“Cash Only” Shops Ravaging The Retail Industry
A new economy of small retail shops that sell goods in cash only has taken Bulawayo by storm with prices of most basic commodities selling at almost half of what is charged by big supermarkets that accept all forms of payment.
While residents throng such shops, whose operations border on illegality by charging in cash only, what is apparent is that the cash shops have contributed to the high demand for cash as people seek money to buy cheap commodities from them.
A survey by Sunday News last week revealed that the “cash shops” started as small vending sites with owners operating on pavements but have now grown to become organised and groups of some shop owners are in some cases renting outbuildings to conduct their business.
However, it is the disparities in prices that have set the new shops as the new economy of Bulawayo. In the survey, the shops were selling a 10-kilogramme bag of mealie meal at $40 at a time when established supermarkets were selling it as high as $72. A two-litre bottle of cooking oil which has gone up to as much as $44 was selling at $34 in most of the new shops.
A 2-kilogramme packet of sugar was selling for $20 while in big supermarkets it was going for $30 while a 2-kilogramme of rice was selling at $21 in the cash shops and at big shops for as much as $36. A 2-litre bottle of Mazoe was trading at $30 while in established retail shops it was ranging from $40 to $50. Many other goods were also sold way below the prices that are charged in big retail outlets.
In separate interviews, owners of the new shops said their business has proven popular due to their pricing structure, which is affordable at a time when prices of most basic goods are galloping.
“We sell in cash only because cash has also become some sort of commodity. But the main reason is that we can buy foreign currency at lower rates using cash from the streets and this allows us to restock especially on imported products. On local products we can sell the cash first then go and order by money transfer or swipe,” said a shop operator near the vegetable market along Jason Moyo Street.
Ordinary people said the shops have brought relief to them as the traditional retail shops were swindling them by continuously increasing prices. They said they would rather spend time in bank queues to get the little cash offered so as to get “maximum use” from it.
“These shops are cheap and offer us relief. Sometimes, it is better to look for cash and buy from these shops than go to these big supermarkets. Yes, the big supermarkets allow us to swipe and use EcoCash but it’s a double tragedy. Apart from high prices, there are high bank charges and taxes that we pay when we use electronic money. So if I get for example $50 from the bank, I can buy more goods from these shops than when I use the same amount in big shops through electronic payments,” said Mrs Fadzai Mapfumo from Gwabalanda.
Another shopper said the pricing of goods at the street shops was exposing the greediness among major retailers.
“Sugarcane is grown in Zimbabwe and sugar is processed in Chiredzi. How can we have prices of such a product then differ by more than $10? It is illogical. The difference cannot just be about cash and swipe, it is a sign that under normal circumstances the prices charged by cash shops are the realistic ones. We wonder what method these big shops are using to peg their prices,” said Mr Mandla Mlilo, another Bulawayo resident.
He added that while shops argue that they accept electronic cash as the basis for high prices, they still do not change the prices when customers pay in cash. An economist with a local bank said the small cash shops were exposing big retailers.
“In essence, these shops are trying to show everyone from Government to the retailers that these are the prices these commodities must be sold at. In fact, it is a signal to the Government that part of addressing the price madness is also to ensure that more cash is availed in the economy. It is a sign that if cash was available this price madness and even the rates of foreign currency will not be as high as it is now when electronic money is mostly used,” he said.
However, contacted for comment, Retailers Association of Zimbabwe president Mr Denford Mutashu said the difference in pricing structures was because of difference in cost structures.
“Informal players ordinarily do not absorb other costs in their operations. Their operations are usually small and sometimes do not pay taxes, regulatory or statutory fees, they also do not have many employees to cater for. If you look at labour, currently despite the erosion of income it has continued to be a huge cost in an environment where minimum wages have been thrown out of the window by many players. They directly engage with their employees and even pay them above the minimum stipulated wage so that they do not get incapacitated and fail to report for duty,” he said.
Nonetheless, Mr Mutashu said the informal traders have brought competition which was good for the industry.
“Uniformity of pricing may also indicate lack of competition so it is healthy to have different prices on the same product for consumers to have a choice.”
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