Wholesalers should be innovative to avoid extinction
WHOLESALERS should come up with innovative ways that foster sustainability and viability of their operations in light of the ever-changing market dynamics, rather than advocate Government protection.
The Confederation of Zimbabwe Retailers (CZR) president, Mr Denford Mutashu, said this in an interview amid reports that some manufacturers are now bypassing wholesalers, distributing their goods directly to retailers and the informal sector.
Consequently, this has threatened the viability and existence of wholesalers, which some still believe are a critical part of the value chain.
Traditionally, manufacturers distributed their goods through wholesalers, which, in turn, distributed them to retailers before the products are broken down and sold to consumers.
“We can’t be protecting wholesalers, retailers, manufacturers or informal traders, but this development that has happened is a market trend that has actually been informed, even by global trends of online purchasing or e-commerce.
“The market isn’t what it was way back and this is why, at some point, if you go to Europe, a lot of the traditional brick and mortar stores closed after consumers moved en masse to online purchasing or online shopping.
“So, I think there is a need for the local businesses to stop mourning always, but come up with innovative ways of sustaining their enterprises,” he said.
Mr Mutashu stressed that governments do not run businesses but promote an enabling environment, where enterprises can thrive or find it easy to operate, providing goods and services to the country.
“So, it is an onerous duty for business to play a part by coming up with innovative ways that they would go to Government with and request or require if there is any improvement that may be required on policy intervention,”he said.
The CZR chief also highlighted that this development, where local wholesalers are being eliminated from the distribution chain, arises due to many factors that include liberalisation of the market, where some products, mainly basic commodities, are being allowed to enter into the country duty-free.
“It’s a development that arose out of many developments, one of which was direct importation of goods by anyone in the zone (businesses and individuals), and the route to market traditionally implied that the manufacturer supplies to the wholesalers or retailers, who would further break down to the consumers or to the SMEs (small and medium enterprises). But that has since been obliterated, arising from one of the issues that I mentioned and, of course, the issue of competition.
“The liberalisation of the market has meant that more and more individuals, more and more SMEs would buy directly from manufacturers and the issue of runners (individuals who import in bulk and resell to consumers) as well . . . it’s a big factor where runners apparently sideswipe the traditional players along the supply chain,” said Mr Mutashu.
In May this year, Government scrapped import duty on 14 basic commodities for six months, in response to unjustified price increases by unscrupulous retailers and to ensure the availability of the products at competitive prices.
The prices linked to the wild exchange rate had led to erosion of buying power and constrained consumer aggregate demand.
He said runners have to be eradicated in the supply chain because such players are not registered nor do they subscribe to any regulation or statutory obligations.
“As a result of these runners, there are a lot of illegal money transactions like money laundering because, sometimes, the money that they (manufacturers) receive from the market is outside the jurisdiction of the formal monetary financial systems.
“Going forward, we don’t need to eliminate the informal sector because it is a very vital integral pillar of the distribution chain, which has provided the much-needed competition between the established businesses and informal businesses,” said Mr Mutashu.
“So, some think that, if one speaks about the informal sector, you are generally talking to the market of businesses that are selling vegetables . . . that is not the informalisation that we mean.
“It is actually quite a number of businesses that are operating from places or shopping malls, but they are not registered, they don’t subscribe to taxation, they don’t subscribe to the statutory obligations and requirements and the majority of them actually don’t have shop licences.”
He said instead of attacking informal trade, it must be promoted. He added incentives should be put in place to promote the growth of informal businesses.
Mr Mutashu noted that the majority of existing enterprises started off as SMEs in the informal sector.
“So, it is an opportunity that has arisen out of the many Government interventions through policy to allow and ensure that Zimbabweans become their own employers, instead of seeking jobs in most of these oligopolies and monopolies.
But speaking during a tour of National Foods in Harare last week, Industry and Commerce Minister Dr Sithembiso Nyoni said the wholesale sector should not be allowed to die.
“We are putting order in the commerce sector by ensuring that manufacturers deliver to wholesalers and these are accessed by retail (operators) rather than what is happening now, whereby companies are delivering to the informal sector.
“That is distorting the value chain. If we do not address that, we are killing the wholesalers and bringing chaos to the market,” she said.
Dr Nyoni said the retail value chain creates jobs and order, adding that the Government policy is to ensure the value chain was alive to sustain those jobs.
Confederation of Zimbabwe Industries president Mr Kurai Matsheza, whose organisation represents the manufacturing sector, could, however, not be reached on his mobile phone for a comment.
chief executive officer Ms Sekai Kuvarika requested questions in writing, saying she was in a meeting but did not respond by the time of going to print.