OK Zim splashes $3,1 billion on capital expenditure

Listed retail giant, OK Zimbabwe, said it spent $3,1 billion in 2022 on capital expenditure as it seeks to bring better customer experience.

Capital expenditure for the year was $3,1 billion up from $2,1 billion in the prior year.

OK Zim chief executive, Maxen Karombo said; “The bulk of the capital expenditure was spent on refurbishments of stores, opening of new stores, replacement of equipment and the purchases of vehicles necessitated by operational requirements.”

In line with their cost containment, 2022 saw the group combine procurement, logistics and sales and operational planning to form a Supply Chain Function. This will introduce streamlined and efficient processes to source, store and distribute our merchandise with the goal of reducing costs to improve our price competitiveness.

With this development, the retailer has moved to introduce a central procurement structure that is based on product categories and combines the volume from all our trading brands in order to negotiate better prices.

Through combining their product categories, they also make it easier for their suppliers to understand requirements and improve their service levels to the retailer.

OK Zim in the period under review operated a network of sixty-eight stores that are spread across the country. Two new stores namely OK Banket and OKmart Chivhu, were opened in the second half of the financial year and the two stores are expected to contribute meaningfully in the coming years.

Karombo added, “Refurbishment of stores remains a central part of the Group’s strategy of regularly refreshing our facilities and ambience, which subsequently improves the equity of our store brands. Refurbishments were completed at OK Masvingo, OK Chinhoyi, Bon marché Avondale, OK Mbare and OK Queensdale.”

Stock shrinkage was under control and below the industry average during the year under review and the group said management will continue implementing measures to control shrinkage, given the challenging economic environment.

Positive growth was sustained in value added services with forex earnings supported through the expansion of the domestic remittance service across stores. This was in spite of the negative impact on customer count due to tariff and premium increases on the back of declining disposable incomes.

On their outlook, Karombo said, “The economic outlook is negatively impacted by high levels of inflation, exchange rate volatility, the global economic impacts of Russian – Ukraine conflict and the less than anticipated yield in the 2021/2022 agricultural season.”

Despite these challenges, the group will continue to implement its growth strategy and focus on the various measures to deliver growth in shareholder value. OK Zimbabwe seeks to extend reach through store expansion and store refurbishment programme, plus service excellence and responding to customer needs.

Improvement in supply chain efficiencies, effective cost management and risk mitigation are also part of the growth strategy targeted by the retailer.

“The Group is currently implementing a new enterprise resource planning system (ERP) and this is expected to improve efficiencies across all functions of the business, advancing the Group’s innovation thrust and ultimately optimising business performance,” Karombo concluded.-ebusinessweekly