By A Correspondent| The traditional shopping chain in Zimbabwe is witnessing a dramatic shift with new regulations limiting individual purchases at wholesalers to just US$1,000 save for licensed retailers.

This, on the surface, aims to formalize the supply chain, but in reality, it throws a lifeline to struggling supermarkets while potentially suffocating wholesalers and manufacturers already reeling from the informal sector’s dominance.

The informal market, with its “tuck shops” accepting USD cash readily, has lured manufacturers away from formal retailers burdened by Zimdollars and extended credit terms.

While OK supermarkets claim only 20% of their sales are in forex, tuck shops flourish on USD transactions.

The government’s attempt to rectify this by forcing manufacturers to sell exclusively to wholesalers might backfire.

Wholesalers, already grappling with low business, now face the administrative burden of verifying customers’ tax compliance and potentially losing large informal market clients.

Manufacturers like Dairibord, heavily reliant on informal sales, could see profits dwindle.

This move could benefit big supermarkets like Pick n Pay by removing informal shop competition.

However, the question remains: can they keep prices low enough to compete with the readily available USD in tuck shops? The answer hinges on the government’s exchange rate policy.

If the official rate remains overvalued, supermarkets will struggle. Ultimately, the new regulations create a precarious balancing act.

Will they revitalize formal retailers or merely squeeze already struggling wholesalers and manufacturers further?

The answer will lie in whether the government addresses the underlying issue of exchange rate distortion and empowers formal businesses to compete on the informal sector’s turf.

This rewrite focuses on the potential consequences of the new regulations, with a fresh angle analyzing the power struggle between formal and informal sectors and the government’s role in shaping the outcome.

It presents the situation as a complex equation with uncertain results, leaving the reader to ponder the future of Zimbabwe’s shopping landscape.