Retail sector appeals for Govt bailout…Covid-19, high costs strain operations
THE Confederation of Zimbabwe Retailers (CZR) says its operations are being adversely affected by the continued Covid-19 lockdown measures with the sector’s wage bill spiking above the recommended three percent of total revenues to 10 percent in the first half of the year.
Shrinking sales linked to reduced business hours against constant employment costs are straining operations at a time when entities have to spend more on Covid-19 pandemic mitigation measures.
In an overview of the retail sector for the first six months of the year, CZR president Mr Denford Mutashu said lockdown measures have negatively impacted business through supply chain disruptions and high costs of doing business.
He said as essential service providers, most retail sub-sectors were open, although other retail sub-sectors considered as non-essential remained closed.
“The lockdown measures negatively impacted real disposable incomes mainly due to constrained economic activity, with shops also opening for limited trading hours, currently restricted to 8AM to 3.30PM,” he said.
“During the first half of the year, most retail players have seen their wages and salaries jumping out of the recommended which is three percent and below of total revenue to the current seven to 10 percent of total revenue, largely due to the shrinking topline against a constant wage bill.”
The CZR president said the trend has seen some players reducing their staff complement by terminating contracts while others have adopted a rotation system of two weeks on and two weeks off. Mr Mutashu said this has been largely caused by the reduced operating hours.
“In light of the above, we appeal to Government to consider providing a subsidy to cover part of employees’ wages.
This subsidy can also enable players to re-hire employees and help prevent further job losses,” he said.
In the Mid-Term Budget Review Statement presented a few weeks ago, the Government revised upwards Gross Domestic Product growth projections from the initial 7,4 percent to 7,8 percent citing a better 2020/21 rainfall season, higher international mineral commodity prices, stable macroeconomic environment and better managed Covid-19
pandemic.
“For the wholesale and retail trade sectors, projections were slashed downwards from 5,7 percent to 5,1 percent.
“This downward revision is a reflection of how the retail sector was significantly affected by the national lockdown measures imposed during the first half as well as other factors,” said Mr Mutashu.
During the period under review, CZR members also incurred Covid-19-related costs through implementing measures to fight the spread of pandemic to ensure the safety of different stakeholders that include customers, employees and suppliers.
The implementation of such measures come at a higher cost in the form of Covid-19
tests, procurement of face masks, thermometers, hand sanitisers, staff passage costs and
increases in security and cleaning expenses.
“Further, the requirement to retest all employees in the event of one contracting Covid19 compounds the situation.
The retail sector employs a lot of people per store and it becomes expensive to test all employees,” he said.
“And in the unfortunate event where an employee contracts Covid-19, more trading hours are lost due to forced closure to allow for disinfection, which can last up to three days of closure while adhering to the standard operating procedures.”
Mr Mutashu said increased load-shedding experienced over the past few months presented huge challenges as most players were forced to rely on fuel-powered generators, which are expensive to run and add to high overheads.
During the first half, Mr Mutashu said domestic demand continued to be weak despite the fact that most retail establishments were operating, largely due to the strong linkages that the sector has with others that were closed or limited in their operations.
Household incomes also declined especially for urban dwellers due to reduced economic activity, which affected disposable incomes.
“Further, inflationary pressures also eroded the dwindling disposable incomes and reduced real consumption levels of most consumers.
“As CZR, we believe that consumer spending is a major source of economic activity and the consumption shock and change in consumer behaviour experienced since the beginning of the year should be addressed through measures that promote consumers to have more income, create employment, promote investment and remittances as well as
reduce the trade deficit,” he said.-chronicle.c.zw
