Innocent Marimo, the Confederation of Zimbabwe Retailers (CZR) acting chief executive officer, says the retail sector is being weighed down by an influx of illicit goods and exchange rate volatility.
CZR also warned of high costs that the sector is facing at a time of declining consumer purchasing power, attributed to the volatile exchange rate.
So serious has been the crisis that retail business membership organisations are closing branches, amid fears of job losses.
Consumers are turning to illicit goods for affordability, as goods in the formal establishments are increasingly becoming expensive in United States dollar and in local currency.
“While the issue of illicit goods is a concern, the challenges faced by the retail sector are far broader and rooted in macroeconomic conditions,” Marimo said.
“These include high operating costs, constrained consumer purchasing power, exchange rate volatility, and a non-supportive policy environment for formal businesses. Additionally, the rapid expansion of the informal sector has created an uneven business landscape, further straining formal retailers.”
He said the existence of illicit goods was symptomatic of broader macroeconomic challenges, including reduced consumer purchasing power and a widening gap between formal and informal economies.
“The growing prevalence of informality in the economy has, however, facilitated an increase in nefarious activities, particularly in unregulated markets, where illicit goods find an entry point,” Marimo said.
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“These informal setups undermine formal retailers by introducing substandard products that do not comply with health, safety and tax regulations.”
He said these goods were often sold at lower prices due to tax evasion and regulatory compliance costs.
“Inconsistent enforcement of anti-smuggling laws and limited surveillance capacity at borders exacerbate the challenge, placing undue pressure on the formal retail sector,” Marimo said.
“The proliferation of informal trading platforms has redirected a portion of consumer spending away from formal retail outlets.”
This, he said, has resulted in a market share loss for legitimate retailers.
“However, we urge authorities to adopt a holistic approach that not only targets smugglers but also addresses the systemic issues driving informality and tax evasion,” Mariomo said.
“Strengthening border controls and enhancing collaboration with stakeholders, including retailers, will be instrumental in achieving sustainable results.”
On Sunday, CZR revealed the continued closure of formal retail and wholesale businesses and accused government of downplaying the crisis rocking the sector.
