Zimbabwe’s Retail Sector Faces Tight Squeeze Despite 5.1% Growth Forecast

Zimbabwe’s retail sector is expected to grow by 5.1% in 2025, but analysts warn that high operational costs, informal competition, and infrastructure challenges threaten sustained recovery (image source)

HARARE – Zimbabwe’s retail sector is projected to grow by 5.1% in 2025, according to the latest industry forecasts, but analysts warn that the expansion is fragile and heavily dependent on resolving persistent economic constraints and adapting to the informal economy’s dominance.

The growth outlook, published by Fincent Securities and echoed by the Confederation of Zimbabwe Industries (CZI), suggests a modest recovery driven by urban demand, digital commerce, and the resilience of small and medium enterprises (SMEs). However, retailers continue to grapple with high financing costs, tight liquidity, erratic power supply, and complex tax regulations. “Retailers are walking a tightrope,” said CZI economist Tafadzwa Makoni. “While consumer demand is recovering, the cost of doing business remains prohibitive for many formal operators.”

The sector’s transformation is most visible in the shift from large chain stores to agile SMEs and informal traders. According to Propertybook, Zimbabwe’s retail property market is undergoing its biggest shake-up in decades, with rental rates and investment strategies adapting to the rise of small-scale operators.

Major retail chains such as OK Zimbabwe and TM Pick n Pay have reported stable revenues but shrinking margins, citing increased competition from informal vendors and parallel market pricing. Informal traders, often operating outside tax and regulatory frameworks, continue to undercut formal retailers on price and flexibility. “We’re seeing a dual economy in retail,” said Makoni. “Formal stores offer reliability and quality, but informal traders dominate on price and accessibility.”

The government has acknowledged the challenge and is working to streamline regulations. Earlier this year, the CZI proposed a Presidential directive to harmonize licensing, reduce tax burdens, and improve access to affordable financing for retailers. The Ministry of Industry and Commerce is reportedly reviewing the proposal.

Meanwhile, digital commerce is emerging as a growth driver. Mobile money platforms and social media marketplaces are enabling micro-retailers to reach customers across the country. WhatsApp-based ordering and EcoCash payments are now standard in urban and peri-urban areas. “Digital retail is the new frontier,” said Rudo Chikafu, a Harare-based retail consultant. “It’s low-cost, scalable, and consumer-friendly.”

Despite the challenges, some segments are outperforming. Fast-moving consumer goods (FMCG), clothing, and household electronics are seeing steady demand, especially in high-density suburbs. Retailers that offer flexible payment plans and loyalty programs are gaining traction.

However, power outages and foreign currency shortages continue to disrupt supply chains. Retailers often rely on diesel generators and informal forex markets to restock imported goods, adding to operational costs. Industry players are calling for a national retail strategy to formalize informal trade, improve infrastructure, and support digital transformation. Without such reforms, Zimbabwe’s retail sector risks stagnation despite its growth potential.