‘Retail companies like Edgars need disruptive, guerilla tactics to survive’
Edgars Stores Limited Zimbabwe Group CEO Tjeludo Ndlovu surrendered the keys after failing to manage the rapid decline of profits at the company due to currency distortions, rising inflation and competition from the informal market experts have said.
Retail companies in Zimbabwe are facing an unprecedented challenge due to an uneven operating environment which is now dominated by informal traders. Latest financial updates by both Pick n Pay and OK Zimbabwe, the country’s leading retail supermarkets, revealed massive losses.
Edgars has not been spared. The company suffered huge losses stemming from the Covid-19 pandemic which saw Edgars putting old merchandise that customers didn’t want on sale in 2021 after losing selling months to the lockdown.
As if this was not enough, informal traders emerged with imported pre-loved clothes selling them at very low prices. Due to the economic crisis facing the country, many do not afford expensive boutiques, hence they prefer informal traders.
Facing this immense crisis, Ndlovu and Edgars CFO Happiness Vundla, who was appointed to the post in 2021 decided to step down to allow new ideas to save the company.
Newzwire said the company has since appointed, as new CEO, Sevious Mushosho, a former executive of SSCG, who was appointed to the Edgars board after SSCG bought the majority stake from South Africa’s Edcon in 2019.
Renowned academic Charlton Tsodzo argues that it will require unbelievable resilience and disruptive guerilla business models from the new executive for Edgars to stay in the game.
He argues that, Tjeludo Ndlovu stepped down “reportedly at the instigation of some major shareholders in the group.”
“I believe she gave this role her best shot in the last 3 years but to be honest…the forces she was fighting against were massive.
“Against the backdrop of the very low buying power of potential customers, informalisation of the economy, and not too many people keen on servicing monthly debt for clothing and accessories, there is an explosion of runners, cheap imports from China and Dubai…. second-hand imports (mabhero) …merchandise which, admittedly, is affordable to many average Zimbabweans who have been battered back and forth by the unstable economy,” he said.
“Flea markets.. sellers of imported cheaper clothing and fake labels selling just outside the main retail stores like Edgars – have all but shattered such big stores’ competitiveness as they have to grapple with taxes and rentals etc.
“Stuff that most of the street retailers don’t have to be burdened with. Seriously, unless you are guerilla-tactics-minded and insanely disruptive, it would be hard to run a retail chain like Edgars successfully in Zimbabwe at the moment.
“The business model, which it has tried and tested successfully for decades, is unfortunately unraveling and in my view. Not even Cristiano Ronaldo can turn things around at that entity even if he tried.
“I think it’s time to shift things around a bit and revamp the ailing business model; otherwise it’s game over. Edgars needs to understand that with regards to their business model, no amount of shifting furniture around on the deck could save the ship from sinking here.
“The post-2000 Zimbabwean economy stresses God and the ancestors in similar measures and requires unbelievable resilience and disruptive guerilla business models to stay in the game.
“At the same time carrying the economic cost of weak regulation and a laissez-faire attitude towards bringing sanity to the informal economy.” Tsodzo added.
The monetary framework in the country has also been cited as a major setback by key retail companies like OK Zimbabwe.