HARARE – Leading grocery retailer, Choppies Enterprises Limited has announced plans to cease its operations in Zimbabwe citing, among other reasons, competition from the informal sector.

In a statement, the Botswana listed firm owned by Nanavac (Pty) Ltd, said it has started negotiations aimed at selling the company.

“The board of directors of Choppies (“Board”) hereby advises all shareholders that the Company has entered into discussions regarding a possible sale of the business operations of Nanavac (Pty) Ltd trading as Choppies Zimbabwe for cash (“Possible Sale”), which, if successfully concluded, could have an impact on the Company’s share price,” said the company, which has 30 stores in Zimbabwe.

Added the retailer, “The Possible Sale, which is subject to certain conditions and regulatory approval, is aligned to the strategic intent of Choppies to focus on profitable retail.

“In Zimbabwe, over the last two years, there has been a significant shift to the informal retail sector, leaving the formal retail sector to battle a reduction of up to 30% in footfall and having to compete with the informal sector.”

Zimbabwe has, in the recent few years, seen the proliferation of both registered and unregistered tuckshops in both the residential areas and the CBDs.

While the formal shops are obliged to follow scrupulous business conduct with heavy penalties hanging above their heads for malpractices, the corner shops are often let off the hook, allowing them to charge their goods in hard currency.

Grocery vendors, likewise have emerged as another layer of competition and are found on city pavements, including on supermarket verandas.

Competitors of big shops in the informal sector hardly pay any tax or rentals, leaving them with the leeway to vary their prices downwards where necessary.

Choppies added in its statement, “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.

“Shareholders are cautioned that there is no certainty at this stage that the discussions will lead to a formal transaction, and approval from the Zimbabwean Competition and Tariff Commission is required.

“The company advised shareholders “to exercise caution when trading in their Choppies shares until a further announcement is made”.