South African retailer Pick n Pay also echoes the same sentiments on its Zimbabwe operations stressing that its Zimbabwe associate Pick n Pay TM Supermarkets boosted the group’s half year revenue.
Pick n Pay’s Rest of Africa division increased by 12.6 percent to R2.3 billion ($170 million) while profit before tax was up 22.3 percent from R103.7 million ($7.7 million) to R126.8 million ($9.5 million), due to a strong performance from TM Supermarkets.
The group’s share of TM’s earnings grew 40.4 percent on last year to R40 million ($3 million).
TM Supermarkets has 56 stores in Zimbabwe, 16 of which trade under the Pick n Pay banner.
Pick n Pay controls 49 percent of TM , with the remainder held by Meikles.
Pick n Pay explicitly said that even though its franchise businesses outside South Africa did well in the period, the group’s share of profits of TM Supermarkets (its associate in Zimbabwe), continue to make an outstanding positive growth contribution.
Zimbabwe supermarkets operate in a market which is still significantly underpenetrated in terms of formal retail but face competition from an explosion in informal commerce.
Supermarkets however have an edge over the informal which are predominantly cash based.
The cash situation in the country has seen an upsurge in customers bracing to queue in formal shops which offer an array of payment options other than cash.
However retailers are not immune to the forex challenges facing the economy at large, which constrain their capacity to meet foreign suppliers on time, posing product supply challenges.
They however leverage on the support from their parent companies, though not sufficient, to meet consumer demand and provide a wide range of products.
The performances of these supermarkets indicate that despite the sluggish outlook, Zimbabwe is a high performing economy which could get even better with the right policies. – The Source