Home » Business » OK Zim in U.S.$5 Million Expansion

OK Zimbabwe will spend about $5 million on expansion in the current financial year as the company plans to strategically position itself to fight off growing competition within the retail sector.

The coming in of Choppies and the expansion of the Pick n Pay brand especially in Harare has accelerated competition within the retail environment.

Speaking at the company’s analyst briefing yesterday, OK Zimbabwe chief executive Mr Willard Zireva said the coming in of Choppies in Bulawayo has had an impact and the company is looking at expanding and upgrading its facilities to maintain its market share.

“We have not felt the impact of new players in Harare yet, but have felt it in Bulawayo especially the coming in of Choppies. We have lost a bit of business in Bulawayo.

“As you know OK Zimbabwe is also aggressive in the market and we are planning to roll out initiatives that will cater for the high and lower end of the market.

“The company will invest about $5 million on expansion in the next financial year and we think that will give us an edge in terms of our product offering,” said Mr Zireva.

The retail giant plans to re-align its operating model by dividing its store operations into two brands trading as OK conventional stores and OK value stores with different pricing structures to cater for consumers.

Mr Zireva said OK Zimbabwe was adopting this model to adjust to the changing business environment as more retail companies invade the market at the same time fighting for the same dollar.

He said OK Mbuya Nehanda and OK Kwekwe have already been converted into value supermarkets and the company is looking at expanding the new strategy into Victoria Falls.

“These will have different pricing structures and they have already proved profitable.

“There are not going to be changes on the Bon Marche brand as it will continue to operate like what it used to do.

“The market has shifted this will reduce margins, but sales will grow positively and bottom-line will also respond positively,” said Mr Zireva.

The company is also looking at developing OK Mutare, OK Marondera while it is looking at opening a new branch in Zvishavane.

The company’s revenue for the year ending March 31, 2015 declined 4,3 percent to $462,7 million from $482,8 million recorded in the prior year due to subdued demand and low disposable income within the market.

The negative revenue growth of 4,3 percent exhibits the official deflation as at March 2015 of -1,2 percent internal deflation -2,6 percent which resulted in less revenue for the same volume.

Gross margin for the period was at 17,8 percent compared to last year which was 17 percent and this was as a result of efficient procurement, bakeries, fruit and vegetables among others.

Overheads for the period were up 3,8 percent with sales growth going on a negative due to the rate of increase that has slowed down significantly and higher depreciation expense from continuing capital expenditure which was $11,3 million down from $12,4 million in 2014.

Source : The Herald