Finance and Economic Investment Ministry’s Secretary George Guvamatanga said that formal retailers should be innovative and respond to economic dynamics rather than “moan” about tuckshops that are taking away customers, reported NewZimbabwe.com.
This comes after one of the country’s biggest retail chains, OK Zimbabwe, last week said large-scale retailers in the country are struggling to remain viable due to competition from “tuck shops”.
But Speaking at the Zimbabwe Economic Development Conference (ZEDCON) currently underway in Victoria Falls, Guvamatanga said large-scale retailers have an advantage over tuckshops because they have access to cheaper foreign currency. He said:
Let me come back to another very controversial issue about these tuck shops versus formal retail.
There was a retailer who went out last week complaining about the influx of tuckshops.
But how do you complain about a tuckshop which is paying five times more per square meter rent?
It does not have access to credit so buys all the goods for cash. Possibly they do not have a better system than what you have.
They do not have access to the cheaper foreign currency that is available in the market, they have to go to source for it from the parallel market.
Guvamatanga said that big retailers who complain that they are not able to compete with tuckshops should fire their managers because they “will be useless management.”
He said in South Africa, the Spaza market has a size of almost US$10 billion but that has not made big players like Shoprite, and Pick n Pay complain. Said Guvamatanga:
As new economies re-emerge things change but the challenge is that you are dealing with management who only knows one thing. They are used to exchange rate hikes and adjusting prices every Monday.
That’s what they are used to. So we have lots of Finance Directors and Managing Directors running these companies today who are just accustomed to exchange rate hikes and price adjustments.
I have always told my colleagues that if by chance you walk into most Treasuries today and you ask these guys whether they know what a stop loss is all about.
They will tell you that they don’t know about that. All they know is that the exchange rate will go up and you sit and reprice every day.
A player in the retail sector told NewZimbabwe.com said that Guvamatanga made “generalised comparisons” and ignored the harmful impacts of the informal sector on the economy. Said the businessman:
Guvamatanga needs to take full responsibility as a government official and desist from making such highly generalised comparisons that ignore how catastrophic the informal sector has been to this economy.
Comparing the local setup to South Africa is quite remote because we don’t share the same economic similarities.
The Confederation of Zimbabwe Retailers (CZR) says unlike the informal sector, its members are forced to pay multiple licenses like the butchery, bottle store, bakery over and above industry-pegged salaries.
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