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Zimbabwe’s retail sector, once dominated by formal supermarket chains, is undergoing a dramatic transformation. The recent closures of TM Pick n Pay outlets in Mutare and OK Zimbabwe’s premium Food Lover’s Market branches in Borrowdale and Avondale highlight a deepening crisis in the country’s formal retail space. These shutdowns are not isolated incidents but part of a broader trend that has seen major retailers including Choppies and Spar either scaling back operations or exiting the market entirely.
The shift from formal retail to informal tuck shops and street vendors is accelerating, driven by a toxic mix of economic instability, currency volatility, and declining consumer spending power. Multinational corporations are writing off their Zimbabwean investments while logistics firms like Unifreight Africa lament soaring operational costs.
Is Zimbabwe’s formal retail sector on the brink of collapse?
By Gamuchirai Mapako
The closure of TM PicknPay’s Chikanga and Dangamvura stores in Mutare is a reflection of the struggles facing South African retail investments in Zimbabwe. PicknPay’s parent company recently wrote off its entire investment in TM Supermarkets, citing unbearable losses amounting to R51 million in the last financial year.
The company’s financial statements starkly declared that its investment in Zimbabwe had been “impaired to nil,” a clear signal of no confidence in the local market. This decision follows years of financial strain, exacerbated by hyperinflation, foreign currency shortages, and declining consumer demand.
Similarly, OK Zimbabwe’s decision to shut down its Food Lover’s Market outlets in Borrowdale and Avondale just two years after acquiring them also reflects the harsh reality of Zimbabwe’s retail environment. The company had hoped to tap into the premium grocery segment, but soaring operational costs, erratic currency policies, and reduced consumer spending have made the venture unsustainable.
These closures are part of a wider trend. microcosm, Spar Zimbabwe, and Choppies have all either shut down branches or exited the market entirely. These closures are other examples of how even well-established brands are struggling to stay afloat.
Zimbabwe’s economy remains trapped in a cycle of currency instability. The reintroduction of the Zimbabwean dollar (ZWL) alongside a multi-currency system has created confusion, with businesses struggling to price goods amid wild exchange rate fluctuations.
Retailers face constant price adjustments, eroding consumer trust and making long-term planning impossible. Many formal retailers rely on imports, but foreign currency shortages mean they often cannot restock shelves, leading to empty stores and frustrated customers.
Running a formal retail business in Zimbabwe has become prohibitively expensive. Key challenges include high electricity, exorbitant rents, tax burdens, logistical nightmares due to fuel shortages and poor road infrastructure.
With inflation now at 92% and unemployment rampant, most Zimbabweans can no longer afford to shop at formal supermarkets. Salaries have failed to keep pace with price hikes, forcing consumers to seek cheaper alternatives.
While formal retailers struggle, tuck shops, street vendors, and black-market traders are thriving. These informal businesses have several advantages, no rent, taxes, or formal employment costs. They adjust prices daily based on parallel market exchange rates and many informal traders smuggle goods from neighbouring countries, avoiding import duties.
This shift has reshaped Zimbabwe’s retail landscape, with over 60% of grocery sales now happening in the informal sector, according to some estimates.
Every retail closure means more job losses in a country already grappling with unemployment. TM Pick n Pay and OK Zimbabwe’s shutdowns have left hundreds without jobs, further straining an already fragile economy.
Moreover, the exit of multinational retailers like Pick n Pay and Choppies sends a negative signal to foreign investors. If even well-capitalised firms cannot survive, who will take the risk?
As formal retailers close, the government loses critical tax revenue. Informal traders dominate the market but contribute little to the fiscus, worsening Zimbabwe’s fiscal deficit.
To salvage the formal retail sector, the government must look into stabilising the currency, reducing taxes on formal businesses, improve foreign currency access and cut red tape.
The collapse of TM Pick n Pay and OK Zimbabwe’s premium outlets is a symptom of a much larger economic malaise. Zimbabwe’s formal retail sector is on life support strangled by inflation, currency instability, and unfair competition from informal traders. The country is turning into one big mall.
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