
Business Writer
THE closure of formal retail shops in Zimbabwe is of major concern, with many retailers struggling to stay afloat due to various challenges.
As of January 2025, the situation remained dire, with many retail shops teetering on the brink of collapse, while many others may be forced to close their doors unless the Government intervenes.
Zimbabwe’s economic challenges have had a devastating impact on its formal retail sector, leading to the shutdown of well-established retailers such as N Richards Group and Queensdale Spar, while Choppies, once a major player in the market, has exited entirely, signalling a broader trend of distress among retailers.
OK Zimbabwe has closed five brunches and reports say more are set to close with a devastating carnage of employees, while prominent retail chain Food World is grappling with challenges.
Currency crisis, mainly foreign exchange shortages within the formal retail sector, continues to exacerbate the problem.
The local currency has undergone persistent fluctuations, undermining pricing stability and overall profitability for businesses.
Formal retailers are legally obligated to accept the local currency for transactions, a requirement that exposes them to substantial risks from exchange rate volatility.
Before exiting, Choppies indicated that its primary challenge lay in the instability of ZiG, whose fluctuation in value created uncertainties for businesses, affecting pricing, investment and overall planning.
As a result, retailers are struggling to adapt to the unpredictable financial environment and are concerned about the long-term implications for their operations and profitability.
The volatility of the local currency often results in significant exchange losses, as the value can drop precipitously between the time of purchase and sale.
This scenario highlights the complex dynamics between regulatory compliance, currency instability and the rapid growth of the informal retail sector.
Denford Mutashu, president of the Confederation of Zimbabwe Retailers (CZR), expressed deep concern over the ongoing closures of formal retail and wholesale enterprises.
He said the closure of these business is a direct outcome of an economic landscape that has consistently failed to bolster the operations of formalised sector players.
Mutashu called for urgent action to protect the livelihoods of millions of Zimbabweans reliant on these businesses and to ensure the survival of established retail and wholesale brands.
“The Confederation of Zimbabwe Retailers (CZR) is deeply concerned about the continued closure of formal retail and wholesale businesses, a direct consequence of the prevailing turbulent economic environment that has consistently failed to support formalised sector players,” said Mutashu.
He pointed out the alarming disconnect between the challenges faced by formal businesses and the significantly different narrative presented by authorities regarding the operating environment.
“The fiscal, monetary, regulatory and statutory frameworks have remained unforgiving to formal retail and wholesale operators. These challenges have created an uneven playing field, allowing the informal sector to dominate with little intervention to ensure equity.
“The growing levels of informalisation have led to a significant loss of market share for formal businesses. The unregulated informal sector offers goods at much lower prices, largely because it operates outside compliance with statutory obligations such as taxes, licensing fees and labour laws. This has made it increasingly difficult for formal businesses to compete effectively.”
Research from Equity Axis, a financial research firm focused on Zimbabwe, revealed that the fate of formal retail establishments is intricately connected to the regulatory landscape, currency instability and the sprawling informal sector.
“The fate of Choppies, OK Zimbabwe, and similar formal retail entities speaks volumes about the intricate interplay between regulatory compliance, currency instability and the burgeoning informal retail sector.
“Zimbabwe’s economic landscape is heavily influenced by currency instability. The local currency has experienced severe fluctuations, undermining the stability of pricing and profitability for businesses. Formal retailers are mandated to accept the local currency for transactions, a requirement that exposes them to substantial exchange rate risks. The volatility of the local currency often results in significant exchange losses, as the value can drop precipitously between the time of purchase and sale,” said Equity Axis.
The formal retail sector in Zimbabwe faces a grim future as it continues to succumb to the rampant growth of the informal economy.
Key retail players across diverse sectors, including food, clothing, textiles and footwear, are struggling to compete against the informal market’s dominance.
The plight of major retail stores, including OK Zimbabwe, proves the harsh realities faced by formal retailers, whose survival is increasingly challenged by the dynamic and unregulated nature of the informal sector.
The informalisation scourge is cross-cutting even hardware shops are battling it out with enterprises that are rampantly importing non-duty-paying stock from beyond the country’s borders.
Government has been urged to take decisive action to address these challenges before the once-vibrant formal sector is completely undermined.
This informal economy is characterised by enterprises that often operate outside the bounds of regulatory oversight, including those that import goods without paying the necessary duties and have since exhorted the government to bring the situation under control before it buries the once vibrant formal sector.
Furthermore, various business players remain sceptical of the local currency stability in the coming months, particularly in light of a significant devaluation that occurred in September last year.
During this episode, the ZiG officially fell 43 percent against the USD in September, effectively narrowing the gap between the official and parallel market rates.
This devaluation had severe repercussions for consumers, as it eroded disposable incomes, exacerbated inflation and negatively affected revenue generation and profitability for businesses across the board.
Industry insiders have reported that many companies have suffered significant losses, with balance sheets being substantially eroded following the devaluation.