Source: Retail sector to decline – NewsDay Zimbabwe June 1, 2017
THE retail sector is this year expected to experience a 1,9% decline to 0,8% growth compared to last year largely on the back of the low demand and a prolonged deflationary period, the Reserve Bank of Zimbabwe (RBZ) has said.
BY TATIRA ZWINOIRA
In 2016 the retail sector experienced a 2,7% growth. This comes, as the RBZ says the deflationary mode for the past two years has impacted the retail sector most.
Confederation of Zimbabwe Retailers (CZR) president, Denford Mutashu told NewsDay at the international retailers’ indaba in Harare yesterday that the government should step in to support the sector.
“One of the challenges right now is to stimulate demand. It has been quite critical, remember the economy has been deflationary mode for a long time,” he said.
“During the period when inflation is not growing or going up, the contracting of your margins continues. One of the things that have happened this past year is the competition being so tough to grapple with slim margins.”
Mutashu said if demand was stimulated, then the retail sector would be poised for growth.
Currently, the retail sector is reeling from fewer customers, as disposable income has become tighter for consumers, leading to low spending.
This has been compounded by the prevailing biting cash shortages, which are making it hard for retailers to remit cash to foreign suppliers resulting in lower stocks and sales.
However, RBZ deputy governor, Kupukile Mlambo said they expected the retail sector to rebound on the back an expected a 3,7% economic growth leading to an improvement in inflation.
“By our estimate, by December, our inflation should be between 2% and 3%, which is in line with Sadc recommendations for convergence, which puts it at between 3 and 7%. When there is inflation in the economy, the sector that benefits the most is the retail sector,” he said
“By 2020, we expect this sector (retail) to be one of the leading sectors. By 2020, it will be growing by around 6%, which would be one of the fastest growing sectors together with the financial services sector.”
Retailers are now also competing with a growing informal sector that is attracting consumers due to the cheaper prices.
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