The country’s formal retail sector has lamented the damage posed by the informal sector which is selling cheap substitute goods to consumers resulting in the formal sector making loses, Sunday Mail reports.
This was revealed by CRZ President Denford Mutashu who said groceries smuggled into the country are sold at a very low price, formal retailers can’t match that price:
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Formal traders are currently in a difficult situation as they have to contend with informal traders, who are selling commodities available in shops at very low prices and this practice has seen anyone wishing or thinking of being an informal trader just “waking up” to become one,
The (profit) margins for the sector have dropped. We used to put a margin of 10-15 percent, but have reduced to five percent and sales per square footage have also dropped. The average basket per shop has also reduced as the commodities are being offered outside.
Expenses remain constant as shops can’t lay off workers overnight with equipment having to be maintained despite sales being low. Salaries have to be paid despite prices going down
More: The Sunday Mail