Last Word
OK Zimbabwe is clearly from all accounts in a moderate crisis, probably not a fatal crisis but one demanding a great deal of effort and a substantial relook at the whole business and a dramatic shift from the complacency that appears to have crept into the company, that things can continue as they have for the past quarter century or more.
The company has been there before, as was seen in its major shift from a chain of cash-only department stores. It had a single chain-store competitor in the lower middle and lower ends of that market, but while that competitor that went to the wall in the general collapse of the department store business, OK accelerated out of the potential disaster with a great deal of innovation and creative management.
OK Zimbabwe survived that crash in the department store business by pushing ahead with developing what was almost a sideline in the supermarket business into its main business and recreating itself as primarily a supermarket chain but retaining some holdover from the old business by having a wider range of non-food goods in its supermarkets than is typical in Zimbabwean supermarkets.
OK started in Zimbabwe in 1942, in the midst of a world war, as an offshoot of the South African OK Bazaars chain that had started in 1927. So it started as a department store in what was then the unfashionable upper end of First Street, on the site of an old boarding house, in competition with the posher and more upmarket department stores of Meikles, in Robert Mugabe Road and H.M. Barbour and Sanders Brothers in the lower end of First Street.
After the Second World War, with the massive white immigration sparking a boom, it built the lower floors of what is still its First Street store, more floors being added later, and in the early 1950s opened a second department store in Bulawayo. It was locally incorporated in the mid 1950s through a buyout from Springmaster and rapidly moved to establish other branches so by 1960 it had five department stores.
The 1960s to almost 2 000 were the heyday of the department store, and in Harare these converted First Street into the premier shopping street: Barbours and Sanders facing each other just north of Jason Moyo Avenue, and OK Bazaars and F. W. Woolworth almost facing each other by Nelson Mandela Avenue. Meikles was still the big general dealers converted into a department store in Robert Mugabe Road, also in brand new large premises, and the old Store Brothers was still there just down Jason Moyo Avenue. Checkers, later Greatermans, put in another major department store along Jason Moyo Avenue, and there were other smaller but similar single stores on the edge of that central business area centred on First Street.
The divvy-up of the department store market seemed to be eternal and while there was competition, and the snobbier households avoided OK Bazaars unless they wanted a bargain since it did not offer monthly accounts, most of the target market, largely the white immigrant population and the growing black middle class, would shop around.
The 1970s saw South African Breweries taking over OK Bazaars in South Africa and in 1977 its Zimbabwean semi-subsidiary, Rhodesian Breweries, later National Breweries later Delta, followed suit with the Zimbabwean stores.
Throughout this department store boom, groceries were not included. Most grocery stores were family small family operations, and even those which called themselves supermarkets were small by modern standards. In those days they did not sell meat, that being all sold by specialist butchers, and until the 1970s alcoholic drinks were limited to bottle stores, with tightly controlled opening hours, and the hotels, which explains that sprinkling of suburban hotels, all now gone, which operated what amounted to late night bottle stores through their off-licence booths.
Larger supermarkets did start appearing, with Sam Levy among the leaders with his Maceys in Nelson Mandela Avenue and a growing chain of smaller shops, and another small chain in northern Harare called Bon Marche, again in what would now be small shops. There were others, not chains but independent supermarkets with a single owner-manager, opening across the suburbs and competing with the old small family grocery stores, many not much larger than the present tuckshops.
OK Bazaars dipped its toe into the grocery market, using the basement of its First Street store for example, as slightly later did FW Woolworths and Meikles. But it was just another department although a profitable sideline.
Under Delta ownership the supermarket business was pushed far harder, and gradually came to be a major part of the business, with the small Bon Marche chain bought out to expand the OK chain and after independence there was some serious repositioning with new and larger branches opened, often dual department and supermarket stores and the Bon Marche brand positioned as a northern Harare suburbs chain in larger stores, usually in rented premises.
