The pricing of goods in Zimbabwe is ridiculous. You don’t even have to ask any local to know that for a fact. It’s all over where goods are being sold. We have taken the dollar and made a complete mockery of it.

One is reminded of the story, whether true or not, of former President Barack Obama wanting to see this loaf that cost a dollar. Was it that special? Well for the rest of us, we are now used to it.

The import of that story is that we have no respect for the dollar. Even in a crippling cash crisis, the prices seem to go north instead of southwards. Any visitor will tell you that the greenback is hopelessly undervalued in this country. The excuse one is given is the hyper inflationary era where the value of our currency was once less than that of tissue paper.

That’s a lame excuse if you ask me.The reality is plain greed. I am appalled by the number of people dealing in cash, carrying stacks of both bond notes and the dollar. We are a highly unbanked society because very few trust the banks. Not with the added inconvenience of being restricted when it comes to withdrawals.

The way retailers have stuck to a warped pricing model boggles the mind. Take for instance local retailers in Bulawayo who sell their goods at a price higher than in Harare or the rest of the planet for that matter.

Bulawayo, for all its collection of sins, has no money. The burgeoning industry that was once the envy of the region is now a distant memory. Factories have been turned into churches, and the thousands who trekked to Belmont, Donnington and Khami industrial sites have all but disappeared.

Many have trekked across the Limpopo and those who remain depend on their remittances. The rest are scratching the ground for a living or nearly eating grass.

From where do our avaricious retailers and service providers expect the money to cover their extortionist? We suspect business owners just shut their eyes and prices come to them in a dream.

Perhaps that could be justified during the Zimdollar era when inflation ravaged the economy.Today retailers wonder why stock is not moving an inch on the shelves. It’s just too damn expensive! Never mind the fact that there are a hundred other competitors selling the exact same thing!

If its cost recovery you are looking for then forget it. Unless one would rather have goods on shelves, a form of money laundering. Which I suspect is the case with most businesses. It’s safer to have dubiously acquired loose cash converted into goods. And let them rot there until someone comes across a windfall.

Customers are such a gullible lot. Like a Mexican wave, they are easily swayed. The little cash they could have scratched around to get is tricked out of them.

Admittedly, telling business people to cut their losses and run might be absurd advice. But a fool and his money are soon parted. It makes no sense to gun for 1 000 percent profit when there is a liquidity crunch.The reality is that you have to have cash to pay for rent, utilities and labour.

I remember teaching a very simple principle to my commerce students years ago. It was called SPQR — small profit quick return. The big supermarkets are making a killing from it. It’s just some of us are driven by greed and are not that patient. Kill the goose that lays the golden egg and move to the next one.
The idea is to make your goods affordable enough and they will fly off the shelves. That will put cash in your hands to order some more and the cycle continues. Is there an invincible mafia that is forcing every seller to charge the same price? There is absolutely no logic in selling two shirts a week just because one doesn’t want to cut the price below that of the competition.

The problem with some of our businesses, particularly the small to medium entrprises, is that they do not work on a business plan. That is, to sit down and think about what they do and why they are doing it. To consider where are they going and at what pace and cost.

If they are not breaking even, then logic says they should shut down. If they are hanging around oblivious of the reality on the ground, then we can safely assume they are a crime waiting to be busted.

Local businesses should disabuse themselves of the herd instinct. Just because this one is selling men’s underwear and seems to be making it does not justify me going into the same business. I saw it happen in Botswana and when one is forced to shut shop, it’s not pretty.

In Harare you have a whole block of shops selling exactly the same things. That is no reason to copy that warped model. It might even be that they all have one owner! We will never know where they got the money from in the first place. Such shops are sustained by a seemingly invincible, yet steady supply of hard cash.

The lesson for our businesses is as clear as day. Re-strategise on pricing by considering the ability of your customers to pay. Secondly, diversify and identify your unique selling proposition. If it is service then go for excellence.

As for the goods, price them affordably so that customers come back to buy more. That will sure keep the tills ringing. If you employ the scorched earth approach, and fail to adapt, you will go the way of the dodo. Extinction.

 

You Might Also Like

Comments