eBusiness Weekly
Tapiwanashe Mangwiro
Zimbabwe’s largest retailers through their quarterly business updates for the period to December, have been saying the country is experiencing a decline in consumer spending power, but the information at hand says otherwise.
It is true that they are seeing less and less sales volumes in their outlets, but it is not because of lower consumption power, but a result of change in primary currency by consumers as reported by the Zimbabwe National Statistical Agency (ZimStat) in January.
The increased use of USD in the economy has led to more people buying in small USD only shops in the downtown areas of their respective cities and towns, resulting in less people visiting the traditional supermarkets.
According to economist, Tinevimbo Shava, the major retail outlets need to be honest with their investors that the local currency is being abandoned by their customers.
“Yes, it is a fallacy that consumers are becoming less and less liquid to buy goods. The larger retailers should just state the truth that they are also recording increased revenues in USDs and not try and sanitise the truth,” he said.
Meikles, which partly owns the local Pick n Pay retail, said that volumes for the important December quarter declined.
“Sales volumes for the supermarkets segment decreased by 16,49 percent for the quarter but were resilient to the challenges in the operating environment and grew by 2,5 percent for the nine months’ period ended December, 31, 2022,” the company said in a trading update.
This sharply contrasts to Pick n Pay’s 17 percent rise in sales for the 10 month period to December 25, 2022 in its rest of Africa market.
In Zimbabwe, Pick n Pay’s rival operator, OK Zimbabwe also reported this month that sales volumes were taking a knock.
This comes as the year on year inflation rate in Zimbabwe has remained elevated at 229 percent for the month of January despite cooling off from 243,8 percent a month earlier.
OK Zimbabwe corporate affairs director, Margaret Munyuru said: “Sales volumes decreased by 11,33 percent for the quarter and 9,37 percent for the nine months to December 2022, compared to the prior year driven by declining consumer spending power.”
Analyst Namatai Maeresera said the country has seen more remittances in the past year and that alone should have been the sign to the large retailers.
“We have seen a surge in remittances and this increases the ability of one to go buy in the small retailers which use USDs and are considered cheap. Salaries are being paid more in USDs and just in the quarter mentioned, the government paid bonuses twice in USDs,” he said.
Maeresera added that with such bonus payments no one will go spend that USDs in a larger retailer as they are expensive in foreign currency.
According to figures released by ZimStat, the majority of transactions are now being conducted in US dollars.
ZimStat conducted a household budget survey to determine the value of goods purchased in USD and ZWL per Classification of Individual Consumption by Purpose (Consumption Category).
The food and non-alcoholic beverages consumption category has the lowest ratio of US dollar use at 65,04 percent. Its followed by the housing, water, electricity, gas and other fuels consumption category with a US dollar use ratio of 76.45 percent.
Combined, the two consumption categories have a weight of 58,92 percent, which helped drag the level of US dollar use in the economy to an average 76,56 percent.
However, of the 12 consumption categories looked at by ZimStat, eight had US dollar use above 90 percent.
The furniture and equipment consumption category is now conducting 99,91 percent of transactions in US dollars.
Basic sectors such as clothing and education now conduct 97,77 percent and 95,38 percent of their transactions in US dollars, according to ZimStat.
Economist, Gladys Shumbambiri added; “The authorities need to safeguard the use of the local currency because as it stands the country might use the USD even beyond the 2025 de-dollarisation period.
“What also needs to be done is to pay more employees in the local currency such that they do not see the need to go get USDs then buy later.
“It is something that is happening (more USD use) and the big retailers will always feel it due to the official rate which is at a discounted price for the consumer who ends up not going there altogether.”