OK also went for smaller supermarkets around the edge of the central business district, which are now in the biggest trouble being in direct competition with only moderately smaller grocers, such as the tuckshops.
Towards the end of the 1990s SA Breweries dumped its now troubled OK chain in South Africa, selling it with its debts for R1 to Shoprite who converted it into a furniture store chain, while Delta, with a far more successful chain of what were now primarily supermarkets, although still retaining department store business, decided to demerge the businesses, Delta shareholders receiving OK Zimbabwe shares one for one in 2001
While the shareholding started off identical they are now totally different. NSSA is the majority shareholder of OK Zimbabwe, with the major OK landlord, Old Mutual Zimbabwe, being the other substantial shareholder.
With its new and successful business model OK Zimbabwe embraced the supermarket business, although retained some more general dealer interests, especially when it bought out the two giant Makro stores, rebranded as OK Mart. It also, with its own small portfolio of property and more importantly in co-operation with its major landlords in shopping malls and shopping centres, remodelled many stores and made them larger as well as seeking new suitable premises for new branches. Hence the chain reaching more than 60 stores under all brands.
In 2023 it bought out three of the Food Lovers franchises, one remaining in different private hands, and while Food Lovers is not listed as an OK Zimbabwe brand there is still the peculiarity in Avondale and Borrowdale in Harare that a Food Lovers is almost next door to a Bon Marche and OK is in effect in competition with itself.
Other problems that have hit OK, according to analysists, is its top heavy head office of senior executives with their range of perks, a common Zimbabwean tendency among large older firms that needs to be reigned in, and an over-reliance on credit for supplies instead of a relentless building of working capital that would seem to be the path that Zimbabwean businesses need to follow.
It must also be admitted that OK Zimbabwe was hit when one of its major competitors, the old TM Supermarkets of the Meikles group, which started in a small converted warehouse next door to its Harare flagship store, brought in Pick n Pay as a partner and started a major conversion and upgrade of its chain. The little supermarkets were closed and branched were moving into far larger minimum sized premises, at times working with landlords to even double floor area.
Pick n Pay was also fortunate that its was able in places to take over some of the buildings of the large former department stores owed by Meikles in prime locations, and after extensive redevelopment converting these into really big city centre supermarkets that dwarfed the OK supermarkets.
Pick n Pay has also been far more adventurous in looking for new suppliers outside the traditional Zimbabwean and South African suppliers, and that has helped it compete with the family grocers, the tuckshops, who even with formalisation are likely to be able to undercut prices for a top-heavy chain like OK Zimbabwe that is over-reliant on credit for working capital.
OK, like Pick n Pay, was helped by the collapse of the old Spar Zimbabwe of Innscor, although still gets hard competition from the smaller chain established by the major Spar franchise holder.
OK Zimbabwe also tends to live in the past a bit too much. Its main, and expensive, promotion was the OK Grand Challenge although it did dump the French Connection promotion for its Bon Marche brand. Horse racing is now almost dead in Zimbabwe. It once flourished as the only legal gambling outside a monthly State Lottery, but the rise of many other legal gambling outlets, the sports betting business, killed horse racing. OK probably needs to find a substitute promotion, possibly based on pricing.
As Axia, the demerged retail arm of the old Innscor empire has spectacularly shown, chain stores can flourish, but they need to be correctly positioned.
The main cleft stick OK Zimbabwe is in is pressure from a more competitive major supermarket chain on one side, and the re-emergence of a flourishing sector of small family-owned grocery stores with very small overheads, although a very limited range of products. The temporary extra advantage many have of never paying taxes is now being dealt with, but that sector will still retain the small overheads even when formalised.
As Pick n Pay and some independents have shown, large supermarkets need to compete with their far greater product ranges and keeping overheads down, while building up their working capital so they are not crippled in a credit squeeze. OK Zimbabwe has managed this before and can do again, but needs to be as dramatic in its innovation as it was when it transitioned from a chain of department stores to a chain of supermarkets.
