Edgars guns for US dollar sales
A few months ago, Edgars Stores Limited, decided to display prices of merchandise in US dollars only.
Since re-introduction of the local currency, businesses displayed prices in Zimbabwe dollars only in contravention of the law that says prices should be displayed in both the US dollars and Zimbabwe dollars.
Statutory Instrument 185 of 2020 compels providers of goods and services to display dual prices in Zimbabwe dollar and foreign currency using the official exchange rate.
Many businesses have largely ignored this law.
For Edgars, the decision to display prices in US dollars only away from Zimbabwe dollars was motivated by a couple of things.
Displaying prices in a volatile Zimbabwe dollar was costing time and money as in store staff had to constantly change them, Edgars Stores Limited chief executive officer, Tjeludo Ndlovu, told an analyst and press briefing on Wednesday.
“As the rate kept changing we had to reprice because we do have a US dollar cost and a price for every single item, so as the rate changed it meant we had to change pricing for every single item,” she said.
At some point Edgars took off all the prices on merchandise, but that would still cost time and probably sales.
Not having prices on display means each and every customer, even one doing window shopping for another day would need assistance.
“But we have now gone back to putting a US dollar price, because with a US dollar price, what changes is the exchange rate.”
According to Ndlovu this move will help contain costs as changing prices everyday would require employing someone to do that “which is not really necessary”.
In any case, customers are thinking in US dollar terms as most of Edgars’ competitors in the informal sector are charging in foreign currency, said Ndlovu.
Displaying prices only in US dollars is, however, a small part of a bigger plan.
The clothing retailer is on a drive to increase its US dollar credit book.
The Group has since launched its US$ credit book and plans to migrate out of the entire Zimbabwe dollar credit book, according to chief finance officer Happiness Vundla.
“From the performance of that US dollar credit book, it shows that in the next three months, and into next year, we are looking at our ZWL book converting into a US dollar book,” she said.
Vundla revealed that in terms of trading off the ZWL book, “the US dollar book is now at US$2 million”.
“We are running a conversion process for our customers where we are saying that we do appreciate that the Zimbabwe dollar pricing is a bit up, but we do have a US dollar book that is better priced, and will be better to manage because it’s a more sustainable currency to sustain yourself on.”
Vundla said by December the US dollar book should reach between US$5-6 million “as we migrate slowly out of the Zimbabwe dollar”.
Both the decision to display prices only in US dollars as well as migrating to a US dollar credit book comes at a time when the local currency has been depreciating daily on the official willing-buyer willing-seller platform.
This would mean changing prices every day or inconveniencing customers who would have to ask for prices.
It’s also a nightmare for credit sales as the price for today is totally different tomorrow.
The firm says trading in foreign currency since April 2020 has allowed its retail chains to improve stock assortments, which in turn has increased traffic in its stores.
“While a sizable portion of our cash sales are in foreign currency, we believe that further relaxation of foreign currency trading will go a long way in increasing our US dollar generation to fund imports,” said chairman Thembinkosi Sibanda in a statement accompanying results.
Vundla said post the results, the split between foreign and local currency sales is now 50-50.-ebusinessweekly
