Supermarket group Choppies confirms its exit from Zimbabwean market

According to media reports that circulated in the country in recent months, the instability of the Zimbabwe Gold (ZiG) currency introduced in April, high levels of inflation, and growing competition from the informal sector are all factors in the decision. 

Choppies is known to be worried that the resulting poor performance of the chain’s Zimbabwe operations is putting a strain on the financial performance of the group as a whole. 

“Ongoing power outages and droughts affecting agricultural produce have also contributed to the exit. Choppies noted that it had seen a reduction of 30% in footfall, partially due to customers shifting custom towards the informal sector,” comments Trendtype, the emerging markets consultancy. 

Informal traders are avoiding regulations and taxes 

“Formal retailers use the official exchange rate, whilst informal retailers purchase from manufacturers and sell to customers in USD. Informal traders avoid having to comply with regulations and manage to avoid paying tax and rental costs.” 

NewsDay, the Zimbabwean-based newspaper, quotes Choppies as saying: “While we believe in the country’s long-term viability, Choppies as a group needs more capital to support its Zimbabwean operations for extended periods and has already invested significant capital to support the operations. Due to the factors mentioned above, we have decided to exit the country.” 

Choppies now remains in Botswana, Kenya, Namibia and Zambia. It has previously exited several other African markets, including Mozambique and Tanzania. 

CEO Ramachandran Ottapathu is on record as saying that the long-term focus of the Choppies strategy is to reduce debt.