Choppies’ trading update indicates lower consumer spending in Botswana

“Choppies is a good bellwether for the consumer economy in Botswana. Its challenges reflect a new reality in the country in which dependency on the diamond trade may be a vulnerability if global demand for diamonds is falling or volatile,” comments Trendtype, the emerging markets consultancy.

Trendtype believes there are underlying challenges for retailers in Botswana, historically the safest and most stable market in Africa, as the economy falters.

“In Botswana, a slump in the global diamond market reduced consumer spend, compounded by government austerity measures and a devaluation of the pula,” the consultancy notes in a post published late last week.

Barometer of household purchasing power

In its own commentary, Equity Axis, a Harare-based financial media and research firm, says the collapse in global diamond demand has hollowed out Botswana’s consumer economy.

“Choppies is now the latest and perhaps most visible casualty, given that food retail is the most direct barometer of household purchasing power, Equity Axis comments.

“The Gaborone-based group, which at its peak operated dozens of stores across Zimbabwe before exiting the market in 2019 amid operational and regulatory difficulties, has since rebuilt its footprint across Botswana, Namibia, Zambia and South Africa.

“But it is the Botswana home market that is doing the most damage right now. The diamond-driven slump in consumer liquidity, compounded by the pula’s devaluation and the government’s austerity programme, has left shoppers buying less and trading down, crimping the high-margin lines that typically carry a grocer’s profitability.”