Tawanda Karombo Harare

PICK n Pay’s jointly owned TM Supermarkets in Zimbabwe has opened a new megastore a few kilometres east of Harare’s central business district after spending $4.5 million (R48m).

The company is set to spend even more as it continues with its store upgrading exercise, which will result in the opening of a new Pick n Pay branded store in Gweru, the country’s third city.

The South African retailer has a 49 percent stake in TM Supermarkets, while the rest is controlled by Zimbabwe Stock Exchange-listed Meikles.

Meikles also has subsidiaries in agri-processing, and city and resort hotels.

TM Supermarkets has 53 branches in the country, in addition to two Harare branches that already carry the Pick n Pay name.

Now it is strengthening its position in the Zimbabwean market – in which it competes against OK Zimbabwe and Spar-franchised operators – by opening the megastore.

Known as Jaggers Masasa, the megastore was previously owned by South African company Metcash Africa.

The premises are owned by Old Mutual, which has a diverse portfolio of properties in Zimbabwe.

The new store will have about 20 point-of-sale machines.

“The supermarket chain spent close to $4.5m [on] refurbishment and stocking of its supermarket,” the company said. Of that, about $3m was used on refurbishing and upgrading, while the “balance went towards stocking the new supermarket”.

Zimbabwean retailers are giving their their outlets a face-lift to attract shoppers and to fend off competition.

However, experts in the industry say the retail sector in Zimbabwe continues to struggle, with margins having fallen below 5 percent from between 15 percent and 20 percent during the past three years.

Demand from consumers has dried up as the effects of a liquidity crunch ripple across the economy, forcing it into deflation in the past five months.

TM Supermarkets had hired 200 new staff, primarily from “the surrounding areas” to operate the new store. This brings the number of employees at outlets of TM Supermarkets and Pick n Pay to 3 700.

John Moxon, the chairman of Meikles, has said the company intended to open a new Pick n Pay store in central Harare in the next two months.

TM Supermarkets said on Friday that another Pick n Pay branded outlet would open shortly in Gweru.

“TM Supermarkets is also renovating Bulawayo Hyper [and] TM Kwekwe… among other refurbishment exercises under way,” the company said.

The partnership with Pick n Pay gives the retailer operational clout as it leverages the South African company’s technical expertise and its ability to assist in the “sourcing of the much-needed product brands from South Africa to complement the Zimbabwean range” in a bid to meet customer demands.

The TM Supermarkets division had turnover of $334m in the year to March, Moxon said last week.

He added that the “average cost of product to the consumer” in the supermarket division had declined, while earnings before interest, tax, depreciation and amortisation fell to $11m from $11.6m the previous year.

Margins for the period were similar to the previous year, pointing to limited growth.

In the next two years, TM Supermarkets would open five new stores across the country, and these would “increase the trading space by more than 18 percent”.

Shares in Pick n Pay Stores lost 1c to close at R55.59 on Friday on the JSE.