OK wins in Harare CBD as the cheapest store

03 Nov, 2017 - 00:11 0 Views
OK wins in Harare CBD as the cheapest store

eBusiness Weekly

The cheapest supermarket in Harare’s CBD is OK Zimbabwe with the retailer carrying the most competitive line items, according to a central business district survey carried by the Business Weekly.

The store has 30 cheapest line items.
Pick n Pay and Choppies came out joint second with 25 items each being the cheapest out of the line items that were part of the survey. The highest number of available products was in OK Zimbabwe, Spar Fife Avenue and Choppies.

But that’s so much as the formal shops are concerned. A different scenario exists in downtown Harare as the majority of goods are sold much lower than their ex-factory prices by dealers who only accept cash.

How this works is simple as this is a more advanced way of burning cash. Mazoe Orange Crush was retailing for a cash price of $2 much lower than both its factory price and retail price. Because its cash only, the dealers sell the foreign exchange in cash to certain importers who transfer this money to them at a premium of 60 percent.

This transferred money (ku burner) is then used to make more purchases allowing them to start the process all over again, and as volumes increase, the deakers experience a healthy profit.

Generally, there is no clear pattern in terms of pricing as the same product has different prices in different shops. This reflects the manner in which the product is sourced as well as demand factors in a particular outlets. Cooking oil, for instance, is arguably scarce and was available in one out of three wholesalers.

Tuckshops are increasing in number as property owners are sub-dividing their properties to accommodate more small shops. This way they are guaranteed of rentals every month than letting out the whole place to one tenant.

The most intriguing issue is that these dealers have their unique clientele that understand the business and always bring bags full of bond notes at a time others are even failing to get bus fare for school children daily. Because of the huge amounts they receive daily, the majority of the dealers have invested in note counters to speed up transactions.

In the formal retailers, the prices of locally manufactured goods are lower than imported goods. For example 50ml of Nugget shoe polish sells for $1,99 compared to Chitaitai shoe polish at $1,39. However in these instances brand power is more important and without saying much Chitaitai is not exactly a luring brand name to attract shoppers, never mind they price.

Dairibord was the cheapest with 2litre ice cream at $4, 99 (which is just as well, as it comes with less cream nowadays), Kefalos vanilla was the most expensive pegged at $8, 39 while Cortina and Dendairy price were at $5, 09.

What was missing in all the shops, save one, were eggs. They were only available at Spar Fife Avenue at a very cheeky $7,50.

Cooking oil 2litre-bottles were also in short supply as the shelves welcomed the return of 750 ml bottles. Purola fortified cooking oil remained faithful to the shelves at $3,59 while Olive Oil – a target for those in the business of spiritually cleansing people, remains in abundance at $12, 68.

Local products dominated the tomato sauce section with Rabroy marked $1,99 alternatives like valley fresh tomato sauce were going for $1,09. Beer hasn’t seen a change to prices and three cheers to Delta Corporation for laying out the ground rules to suppliers. At a time when they are now beginning to see a rebound a beer volumes, there really is no need to push up prices.

Spar Fife Avenue carries the unwanted tag of being the most expensive outlet with 45 items coming out as expensive. The tag, however, could be a result of the quality of the products carried by the store.

In-store baked rolls in the outlet are priced at 19 cents. The store is also the only one that carried T-Bone steak at a pricey $12 per kg

Dairibord says it had to put up prices of some of its products in response to supply side price increases on raw materials and packaging materials as a result of foreign currency shortages.

Most of the products whose prices were increased are under the company’s beverages category as well as the foods category.

Since 2014 most Zimbabwean companies have been cutting costs in an effort to stimulate demand as consumers remain constrained. The trend has not changed as consumers continue to seek value for money.

However, new challenges have since developed forcing some manufacturers to put up prices. The shortage of foreign currency has seen companies resorting to the illegal foreign currency market and getting the US dollar at an exorbitant premium.

This has seen the cost of some raw materials going up and as a result prices of basic commodities as manufacturers struggle to absorb all costs.
Responding to emailed questions by Business Weekly, Dairibord’s Marketing Executive

Tracey Mutaviri, said the company recently made marginal price increases on several, but not all, of its products.

“Dairibord recently made marginal price adjustments, of 8 percent on average, on the following non basic commodities: Pfuko, Cascade, Quick Brew, Rabroy Mayonnaise and Rabroy Salad Cream in response to supply side price increases on raw and packaging materials as a result of foreign currency shortages.”

She was, however, quick to say that the company had not put up prices for its basic commodities such as liquid and cultured milk. “The last price increase for these basic commodities was in 2014,” said Mutaviri.

In the last two years Dairibord had to embark on a restructuring exercise in an effort to reduce the cost of production amid very thin margins.

The turnaround was premised on a consolidated organisation structure that eliminated duplications across the value chain and roles and responsibilities resulting in a leaner structure made up of DZPL, Lyons and NFB.

“With effect from January this year we embarked on a major restructuring exercise in our quest to reduce our cost structure through rationalisation of our factories, improved in-processes efficiencies, procurement to best advantage and consolidation of route to market.”

“The restructuring saw the consolidation of three subsidiary units in Zimbabwe into one operating company. “As a result, the overhead costs have reduced compared to prior year,” said Mutaviri.

Prices in the local market have been distorted in the last couple of months amid blame game between retailers and manufacturers.
The Oil Expressers Association of Zimbabwe (OEAZ) has also accused retailers of unjustifiably increasing the price of cooking oil to consumers.

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