A good number of spar outlets in Zambia have been closed raising concerns on the general health of the economy. With a pessimistic attitude of most Zambians, the closures have largely been attributed to the unfavorable macro economic environment and poor economic and trade policies by the government of the day.
But a deeper look at what is currently obtaining, the fact that most if not all the Spar outlets that have been shut are being taken over and quickly re-opened by competitors perhaps questions the pessimistic view that the closures are due to poor macro economic conditions.
The real reason behind the failure of most Spar Zambia franchise outlets had not yet been confirmed, but one can deduce that the reasons for the store closures are most likely attributed to mismanagement or failure to control shrinkage (stock losses), a key success factor in the supermarket business as well as limited capital to see the business through a down time.
However, Alfred Chewe, a former franchise owner of Spar chilenje, said in an exclusive interview with the Zambian Business Times – ZBT that he the main reason why he sold his outlet is that he was making losses due to the unfavorable demand conditions caused by the shrinking market.
Essentially it’s the unfavorable demand conditions. The market was shrinking overtime. Those who are not thinking of going in for the long term, they are closing. You can only maintain your business with losses a long time, if your view is long term”, he told ZBT.
Spar Foxdale also closed but Pick n Pay has moved in the same building where Spar left which leaves people to stop and wonder how a Supermarket like Pick n Pay can rush to start operating where others have failed. Pick and Pay has also taken over the Spar outlet along Great North road, an indication that they are seeing something which Spar owners may have missed.
When asked about this takeover of former Spar stores by Pick and Pay, Chewe stressed that other Stores like Choppies and Pick n Pay (who have moved in where old Spar outlets where), might also be making losses but their view is long term.
“The ones who are taking them up, they are going in there for a long term. Much as in the short term there will be losses they are hoping the economy will turn around. I was running Chilenje Spar, and I closed my outlet because I saw this situation and I sold it to Choppies.
“The economy has to improve for the supermarkets run by locals to be profitable. Even these that are getting the old Spar outlets, if the economy does not turn around, they will close. Essentially what’s causing all this the downsizing is the state of the economy. And Covid 19 has worsened the situation”, he said.
Chewe told ZBT that at that time, his losses were about US$1.5 million. However, he sold the mall at US$2.2m dollars and the store was sold for US$700,000. He reiterated that the economy has to improve for the supermarkets to return to profitability.
