OK Zimbabwe to extend sources of supply to compete...

OK Zimbabwe to extend sources of supply to compete with imports

Audrey Galawu

Assistant Editor

OK Zimbabwe has lamented the increase in direct imports mainly from South Africa with additional sources of supply coming onboard such as the Shoprite Group, Tradeport Group and Food Lover’s Market Distribution.

In its 2024 annual report, OK Zimbabwe chief executive officer, Maxen Karombo said erratic supply of essential products was the biggest challenge in the group’s supply chain.

“Going forward, we will be extending our sources of supply to countries like Turkey and China with the goal of diversifying our product assortments and landing the products cheaper for our shoppers.

“Our House brand strategy continues to grow as we seek to close gaps in our assortments with our own products which helps to improve product availability and also gives our shoppers cheaper alternatives on shelf.

“Our distribution centres are increasingly becoming more important as we centralise our procurement helping us to have greater control around the movement of stock within our business.”

Karombo revealed that 27% of the group’s turnover is now generated from products coming from its distribution centres which have grow from 15% during the previous reporting period.

“We added four new 30 tonne boxed Trucks to our delivery fleet meaning that we are now able to service our delivery schedule without hiring third party transport services thereby reducing our overall cost of distribution by an average of US$40 000 per month.

“During this period, formal retailers were compelled to use the official exchange rate which created market distortions and gave impetus to the informal sector that was not bound by similar regulations.”

In addition, the rapid deterioration of the exchange rate, especially during the fourth quarter of the financial year, created difficulties in long-range planning and operational execution for the Company.

During the period under review, items sold declined by 29.2% against prior year driven by the market pricing distortions imposed on the group.

“This was compounded by constraints within the macro-economic environment that resulted in steep price increases, decline in consumer spending power as well as restrictive supplier trading terms that adversely impacted product availability.

“The operating environment remained constrained throughout the course of the financial year characterised by uncertainties, currency fluctuations, price instabilities, high interest rates and volatile macroeconomic conditions,” chairman Herbert Nkala said.

Group revenue grew by 29.4% to ZWL$12.4 trillion (Last year: ZWL$9.5 trillion), whilst in historical cost terms, revenue grew by 676.6% to ZWL$2.0 trillion (Last year: ZWL$260 billion) against a blended annual inflation of 55.3%.

Revenue growth was muted, which in the face of imposed market pricing distortions, reflects the resilience of the business model and the loyalty of our valued customers.

Operating costs increased by 107% from ZWL$1.67 trillion to ZWL$3.44 trillion during the financial year driven by significant increases in energy costs, utilities and property operating costs.

The group closed the year with a volume decline of 29.2% against prior year, mainly impacted by inconsistencies in product availability and exchange rate volatility.

During this period, the group launched the best premium store in Zimbabwe, Bon Marché Marondera, attracting a new high-end shopper segment.

OK Banket Liquor was launched as the first standalone mainstream Liquor Store.