Harare – A year ago, all 16 checkout lanes were packed into the OK Zimbabwe supermarket in Harare, one of the country's leading retailers.
Customers were shoulder to shoulder, and their carts were filled with essentials from Zimbabwean pantry.
Today, only two tils are open.
They offer only a handful of customers who choose from what is available on a half-empty shelf.
The situation is the same across Zimbabwe, at many retailers. Some still hold it, but the shelves are becoming increasingly empty and the branches are closing one by one.
Others are unable to compete with informal traders and fold the operations completely.
“It never happened this way before,” says Mercy, who has worked for OK Zimbabwe for over a decade.
“People aren't going to buy from us.”
Zimbabwe's formal retail sector is struggling to stick due to a combination of factors that are gradually escalating.
At the heart of the problem is the country's unstable monetary system. In 2024, the government introduced Zimbabwean gold, or jigs. This is intended to be a stable successor to the unreliable Zimbabwean dollar.
Zig, tied to gold and foreign reserves, has curtailed inflation and restored trust in the local currency, as the government hoped.
Zimbabwean gold exceeded many people's expectations, but it was not a magical cure for the country's economic turmoil.
In the black market, the informal exchange rates used by most people, currency was in short supply and had a hard time retaining value.
Six months after its introduction, the Reserve Bank of Zimbabwe attempted to cut its official exchange rate by more than 40%, bringing it closer to black market rates.
Meanwhile, the government has also imposed restrictions on formal retailers.
They had to price the goods within the official exchange rate and then priced them above the rate by violating the sale. This has led to a price hike.
Retail customers were able to rely on informal markets that could pay in US dollars they still prefer, and pay at a more reasonable black market exchange rate.
Busy, many formal retailers in Zimbabwe have folded their businesses amid economic turmoil, a volatile monetary system and increasing competition with the informal sector.
The instability could continue as the US dollar is scarce following the withdrawal of aid from the US. Much of this is poured through the US International Development Agency, an important source of Zimbabwe's foreign currency inflow.
Mirriam Masikati, who once liked the quality of their products to supermarkets, says they are gaining more value in these informal markets.
“We are worried that we may buy fake products without our knowledge, but prices are pushing us into these informal markets,” says the mother of three.
In April, the government abolished the requirement for formal retailers to price items within official exchange rates, but almost a year later the damage had already been done.
Large retailers like Spar Zimbabwe and N Richards Group have folded several branches in parts of the capital.
A statement by the coalition of Zimbabwean retailers in January shows that some shops have cut spaces by 60%.
In April, OK Zimbabwe issued a loss warning, laying out its goal of raising US$30 million and explaining the financial challenges it has experienced over the past six months.
In contrast, businesses are booming for informal traders. Unofficial traders account for an estimated 65% of Zimbabwe's economy and are an important part of the informal sector that contributed approximately 72% to gross domestic product in 2024.
They already had good slices of the market. They're now gaining a bigger share.
That share could grow even more. Unofficial traders often sell out due to high demand, says Musa, the cashier at such stores in Harare.
This success has led other Zimbabweans to open similar stores, he says.
A 2024 report from the Zimbabwe National Chamber of Commerce found that manufacturers who once provided formal retailers on credit are also turning their eyes to informal US cash payers.
This allows manufacturers to bypass the banking system and avoid taxes, Brains Muchemwa says he is an economist. Such a high level of back-channel commerce can be a problem for the country, he says.
Unofficial traders are not compliant with regulations, which significantly reduces government tax revenues.
A 2022 report from the Zimbabwe Revenue Department shows that less than 0.5% of funds made in the informal sector is being collected as tax revenue.
The government has sought to address the growth level of informalization.
In February, it issued a monetary policy requiring all companies to use POS machines.
This brings informal trade to normal banking channels.
But Muchemwa is skeptical.
The informal sector is thriving because it avoids the burden of regulation, he says.
Without stable policies and an encouraging trade environment, government efforts “doesn't produce anything,” he says.
Prosper Chitambara, an economist, says the country needs tax reforms that are easy and inexpensive for businesses to become official.
He points to Brazil and Uruguay as successful examples of simplified tax and support laws that reduced informality.
For Muchemwa, the solution is simple.
“We will continue to present challenges for this economy as long as it goes against logic in terms of managing the economy, especially printing money and coming up with unwise policies,” he says.
According to Mutandazo Muroczwa, chief operating officer of Zaparara supermarkets, the country's struggling economy is a chance for retailers to adapt.
Zaparala has closed several of its branches, but Mlotshwa is optimistic and does not consider the informal market as a threat.
Still, regulations and stable currency fees are needed, he added, and the government is taking steps in that direction.
Meanwhile, retail mercy and other workers are worried about their future.
“Everyone is unmotivated and some are losing their jobs. For those who are still, their pay isn't coming on time. Sometimes they get a portion of their pay,” she says.
*Gumchirai Mashiiwa is a resident reporter based in Harare, Zimbabwe.
*This story was originally published by the Global Press Journal.
