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Senior Business Writer

OK Zimbabwe, one of the country’s retail giants, says in the third quarter ended December 31 it faced stringent supplier payment terms in both local currency and US dollar-denominated purchases contributing to volume decline.

Volumes declined by 32 percent for the quarter versus the prior year and by 28 percent for the nine months ended 31 December 2023.

In a trading update for the third quarter ended December 31, the retail outlet said it continues to implement volume growth strategies to stabilise business performance.

It notes that the depreciation of the local currency against foreign currencies continued in the quarter under review.
Consequently, persistent price changes adversely impacted consumer demand and supply dynamics.

“Compliance with laws and regulations governing currency resulted in high in store prices and loss of competitiveness especially against unregulated markets. The Group continued to engage amicably with regulatory authorities to enhance macro-economic stability and support the sustainable growth of formal retail business.”

Last year, OK Zimbabwe said the rise of the unregulated informal operators who were mostly arbitraging had caused more headaches than good for the formal players.

“This has created a whole new spat 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 outlet said in a statement last year.

In the current trading update, OK Zimbabwe said: “Stringent supplier payment terms on Zimbabwean dollar denominated purchases as well as credit limitations on foreign currency denominated purchases affected stock availability and pricing dynamics during the quarter.”

Group revenue for the quarter of $568 billion was 50 percent above last year in inflation adjusted terms.

In historical cost terms, group revenue grew by 535 percent to $490,5 billion.

“Group revenue for the nine months ended 31 December 2023 grew by 57 percent to $1,6 trillion in inflation adjusted terms and by 501 percent to $1 trillion in historical cost terms.”

The business has adopted a structured cost containment programme to align overhead costs with business performance.

On the outlook, OK Zimbabwe said it remains optimistic about its future prospects and recognises the need to adapt to the changing operating environment.

To that end, the business is focusing on delivering value to its customers by enhancing customer experience, executing fair pricing, improving market presence and optimising operational efficiencies for long-term sustainability.