Reading OK Zimbabwe’s (OKZ’s) latest trading update felt like the final whistle blowing—game over.
After closely following OKZ’s trajectory over the past 18 months, this update signals that major transformations are inevitable. But while the company faces significant challenges, the right strategy—especially one focused on e-commerce and online delivery—could turn the tide.
Let’s break down what happened, why it happened, and how OKZ can reposition itself in the Zimbabwean retail market.
The Reality: Declining Sales and Mounting Debt
The biggest shock from OKZ’s update is the dramatic drop in revenue. In the previous two quarters, the company showed signs of recovery, with volumes increasing by 20% and 35%—though from a low base.
However, in Q3 (Oct-Dec 2024), volumes fell by a staggering 36%. This is the biggest year-over-year decline yet, following a 32% drop in the same period the previous year.
To put it into perspective, if OKZ sold 100 units in late 2022, it sold 64 in 2023 and just 44 in 2024. The company now operates with half the sales activity it had two years ago. This likely explains the recent store closures—fewer customers mean less need for physical retail space.
Yet, the financial situation worsens beyond falling sales. OKZ has significant outstanding and overdue debts, mostly denominated in US dollars. This is problematic because Zimbabwean retailers typically generate only 20–30% of their revenue in USD. The company’s exposure to USD liabilities suggests a level of financial distress that forced it to rely on credit in an unsustainable way.
As of September 2024, OKZ had:
- $29.7 million in trade payables (creditors).
- $5 million in borrowings, with $3 million as an overdraft.
Despite these debts, its core business generated less than $1 million in cash over six months. This means OKZ lacks the liquidity to cover its obligations. Without external intervention, a financial crisis is inevitable.
The Road Ahead: A Shift to Online Sales and Delivery
The traditional retail model is proving unsustainable for OKZ. The foot traffic in physical stores is dwindling, consumer spending power remains weak, and credit reliance has reached a dangerous level. To survive, OKZ must rethink its strategy and embrace a digital-first retail model.
Here’s how OKZ can adapt:
1. Expanding Online Sales
Zimbabwe’s digital economy is growing, with more consumers relying on mobile money, online shopping, and social media marketplaces. OKZ must capitalize on this shift by:
- Strengthening its e-commerce platform, ensuring seamless online purchases and secure transactions.
- Partnering with local fintech solutions to enhance mobile payment options.
- Running targeted digital marketing campaigns to attract younger, tech-savvy consumers.
2. Investing in Delivery Infrastructure
Instead of focusing on large physical stores, OKZ should prioritize last-mile delivery. A robust logistics network will allow customers to shop online and receive products at their doorsteps. Strategies include:
- Partnering with established delivery services like Vaya Express or launching an in-house fleet.
- Creating pickup hubs in high-density areas to reduce delivery costs.
- Offering same-day or next-day delivery for essential goods.
3. Leveraging Social Commerce
Zimbabweans increasingly use WhatsApp and Facebook for shopping. OKZ can tap into this trend by:
- Setting up WhatsApp-based ordering systems with direct payment integration.
- Using AI chatbots to handle customer inquiries and process transactions.
- Running exclusive deals on social media to drive engagement.
Finding the Money: Strategic Investment and Partnerships
OKZ needs significant capital to fund this transformation. Here are potential sources:
1. Attracting Strategic Investors
With no dominant shareholder, OKZ must seek external investors willing to inject funds in exchange for equity. This could be a local financial institution, an international retail partner, or even a private equity firm.
2. Bank Financing for Digital Expansion
Banks are more likely to support a company that has a clear turnaround strategy. A detailed e-commerce and logistics plan could help OKZ secure new funding under more favorable terms.
3. Public Fundraising via Digital Channels
Instead of traditional share sales, OKZ could explore crowdfunding models targeting Zimbabwean consumers who want to support a homegrown brand. Offering equity stakes or loyalty-based rewards could make this model attractive.
Conclusion: From Crisis to Digital Retail Leader
OKZ is at a crossroads. If it continues down the traditional retail path, financial troubles will deepen. But if it reinvents itself as an online-first retailer with a strong delivery network, it can turn the situation around.
Big brands have fallen before, but many have also made bold pivots to survive. The time for OKZ to act is now. Will it step up and embrace the digital revolution, or will it fade into history?
What do you think—can OKZ pull off this transformation?
