain deals for US$1, OK Zimbabwe said:
It has been an interesting watch as perhaps; most formal retailers now are battling for survival. The rise of the unregulated informal operators, who are mostly arbitraging, has caused more headaches than good for the formal guys like OK Zimbabwe, TM Pick n Pay, Gain Cash & Carry and so many more. This has created a whole new spate of dangerously unhealthy competition.
… In instances where some are paying taxes, some are not. Where some are using the regulated bank exchange rate, some are not, hence causing artificial or distorted price points in the stores.
The informal retailer is infamously using the black-market rate and marks the same products downwards causing “forced death” on the formal retailer.
The retail chain urged the Government to create a level playing field to enable the formal retailer to survive through policy intervention.
It warned that failure to create a level playing field will result in company closures and the loss of jobs.