Upmarket stores shutdown exposes deeper turmoil at OK Zimbabwe

LIVINGSTONE MARUFU

The looming closure of Food Lovers Market outlets in Borrowdale and Avondale is more than just a store shutdown, could be the clearest signal yet of the mounting crisis engulfing Zimbabwe’s largest retail group, OK Zimbabwe, which is struggling to stay afloat

OK Zimbabwe is under mounting pressure as it prepares to close two of its flagship Food Lovers Market outlets in Harare by the end of June 2025.

The move, part of a broader restructuring effort, underscores the growing operational and financial distress facing the company, challenges that have been exacerbated by a hostile economic environment, strategic missteps, and weakening consumer demand.

For many observers and industry insiders, the shutdown of the Borrowdale and Avondale branches is not just a routine commercial decision.

It marks a turning point in the company’s long and complex struggle to remain viable amid Zimbabwe’s deteriorating macroeconomic conditions, where rising inflation, erratic power supply, currency volatility, and plummeting consumer incomes have become the norm.

“The Board and Management of OK Zimbabwe Limited formally announce that as part of the ongoing planned corporate restructuring thrust, a strategic decision has been taken to cease operations at Food Lovers Market stores in Harare’s Borrowdale and Avondale suburbs with effect from June 30, 2025,” said company secretary Margaret Munyuru.

Munyuru explained that the shutdown of the two premium-format stores is part of a broader strategy to rationalise the group’s portfolio and redirect investment into more profitable and sustainable ventures.

“This comes as part of a rationalisation programme aimed at focusing the company’s resources on its core operations and optimising overall business performance,” she added.

The closures also mark a formal retreat from the Territorial License Agreement, which had given OK Zimbabwe the exclusive rights to operate and expand the Food Lovers Market brand within the Zimbabwean territory.

While the agreement had initially been seen as a step toward diversification and market segmentation, the economic realities on the ground made it difficult for the high-end brand to thrive.

Effective immediately, OK Zimbabwe will begin the process of winding down operations at the affected locations.

As part of the closure strategy, significant in-store discounts will be offered to clear existing stock.

“We encourage our valued customers to take advantage of these offers while they last. We assure all Food Lovers Market creditors that any outstanding balances for supplies will be taken on for settlement by OK Zimbabwe Limited,” Munyuru assured stakeholders.

The Food Lovers Market exit is just the latest symptom of a deeper malaise plaguing OK Zimbabwe. Over the past few years, the group has battled persistent operational and financial headwinds.

Its once-dominant market presence has been slowly eroded by a toxic combination of supply chain disruptions, currency depreciation, and declining consumer confidence.

Zimbabwe’s inflation rate, which has surged to 92% in May,  has eaten away at disposable incomes, significantly reducing foot traffic in formal retail outlets.

Power cuts, currency volatility and foreign currency scarcity have driven up operational costs while simultaneously limiting the company’s ability to stock shelves with essential goods.

Compounding the crisis is a visible decline in product availability across OK’s stores, with many branches reporting empty shelves and erratic deliveries. The company’s supply chain inefficiencies have further frustrated customers and eroded brand loyalty.

While OK Zimbabwe embarked on leadership changes earlier this year and recently initiated a US$30m capital raise, the positive impact of these measures remains to be seen.

Industry analysts warn that unless the company addresses fundamental issues such as inventory management, customer engagement, and strategic positioning, the capital injection alone will not be enough to engineer a sustainable turnaround.

The company’s recent financial results paint a grim picture. Although nominal revenues may show growth due to inflationary pressures, real-term revenues have declined.

Profit margins have shrunk considerably, and the group has begun accumulating unsustainable levels of debt.

Independent retail analyst Tendai Chakamba told Business Times that the Food Lovers closure could be just the beginning. “This is more than cost-cutting, it reflects a business in retreat. OK Zimbabwe needs more than cosmetic changes, it requires a bold transformation strategy that speaks to today’s retail realities,” he said.

Despite the growing concerns over the company’s future, Munyuru remains upbeat.

She insists that OK Zimbabwe remains committed to its three core brands—OK Stores, Bon Marché, and OKmart—which will continue to serve customers nationwide.

“Three well-renowned brand formats—OK Zimbabwe, Bon Marché, and OKmart—are here to stay,” she said.

Still, questions remain over whether these formats are agile enough to withstand further shocks in an economy where consumer habits are shifting rapidly toward informal markets, dollar-based transactions, and online retail.

The Food Lovers Market concept, which targeted upper-middle-income consumers with fresh produce, imported goods, and premium groceries, struggled to gain traction in a market that has been sliding toward survivalist spending.

“High-end retail formats like Food Lovers Market were simply not suited for a customer base that’s increasingly concerned with basics like mealie-meal, cooking oil, and fuel,” said another analyst who declined to be named.

“That was a misalignment in market segmentation.”

In addition, the licensing model may have limited OK Zimbabwe’s flexibility.

Sources close to the matter indicate that the franchising fees and procurement obligations associated with the Food Lovers agreement may have placed an extra burden on the group’s already strained balance sheet.

As OK Zimbabwe accelerates its rationalisation programme, it remains unclear whether its remaining outlets can be repositioned for growth.

Retailers across Zimbabwe face enormous structural hurdles, from import restrictions and foreign exchange challenges to depressed consumer confidence and an expanding informal economy.

The company’s hope appears to rest on the potential turnaround sparked by new leadership and improved capital access.

However, those efforts must now contend with the loss of a premium brand that was once seen as a pathway to diversification.

The symbolic significance of the Food Lovers closure cannot be overstated.

For the past few years, the Borrowdale and Avondale branches served as emblems of the group’s ambition to elevate retail experiences in Zimbabwe.

Their shutdown signals not only a tactical retreat but also a sobering acknowledgment of the gravity of the economic and operational challenges that remain.

Munyuru concluded on a conciliatory but forward-looking note: “We extend our sincere appreciation to the franchisor, loyal customers, supplier partners, and other stakeholders who have supported the stores over the years. Despite the challenges, the group remains focused on enhancing its core supermarket operations and delivering value to its customers nationwide.”

Whether that optimism can be sustained will depend on how quickly and decisively OK Zimbabwe can confront the urgent need for reform, innovation, and customer-focused retail strategy in an economy where only the lean and adaptive survive.