Woolworths Holdings has announced it will be back in Zimbabwe in the next 18 months, but its largest competitor in the food segment, Shoprite Holdings, is still sounding its horn of caution, Moneyweb has reported.
But the South African clothing and food retailer may find the terrain radically changed and difficult.
Formal clothing and textile retailers have been severely undercut by a boutique-based, rapidly growing second-hand clothes market, which emerged during a decade-long economic downturn, while Fast moving consumer goods (FMCG) retail chains have also lost substantial market share to many semi-formal players that now control about 60% of the market.
On Thursday Moneyweb said that Woolworths doesn’t want to miss out on the “rich pickings” from Zimbabwe’s economic recovery, which it sees reaching a “fantastic” level in five years.
Business confidence in the country and equities’ trading sentiment have received a boost from news of diamond sales, marginal as they may be.
“We are going to reopen. We think Zimbabwe is going to be a fantastic economy in five years, time,” outgoing CEO Simon Susman said.
“We are negotiating leases with shopping centre . . . I want to go up and start trading within the next 18 months.”
The company, which reported strong first-half earnings in February, also plans to expand to the East African countries of Kenya, Uganda and Tanzania.
It is already established in Botswana, Lesotho, Namibia and Swaziland.
The announcement coincides with a similar notification by US fast food giant, Macadam’s, that post-crisis Zimbabwe made a strong business case in terms of opportunities and margins.
Zimbabwe’s retail sector was one of the first to recover from the downturn and estimates put capacity utilisation in the industry at way over 90%, led by the FMCG segment.
But clothing and textile sales by retail chains lag behind food sales.
Imports currently account for more than 50% of retail stocks, most of them from South Africa, and this gives companies based in the country a chance to leapfrog on the strength of their procurement and marketing links.
But for Shoprite, it’s not “the right time to have invested” in Zimbabwe, according to Whitey Basson, CEO of the largest FMCG chain in South Africa, in an interview with Moneyweb.
“Nothing at the moment because . . . we’ve looked at the Zimbabwean situation and we don’t think it’s the right time to have invested there,” Basson said, ruling out any chance of expanding its operations in the country any time soon.
Shoprite is already invested in the country on a limited scale and operates an FMCG store in Bulawayo.