MLIMANI City is neither a suburb nor a municipality on its own. It’s simply a shopping centre with a big name that reflects a lot of business challenges as well as opportunities calling for the attention of Tanzanian investors and policy-makers as well.
In some ways, the centre has marked a revolution in the country’s retail business. It offers no hive for the omnipresent hawkers in Tanzanian towns or hangout for guys in a desperate struggle for survival.
Mlimani City has become a household name among residents of the country’s commercial capital in which it is located. Even kids in the crowded, poor suburbs of Dar es Salaam who don’t frequent the mall know the big names of the department stores at Mlimani City.
Discount stores that have gained a foothold here such as Game, Mr Price and Shoprite have, within a span of three years, become the darlings of the Tanzanian upper class workers and retirees who drive in and out of the vast free parking lot of the mall every day
Though Tanzania has opened its domestic market to the large retail chains from South Africa, local producers at large remain spectators who have had a very insignificant impact on the goods which buyers take out of the mall gates. Local enterprises are either unprepared or ill-equipped to be in such business.
The retailing giants at Mlimani are in no hurry to build up a localised empire across the country. After all they have struck a lucrative niche for imported goods – procured and ferried in bulk from South Africa and Dubai.
“We are very happy here because we have changed a lot the way retail business was done in Tanzania,” says Burton Mballa, Store Manager at Mr Price, a 3,000-square-metre department store that employs about 60 staff and specialises in apparels, crockery and kitchenware.
“We make sure there is somebody in every department to attend to our customers. Customers are the foremost factor in our business. My first thought is always about how I can make customers happy. They mean everything to us,” Mballa told THISDAY.
Apparently, the big stores are not pitted against the traditional small business operators, but they have brought about a welcome change in relations between bargain hunters and shop owners, made quality goods available and, undoubtedly, offer better wages for shop attendants.
Initially, Mr Price management had planned to open five stores in Dar es Salaam before the end of this year. That would add up to the over 1,000 stores chain the company operates around the world.
“We failed to carry out the plan because there are no other malls in the city where we could get a business space and a parking lot for customers,” Mballa explained.
The way things are at present, small retailers will remain the commercial core of big towns around the country until local investors get the financial capacity to replicate such projects as the Mlimani complex in other locations.
The opening of department stores has influenced other businesses as well with commercial banks providing services for extended hours in the same place. Other actors attracted to the mall and thereby adding to its commercial vitality include mobile phone companies, restaurants, book stores and laundry service.
According to Mballa, Mr Price has put people in fashion. And, he explains: “When you put people in fashion, they know how and what to wear. They know how to shop … especially during the Christmas and New Year holiday season.”
Recalling that people didn’t know much about this kind of shopping environment when Mr Price Store opened at Mlimani City, Mballa said: “Now Tanzanians know fitted bed sheets and duvets.”
“Everybody wants a comfortable bed because at the end of a hard working day the body and mind need to rest. Although you may work hard in daytime, the planning for tomorrow is done on bed,” he quipped.
But, at this time of the year people are keeping a close watch on their budgets because what they earn gives them very little comfort to meet their upcoming commitments, including the traditional partying to ring in the New Year.
Game Stores manager Arshad Khalil has a different view of the situation. “Retail business has slowed down a little because of the economic recession. But we have been doing well in Tanzania,” he explained.
If business is not brisk in retail shops, where is the money going? Probably many wage earners and businesspeople have resorted to making savings for a rainy day as Tully Mwambapa, CRDB Bank’s Director of Marketing suggests.
“Our deposits have been growing year after year indicating that the saving culture is developing among Tanzanians. Up to 30 September 2009 (the last published financial results for all banks) CRDB Bank was number one in deposits, profit, loans issued and assets,” Mwambapa told THISDAY.
Due to the downturn, Game Stores anticipates to close 2009 with an annual drop in sales of between 8 per cent and 10 per cent when compared to its 2008 turnover. The store has 50 permanent employees and only four of them are South Africans.
“We are selling high quality goods and we give customers great discount. Our main competitive advantage is that we beat the price of any retailer because we sell genuine products. There is nothing fake in our store,” Khalil said.
Khalil, however, has a bright outlook of the coming year. “I think the effects of this recession will be over in the first half of 2010. There will be more investments to create employment and increased incomes for consumers. In addition, we expect tourism in this country to improve,” he said.
With its home in South Africa where it runs over 120 outlets, Game Discount World has extended business in 11 African countries including Botswana, Tanzania, Uganda, Ghana, Nigeria, Mozambique, Malawi, Namibia and Mauritius. Currently, it plans to open more stores in DR Congo, Cameroon and Senegal.
Had inadequate facilities on the ground not been a stumbling block, Khalil said: “We would like to be in every African country. But, in every place we need some investor to set up a mall where we can do business.”
Though the South African retailers see good prospects for doing business in Tanzania and want to abide by the rules of the land, they complain about the lack of uniform regulations since the two countries are partners of the Southern Africa Development Community (SADC).
For instance, when it comes to foodstuff and beverages they wonder why another certification by the Tanzania Food and Drug Authority (TFDA) should be necessary after the same items were approved by competent authorities for consumption in South Africa. A second test of such items adds to the cost of doing business that must be borne by Tanzanian consumers.
Goods procured from local suppliers for sale at the department stores include alcohol, candies, biscuits, peanuts, detergents, lanterns, mosquito nets, bamboo plate mats, bamboo candle holders and decorations.
For local suppliers to secure a business niche in such chains of stores they must have a capacity for mass-production in order to suffice the requirements of other countries.
“When you supply to us you must be a big supplier. You must have enough capacity to meet the demand and standard for all stores because the buying office in Durban distributes the goods to all stores,” explained Mballa.
In order to make shopping easy for customers and avoid the risk of carrying large amounts of cash, Mr Price Store accepts VISA Electron credit cards and, with effect from 20 December 2009, the store will add on MasterCard.
“We are encouraging people to use credit cards because it is the safe way to do a safe shopping,” Mballa added. Credit cardholders, however, are quizzed by the management in a detective way to establish that their cards are genuine.
At Game Stores only MasterCard makes shopping easy. “We are still negotiating for VISA,” said Khalil. “We need to protect our assets and there are a few banks here that have options for both MasterCard and VISA.”
Gearing up for their busiest end-of-year festive season, all stores are offering markdowns ranging between 30 per cent and 50 per cent on many items. But will the offer of price reduction drive Tanzanians to dig deep into pockets that are already hit hard by the recession?