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PnP Zim partner's client count up on import curbs

Harare - Retail outlets in Zimbabwe, among them those carrying the Pick n Pay [JSE:PIK] brand, are seeing increased customer counts after the government implemented import restrictions to curtail a thriving informal business sector that was eating into retailer volumes, according to economists and executives.

Pick n Pay has a partnership in the country’s TM Supermarkets, which the SA grocer owns jointly with Zimbabwe-listed conglomerate Meikles Limited. Competitors include Choppies, OK Zimbabwe and Spar among other smaller players.

Analysts said this week that consumers are responding positively to deflationary pressures that have seen prices and margins in the Zimbabwean retail space go down. 

Selling goods in smaller packages

Zimbabwean retailers have also started to sell consumables and other goods in smaller packages as salary delays and non-payment of wages force consumers to opt for knocked down packages.

“The deflation which has persisted is helping consumers with declining prices in an economy that has so little liquidity. 

"While margins would have come down for retailers, volumes will go up because of low prices and also because of limited competition from informal traders following the imposition of import restrictions recently,” said economic analyst Moses Moyo.

Other economists say the deflation Zimbabwe is experiencing results from a price correction on the markets, highlighting that the country is overpriced, especially considering its usage of the United States dollar which is now in short supply. Most companies have had to lay off workers and cut salaries to manage operating costs.

Meikles Limited chairperson John Moxon said this week that the retail division had posted excellent results in a tough environment characterised "by a number of impediments, mainly sluggish economic conditions and deflation" in food prices.

Turnover for the Pick n Pay and TM Supermarkets division grew by 10% to $395.3m relative to the prior year, Moxon said this week in the company’s delayed unaudited financials for the year to March 31 2016. 

However, he highlighted that customer counts for the supermarkets division increased by 7.6%, leading to 12.6% growth in units sold.

“This is an indication that customers are spending more in our stores with competitive prices and unique promotions. The gross margin for the year declined by 55 basis points from 19.72% to 19.17%,” he said.

South Africa demanded that Zimbabwe explain its import restrictions at a meeting between trade ministers from the two countries in South Africa last week. Industry and manufacturing capacity in Zimbabwe has sagged and authorities are hoping that the restrictions will help give local producers fresh impetus.

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