With the economy now dollarised, the magic formula for successful businesses is to treat customers like guests and employees like people.
He speaks to businessdigest chief business reporter Paul Nyakazeya (PN) about the retail sector and the group’s plans.
PN: One cannot talk of the retail industry in Zimbabwe without reference to TM, which is presumably why an application has been lodged for PicknPay to shore up their shareholding in TM to 49%. PicknPay is on record saying it wants to see value.
This means market share lost must be regained and a growth trajectory sustained. How do you intend to achieve this?
MV: There has not been a more exciting time in our sector and from an economic standpoint; investment in this sector has possibly been the most meaningful in relative terms naturally. All players across the board are re-inventing themselves to appeal to a very price-sensitive shopper, to whom five cents can make or break the budget in an environment of subdued incomes.
With a formidable infrastructural presence in the form of 51 supermarkets across the country, discussion around opening four to five more in key locations, sound management structures, team building initiatives to re-energise the team, TM’s recovery is in motion and therefore profitability and market is tracking upwards.
PN: TM was criticised and to some extent, is said to be punished by customers for stockouts and empty shelves which could be translated to mean a lack of foresight and agility that is needed in the retail sector in Zimbabwe. How would you respond to that?
MV: I cannot argue with that view, the experiences of businesses, management and regulators in the past are well documented and whatever perceptions were created they became the reality unfortunately. But even then, you found that loyal customers came on a “cruising” mission to see what their preferred retailer had in stock first, then went on to fill in the gaps elsewhere at a time when the competition stocking levels were better which demonstrated the strength of the TM brand. Our key outlets were achieving record sales before the traditional festive season peak and are still performing well.
PN:What have been your claw-back strategies?
MV: Dollar meals, fresh produce focus, bakery and confectionery and butchery, coupled with an emphatic focus on people and their needs, are among TM’s market share claw-back strategies, all provided by a credible chain whose roots are unmistakably Zimbabwean.
PN: Zimbabwe’s darkest hour in retail was without doubt the empty supermarket shelves –– a retailer’s nightmare –– in 2007/8. How would you summaries this period as a company?
PN: What you call the darkest hour later turned out to be more of a salvation in the retail industry in Zimbabwe in the sense that with the whole country having to source basics outside our borders after the situation stabilised, they started to buy locally.
The cross border experience was not pleasing for many. But having said that, the cross border experience also showed them another side which they do not wish to import, where service cultures differ and where they saw the under belly of lower-end retail and wholesale in some of the down-town areas of neighbouring country towns and cities.
However, the service, technology and up-to-the-minute range they saw in neighbouring countries were exactly what they wanted from retailers at home. So it is inevitable that we have had to scale up and rise to meet customer expectations. When customers speak with one voice from personal experience you ignore them at your peril. In my opinion, knowing how deep the state of collapse was, recovery has been comparatively swift; the shopper now has choice and convenience.
PN: With the retail sector on a rebound and more players clamouring to enter Zimbabwe, what lies ahead for those already in the supermarket business?
MV: Our business is all about margins, so if you have the network to push volumes, you rule. Certainly new and diverse players have entered the market, all with the ability to respond to some area of customer need. But with the return of a relatively stable and predictable environment, one is already seeing signs of stress amongst less established players whose models cannot withstand the rigours of competition as business returns to normal. There is a fair element of customers migrating back to known brands, which they perceived had let them down at some point, but where health, hygiene and service standards are guaranteed, among other retail expectations.
PN: What can shareholders and customers expect from TM this year?
MV: We have some exciting developments in terms of the PicknPay brand coming to town, which will give us a capital injection that will also see a phased upgrade of the existing TM supermarkets. The market is ready for something new. PicknPay will provide this new customer experience.
PN: Can you explain why the price of goods in Zimbabwe is more expensive than countries in the region?
MV: This phenomenon is broader than the Zimbabwean retail sector, and is more to do with the economy’s macro fundamentals. The retail industry body would be better placed to respond to this question.
PN: With competitors such as OK Zimbabwe, Bon Marché and Spar what percentage of the market do you command and would you know the market share of the other three?
MV: Suppliers confirm that TM is the biggest supermarket chain at around 30% of the market. I would say the “Big Three” are pretty evenly matched in terms of turnover.
PN: I understand you joined TM in June last year; can you share with us your journey in the retail industry to date.
MV: Prior to joining TM I spent the last five years as managing director of National Tyre Services. Before that I did a brief but very active stint at Tedco Ltd as group CEO. I spent 10 years in a number of capacities at CFI Holdings Ltd, culminating in CEO retail division. The earlier part of my career was spent at Smithkline Beechem/ Pfizer. That represents an almost three-decade long journey working in and directing a variety of local and international companies in the boom times and in some of the really tough times.