By Tawanda Karombo
PICK n Pay and its partner, TM Supermarkets, are investing in new Zimbabwe stores in addition to upgrading others, buoyed by a stronger uptick in sales and a robust revenue base.
However, with the new Covid-19 variant reported in South Africa forcing Zimbabwe to institute new restrictions such as mandatory quarantines and testing on arrival, other retail chains such as Edgars Zimbabwe are switching their attention to online platforms to safeguard sales.
Pick n Pay and its Zimbabwean counterpart have adopted a long-term view, with refurbishment programmes and opening of new stores well on course. Development of new malls in Harare and other urban areas is also giving rise to opportunities for local retailers to expand.
“Refurbishment of the stores is progressing as planned … two more stores are expected to be completed by the end of December,” said John Moxon, the chairman of the holding company of Pick n Pay’s Zimbabwe partner, TM Supermarkets. “In addition, work is under way on new stores that are expected to come on stream during the first half of the next financial year.”
Units sold in the half year to end September period grew by 27 percent, and also robustly paced up after the month of September, a development that is “expected to result in a stronger financial performance” in future months.
Operating profit for the Pick n Pay and TM Supermarkets stores amounted to ZWL 1.2 billion ($11.4 million at the official exchange rate of $1:ZWL105 or R180m) “in inflation adjusted terms” compared to ZWL 463.9 million ($4.4m) in the previous period.
“In historical cost terms, the operating profit increased to ZW$1.8 billion ($17.1m) from ZW$1.1 billion in the previous period,” the company said.
The Zimbabwean retailers have also been massively affected by Zimbabwe’s mobile money and electronic transactions two percent tax. OK Zimbabwe, the Zimbabwean rival for Pick n Pay, said this week it had taken a $4.5m hit from the tax which had also had impact on its profitability.
The mobile money and digital payments tax “significantly eroded the OK Zimbabwe business’ gross margins” with the expenses from the levy not deductible for tax filings. This further compounded “the tax burden” on the retailer. Notwithstanding this, OK Zimbabwe grew revenues by about 42 percent in the same half year period.
Retailers in Zimbabwe are also likely to be impacted by a new five percent levy on imported dairy products as Zimbabwe seeks to prop up its dairy and value addition industries. Other retailers in Zimbabwe include Spar franchised outlets and smaller local players.
BUSINESS REPORT ONLINE