Schools are expected to open for the second term this week and if you were in Harare yesterday then you must have noticed the high number of parents and their children. Most of the parents were paying school fees at banks or involved in last minute groceries for kids going to boarding schools. It was a hive of activity in the city centre with a number of books shops or shops selling school uniforms enjoying brisk business.

Related to the issue is a big question for the forum and the question is ‘What are the top 6 areas where Zimbabweans are spending their money on?’ We carried out an unofficial mini survey within the ZBIN Community and came up with the top 6 which are below:

1. Food
2. Education
3. Accomodation
4. Medical costs
5. Transport
6. Entertainment -Dstv subscriptions

Are you interested in investment especially in the short to medium term? If your answer is Yes, then you may need to criticlly look at the 6 areas we listed above. The above 6 areas are not cast in stone as priorities are always changing and depend on the economy class that is concerned. However based on what is what is currently on the ground, most people seem to be spending money on the areas we mentioned.

Implications for investors

It is not suprising that recent financial statements from retailers such as OK Stores show marked improvements in profits when compared to last year. The same applies to a lot of retailers, large and small scale. You can compare and contrast with other sectors such as the Telecommunication sector where profits are slightly going down when compared to the previous year. So there is more spending on basics with little being left for luxury goods, real estate developments and other capital projects.

So if your planning horizon is short to medium term, then closely study the 6 areas and expand the list, removing or adding areas. As witnessed yesterday, Education is a top priority for most people and spending on education includes school or college fees, school uniforms, stationery, food and school tours.

On accomodation we have spending to a large extent rentals and rates, construction of homes seems to have been affected by the current liquidity challenges. Medical costs remain high especially for those without medical aid insurance. Transport costs is high for those using own cars and costs include daily running expenses such as fuel, service costs and insurance. On the 6th place we have Entertainment where Dstv subscriptions top the list. The inclusion of Dtsv subscription is not suprising because according to the Reserve Bank of Zimbabwe, the nation spend $206 million on Dstv subscriptions during the six months period of July to December 2016.

Conclusion

This list is a general list and should be taken with caution as we did not carry out a comprehensive survey. The intention of the post is to help members with investment decision making, to help our diasporan community to appreciate what is prevailing on the ground so that this can inform their decision making. Remember that for investment making decision, you do not just plunge head on based on general information-you need detailed business plans which shows the potential of an industry, the level of competition, analysis of suppliers, regulatory environment, market review, sensitivity to economic variables, risk and opportunities.

We have a request from one of our members who has just opened a tuckshop . She is looking for tips on how to successfully run her tuckshop since she is a first timer. In this part 1, we are going to look at strategic issues she needs to consider before plunging head on into the tuckshop business. In part 2, we will cover operational issues for consideration.

Our analysis is going to look at Macro Economic issues, Regulatory Environment and People. First we would like to congratulate her on the journey she has decided to embark upon. ZBIN will do its best to assist by providing business advice and mentorship, checklists and a lot of resources so as to assist her and others in the same boat.

Macro-Economic Issues

It is important to look at the performance of the Economy, for instance we are currently facing liquidity challenges and this has an impact on accessibility of capital and credit, the ability of customers to purchase goods and services. In investment one will however need to look at the long term horizon and see beyond current challenges. Understanding the current macro-economic conditions will help you to plan and make informed decisions. Look at opportunities presented by the imports ban and how it helps local businesses and then plan to take advantage. We recommend having a business plan to help you in the assessment of the macro-economic conditions and the opportunities and risks it poses to business.

Regulatory Environment

You will need all relevant permits in order to address your biggest risk. We have uploaded on our site a shop licence application form for your benefit. Download it from our site or alternatively visit the Harare City Council website www.hararecity.co.zw and check out the resources menu. If you do not have all the required permits then expect a lot of disturbances from Council Inspectors with some asking you to pull down your structure.

People: Competition

You have to do an analysis of the current level of competition. Who are your competitors? What is it that they are doing well? What needs to be improved or what is the gap? You are entering the field because you have identified a gap that needs to be filled. Do not simply dive into the business for the sake of it. You need to identify an opportunity and this becomes your competitive advantage. Is the nearby shopping centre located far away? Are there no current tuckshops in your area? If yes, are the tuckshops offering poor customer service? Or current tuckshops do not stock all food stuffs? A good analysis of the present competition should help inform your decision making. In business you have to compete and the higher the profits, the stiffer the competition. Even after establishment do expect to see more entrants into the field trying to get a piece of the profits.

People: Customers

I was surprised by the number of shoppers during the Easter Holidays, shops such as OK, TM and Choppies registered high sales. A look at their recent financial results do show increased business by retailers. When other business sectors are registered losses or a decline in profits for the retailers profits are on a northward trajectory…it is all good for this sector at least for now. So choosing to open a tuckshop is one of the wisest things one can ever do. Iam also finalising a personal venture of a retail shop and will share my results in the coming months. So when it comes to customers, one need not worry much-there is appetite to buy goods especially food and this is likely to remain in the medium term.

What is going to be crucial is how to manage customers-excellent customer care which is characterised by knowing what customers want, who are the customers, changing in tastes, times customers buy, handling complaints from customers as well as making customers happy. Exceptional customers result in profits…a happy customer means more business and more business is profit. You will need to analyse current customer services from your competition and come up with a plan that provides your tuckshop with a competitive advantage.

People: Suppliers

Your business plan should identify your key suppliers. You need to identify the goods that you would like to trade- goods in demand such as bread, milk and eggs. You need to establish who will be your key suppliers of the goods and establish good relations with them. As a first time operator you need to develop trust and this can only be done if you settle your accounts timeously. You will have to be innovative with procurements and establish close relations with suppliers who import goods but make sure that they are not smuggled goods.

People: Employees

Iam not sure whether you will be the person running the business or you will have to hire someone to run the tuckshop on your behalf. Whoever it is, this person is going to be the face of your tuckshop. This is the person who can make or break your business. It starts with customer service-the smiles to customers, integrity-the honesty even when customers forget change, the proactiveness in responding to customer needs. This person needs to have some training and also reviews because any lapse in concentration can result in loss of business to competitors. In our follow up article we will provide more resources and checklists on the management of this area. In your business plan you should also have included a budget of salaries and benefits for this person because if you  do not pay  your employees well, chances are high that they make resort to ‘paying themselves from the tuckshop coffers’.

So we have looked at some of the big issues to critically analyse before you plunge into this business. There are more areas we have left out such as the location and appearance of the tuckshop, day to day management or operational issues. We have left out latest trends in tuckshop management. We will cover all of these areas in our next article-the good thing is that there are no tuckshops that are closing in Harare and this confirms our view that the demand for food is high and will remain high in the foreseeable future.