In a country where the economy has teetered on the edge for decades, and consumer purchasing power has been eroded by hyperinflation, Zimbabwe’s largest clothing retailer, Edgars Stores, is embarking on a daring strategy. For years, local clothing retailers have been overshadowed by the booming second-hand clothing market, known locally as “bhero.” These second-hand clothes, often sold at prices as low as a dollar, have decimated the market share of traditional retailers. However, Edgars has decided not to retreat but to take the fight to the bhero sellers.
The Market Dynamics
Walking through the bustling streets of Harare, it’s hard to miss the vibrant and chaotic bhero markets. These markets offer a kaleidoscope of clothing options—ranging from barely-worn designer jeans to tattered shirts—shipped in bulk from wealthier countries. For many Zimbabweans, bhero clothes are not just an affordable option; they are a necessity in a country where the average monthly salary barely covers basic living expenses.
Despite the stiff competition and the challenges posed by a fluctuating economy, Edgars has not only survived but thrived. The company has remained a pillar in Zimbabwe’s retail landscape, known for its quality and variety. Now, under the leadership of CEO Sevious Mushosho, Edgars is taking a bold step to wrestle market share from the bhero sellers.
Edgars’ Financial Fortitude
Edgars’ latest financials tell a story of resilience and strategic acumen. For the 52 weeks ending January 7, 2024, Edgars reported a revenue of ZWL 294 billion, a significant leap from ZWL 172.6 billion the previous year. More impressively, their profit before tax surged to ZWL 40.7 billion from ZWL 9.2 billion. This growth, achieved in a hyperinflationary environment, underscores Edgars’ effective cost management, procurement improvements, and strategic market positioning.
The company’s ability to navigate Zimbabwe’s volatile economic landscape is a testament to its robust business model. Over the past year, Edgars has focused on maintaining a healthy credit book, ensuring fresh stock availability, and optimizing its store network. These efforts have paid off, leading to a 94.8% increase in retail merchandise revenue.
The Edgars Plan
At the heart of Edgars’ new strategy is a comprehensive plan designed to directly challenge the bhero market. This plan includes several key components:
- Competitive Pricing:
- Affordable Product Lines: Edgars is introducing new product lines that are priced competitively to match bhero offerings. These items are designed to be budget-friendly while maintaining the quality standards that Edgars is known for.
- Cost Management: By optimizing their supply chain and leveraging economies of scale, Edgars aims to reduce production costs, allowing them to pass on savings to consumers.
- Store Expansion:
- New Store Locations: Edgars is opening new stores in high-traffic areas and underserved regions. This expansion is aimed at increasing accessibility and capturing foot traffic that might otherwise head to bhero markets.
- Revamping Existing Stores: Existing stores are being upgraded to enhance the shopping experience, making them more appealing compared to the often chaotic and unstructured bhero markets.
- Enhanced E-Commerce Presence:
- Online Shopping Platform: Recognizing the growing trend of e-commerce, Edgars is enhancing its online shopping platform. This digital presence will cater to a broader demographic, including tech-savvy younger consumers who prefer to shop online.
- Home Delivery and Pick-Up Services: To make shopping more convenient, Edgars is introducing home delivery and in-store pick-up options, providing customers with flexible shopping solutions.
- Marketing and Promotions:
- Targeted Advertising: Edgars is launching targeted advertising campaigns aimed at educating consumers about the quality and affordability of their new product lines. These campaigns will highlight the benefits of buying from Edgars over bhero markets.
- Loyalty Programs: New and improved loyalty programs are being rolled out to retain existing customers and attract new ones. These programs offer incentives such as discounts, exclusive offers, and rewards points.
- Supply Chain Optimization:
- Technology Integration: Leveraging technology to streamline supply chain operations, Edgars aims to ensure consistent stock availability and quick turnover of inventory.
- Local Sourcing: Whenever possible, Edgars is sourcing materials locally to reduce costs and support local industries. This approach also helps mitigate the risks associated with international supply chain disruptions.
Innovations and Leadership
The leadership of Sevious Mushosho, who took the helm in November 2023, has been instrumental in driving these changes. With over 20 years of experience in cross-functional management, financial management, and retail, Mushosho brings a wealth of knowledge and a fresh perspective to Edgars. His previous roles at Sub Sahara Capital Group and Innscor Africa have equipped him with the skills needed to steer Edgars through this ambitious transformation.
Under his leadership, Edgars is investing in innovative supply chain solutions. This includes leveraging technology to streamline operations and improve inventory management. By enhancing their logistical capabilities, Edgars can ensure that their stores are always well-stocked with the latest fashion trends, thus attracting more customers.
Risk and Rewards
The primary risk in this strategy lies in the potential alienation of Edgars’ existing customer base. There is a delicate balance to be struck between offering lower-priced items and maintaining the quality that Edgars is known for. If the market perceives a decline in quality, it could harm the brand’s reputation.
However, the rewards could be substantial. Capturing even a small portion of the bhero market could significantly boost Edgars’ revenue. Moreover, this strategy positions Edgars as a more inclusive brand, catering to a wider demographic. By offering affordable yet quality clothing, Edgars can attract a broader customer base, from low-income earners to more affluent shoppers looking for value.
Financial Highlights and Future Prospects
Edgars’ recent performance has set a strong foundation for this bold move. The company reported a gross profit of ZWL 59.5 billion and managed to keep operating expenses in check. The decision to list on the Victoria Falls Stock Exchange (VFEX) and adopt USD as the reporting currency aligns Edgars with international financial standards, potentially attracting more investors and stabilizing financial operations.
Looking ahead, Edgars plans to continue expanding its geographic footprint. New stores in high-traffic areas and underserved regions will enhance accessibility. The company also aims to revamp its product offerings regularly, ensuring that they meet the evolving tastes and preferences of Zimbabwean consumers.
Conclusion: A Calculated Gamble
Edgars’ decision to take on the bhero market is a calculated gamble, reflecting both ambition and confidence in their business model. The strategy involves risks, but the potential rewards make it a gamble worth taking. With solid financial performance, innovative strategies, and new leadership, Edgars is well-positioned to capture new market share and potentially transform the retail landscape in Zimbabwe.
As the Shona proverb goes, “Mukombe une dovi haudzirwi” (One does not miss out on a cup of peanut butter); Edgars’ readiness to seize opportunities can lead them to greater success. If executed well, this strategy could set a new precedent for how traditional retailers can thrive in an environment dominated by second-hand goods.
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