The Decline of OK Zimbabwe and N. Richards

Zimbabwe’s formal retail sector is facing a severe crisis as major players OK Zimbabwe and N. Richards Group struggle to survive in a volatile economic environment. Both companies have been forced to close multiple outlets due to financial strain, currency instability, and fierce competition from informal traders.

OK Zimbabwe’s Struggles

OK Zimbabwe, one of the country’s largest retail chains, is currently facing significant challenges due to a volatile economic environment. The company has announced the closure of five branches, including Robson Manyika, Glen Norah, Kuwadzana Express, and Mbare in Harare, as well as Chitungwiza Town Centre and Entumbane in Bulawayo. A sixth branch is scheduled to close in March 2025. The company is grappling with significant debts to suppliers (approximately US$17 million and ZiG537 million), leading to empty store shelves and declining sales.

The introduction of Zimbabwe’s new gold-backed currency (ZiG) has worsened the situation, with black market rates outpacing official exchange rates, making it difficult for OK Zimbabwe to price competitively. Meanwhile, informal night markets and tuckshops are undercutting formal retailers by avoiding taxes and operational costs, attracting more price-conscious consumers.

N. Richards Group’s Decline

N. Richards Group, a major wholesale hardware and retail chain, has also shut down multiple branches, including outlets in Hatcliffe and Tynwald, Harare. The company has struggled with economic policies, import challenges, and regulatory burdens, making operations unsustainable.

Adding to its troubles, N. Richards faced an embezzlement scandal, where an employee allegedly stole US$37,000, further destabilizing the business.

The Decline of OK Bazaars and N. Richards: A Reflection of Broader Economic Woes

On 25 June 1927, Michael Miller and Sam Cohen opened the first OK Bazaars on Eloff and President Streets in Johannesburg. In 1929, OK Bazaars was listed as a public company on the Johannesburg Stock Exchange. OK Bazaars went on to gain success as a general store throughout South Africa, and became a household name. The company played a role in the labour history of South Africa, as the establishment of this franchise led to competition between stores in small towns throughout the country, for example, where Indian traders had set up general stores. Source

https://www.rhodesianstudycircle.org.uk/ok-bazaars-ltd/

OK Bazaars, one of Zimbabwe’s oldest retail brands, has been forced to shut down some of its stores, succumbing to pressure from the proliferation of tuckshops. These small, informal traders operate with lower overhead costs, minimal regulatory compliance, and high flexibility in sourcing goods, making them more competitive in the current economic climate. Similarly, N. Richards, a leading hardware chain, is closing some of its branches due to the impact of Zimbabwe’s stringent monetary policies, which have made it increasingly difficult to conduct business profitably.

These closures reflect a broader trend affecting multiple businesses in Zimbabwe, where economic policies, currency instability, and consumer purchasing power have created an unpredictable market.

The Impact of Monetary Policy on Business

Zimbabwe’s monetary policy has been a central factor in the difficulties faced by businesses. Frequent changes in exchange rates, restrictions on foreign currency usage, and high inflation have eroded confidence in the economy. The Zimbabwean dollar’s volatility has made pricing and financial planning a nightmare for businesses, forcing many to either increase prices frequently or absorb losses.

The Reserve Bank of Zimbabwe’s (RBZ) tight controls on foreign exchange, compounded by excessive transaction costs and inconsistent policy implementation, have further strangled businesses, particularly those dependent on imports. Many companies, especially those in retail and hardware, struggle with capital flight, making it difficult to restock at competitive prices.

The Rise of the Informal Sector: The Tuckshop Economy

The rapid growth of the informal sector has fundamentally altered the retail industry. Informal tuckshops, often operating with cash-only transactions, have overtaken traditional supermarkets in urban and peri-urban areas. These small-scale traders offer competitive pricing and flexible supply chains, often sourcing goods from alternative markets such as South Africa, Zambia, and Mozambique. Unlike large retail chains that are subject to strict taxation and operational regulations, tuckshops operate with minimal oversight. This disparity has placed an undue burden on formal businesses, making it difficult for them to compete. Consequently, retailers like OK Bazaars find themselves squeezed out of the market as consumers gravitate toward cheaper and more accessible alternatives.

The Role of Inflation and Currency Volatility

Zimbabwe has been battling inflation for years, with price increases undermining consumer purchasing power. In an economy where wages have remained stagnant, the rising cost of living has forced consumers to prioritize affordability, further fueling the demand for informal trading over structured retail businesses.

Currency instability has also hurt long-term business planning. The unpredictability of the Zimbabwean dollar makes it difficult for businesses to offer stable pricing, secure supplier agreements, and maintain consistent stock levels. The government’s attempts to stabilize the economy through monetary tightening and policy adjustments have had limited success, with many businesses forced to scale down or shut down altogether.

High Taxation and Regulatory Challenges

Zimbabwe’s tax regime is another significant hurdle for businesses. Corporate taxes, VAT, and import duties remain high, making it difficult for companies to operate profitably. The Zimbabwe Revenue Authority (ZIMRA) has intensified tax collection efforts, putting further pressure on struggling businesses. Many companies find themselves overburdened with compliance costs, further tilting the playing field in favor of the informal sector, which largely operates outside the tax system.

The Future of Business in Zimbabwe

The continued decline of major retail and hardware chains highlights the urgent need for economic reforms. For businesses to thrive, the government must create a more predictable policy environment, stabilize the currency, and level the playing field between the formal and informal sectors. Addressing inflation, improving foreign currency access, and reducing regulatory burdens could help restore confidence in Zimbabwe’s business environment.

Until significant reforms are implemented, businesses will continue to face an uphill battle, with many opting to downsize, relocate, or close entirely. The case of OK Bazaars and N. Richards is just the tip of the iceberg—unless bold policy changes are made, more businesses are likely to suffer the same fate.