Truworths, Identity and 4u2 to close shop in Tanzania over endless losses

[nngu007]

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Deacons will close three stores in Tanzania: Truworths, Identity and 4u2. Picture: Phoebe Okall By EMMANUEL WERE

Posted Saturday, February 11 2012 at 15:19

Deacons, the clothing and lifestyle goods retailer, will close its Tanzanian operations in the next two weeks shielding it from continued losses in that market.

The fact that Deacons has found the going to be tough in Dar es Salaam highlights the challenges of doing business in Tanzania, which is ranked fourth out of the five member states in terms of the ease of doing business in the East African Community, according to the International Finance Corporation's Ease of Doing Business report 2011.

The firm's board decided to exit the country after its subsidiary, Tanzanian Fashion Stores, lost Ksh13 million ($154,394) in the full year ended December 2011, marking a fifth straight year of losses despite efforts to turn it around.

Deacons will close three stores in Tanzania: Truworths, Identity and 4u2 branded stores, and in the process shed 15 jobs.

The high cost of doing business in Tanzania, especially the high rental charges where a square foot of office space costs almost double what the prices in Kenya, Uganda and Rwanda, and that their target market, the upper to middle income - is very small compared with operations in other countries, led to the decision, the company said.

The cost of rental space in Tanzania is $40 dollars compared with $18 dollars per square foot in the rest of the region.

"The cost of doing business in Tanzania is 30 to 40 per cent higher compared with other markets. The middle class is also not as big and the uptake of our brands was also not as big," said Deacons chief executive Muchiri Wahome.

Tanzania's middle class make up just 12 per cent of the total population, which is far much smaller compared with Kenya's 44.9 per cent and Uganda's 18.7 per cent of the population. Rwanda's middle class is at 7 per cent its population.

Dar es Salaam, Tanzania's Capital, only boasts of two shopping malls. In contrast, Nairobi, Uganda and Rwanda are experiencing a boom in the construction of malls and hence rapid growth of the shopping mall concept.

Also, long supply chain in Dar es Salaam is a challenge, where it can take up to five times longer by air to clear and deliver goods compared with the rest of the region.

The firm will be looking to have a fire sale before it shuts shop by the end of February. However, the company will have to write off Ksh20 million ($237,500) in assets and inventories.

Although Deacons Tanzanian operations have been loss making, it expects to make profits from its operations in Kenya and Uganda boosting its overall profitability. Rwanda, where the retailer opened two stores in December has been a good market

In the six months to June 2011, Deacons' sales grew by 38 per cent to $11.7 million compared with the same period last year. Profits after tax grew 51 per cent to $507,700 compared with the previous year.

The company said operations in Uganda were doing well with a 44 per cent growth in revenues contributing 7 per cent of the total group revenue for the 2011 financial year. Swedfund International is the main shareholder in Deacons, which is publicly traded firm, with a 19.45 per cent stake.

Pinpoint investment Ltd (12.06 per cent), Charles Mwangi Gathuri (11.04 per cent) and Diana Bird (11.03 per cent) are the other main shareholders of the publicly traded firm, which hopes to list its shares on the Nairobi Securities Exchange later this year.

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[nngu007]

We need our own...

 

[Saint Ivuga]

We need our own...

kweli?........................

 

[Rejao]

Hizo reasons walizotitaja hususani rent ni kitu cha kuangalia sana.

Rent kwa tanzania ipo juu sana, hii inafanya garama ya uendeshaji iwe kubwa!

 

[Saint Ivuga]

Hizo reasons walizotitaja hususani rent ni kitu cha kuangalia sana.
Rent kwa tanzania ipo juu sana, hii inafanya garama ya uendeshaji iwe kubwa!

kaka kwa nini rent ipo juu? demand na supply with the absence of the governmet?..

 

[trachomatis]

Hizo reasons walizotitaja hususani rent ni kitu cha kuangalia sana.
Rent kwa tanzania ipo juu sana, hii inafanya garama ya uendeshaji iwe kubwa!

Hata hivyo inabidi authorities zinazohusika,kuliangalia hili...

Ofisi zangu zilikuwa Mayfair building,na tulianza na makampuni mengi pale,hadi Shoprite... Lakini ofisi zilianza kufungwa moja baada ya nyingine,baada ya muda kwa kuona,kodi ni kubwa,kulinganisha na biashara yenyewe...

 

[Rejao]

kaka kwa nini rent ipo juu? demand na supply with the absence of the governmet?..

Tatizo ni kuwa na soko huria. Kila mtu anajiamulia anavyotaka. Kuhusu nature ya market, ukiangalia ni kweli demand ni kubwa kwa zile key areas ambazo zina standards nzuri but bado rent ni kikwazo kikubwa.
Kama mtu hukufanya market assesment ukiingia kichwa kichwa lazima biashara ikushinde.

 

[Rejao]

Hata hivyo inabidi authorities zinazohusika,kuliangalia hili...

Ofisi zangu zilikuwa Mayfair building,na tulianza na makampuni mengi pale,hadi Shoprite... Lakini ofisi zilianza kufungwa moja baada ya nyingine,baada ya muda kwa kuona,kodi ni kubwa,kulinganisha na biashara yenyewe...

Pole mkuu, ukiacha suala la rent Wabongo pia hatuna tabia ya kushop kwenye malls.

 

[Josephine]

We need our own...

You need your own,je umeshafanya tafakari juu ya kile kilichoongelewa?

Biashara nyingi zilizo kwenye majengo makubwa zitafungwa nyingi,kwasababu zinaendeshwa kwa hasara sana.na moja ya sababu ni kodi.Majengo yote yanatoza kodi kwa dola,na dola hapa kwetu haina msimamo kila kukicha inapaa kama njiwa
angani.

Kwa Taarifa hayo ya kwenu unayozungumzia yameshaanza kufungwa mda,tunakwenda kushuhudia anguko kubwa sana la uchumi miezi miwili ijayo.
Hata ninyi wakina Rejao mtakwenda kubadili kauli zenu,kwani ushabiki utawashinda.

 

[measkron]

Pole mkuu, ukiacha suala la rent Wabongo pia hatuna tabia ya kushop kwenye malls.

Kaka kwenye malls kwa hela ipi? Hali mbaya wengi twakimbilia vya bei rahisi kariakoo bila kujali quality ya kitu

 

[NGULI]

Na sababu zoote hizo fine! Pia nguo zao ni za poor quality bado mr. Price naye anauza poor quality clothes. Ukinunua tshirt ukifua inageuka kanzu inafika kwenye magoti

 

[Rejao]

You need your own,je umeshafanya tafakari juu ya kile kilichoongelewa?

Biashara nyingi zilizo kwenye majengo makubwa zitafungwa nyingi,kwasababu zinaendeshwa kwa hasara sana.na moja ya sababu ni kodi.Majengo yote yanatoza kodi kwa dola,na dola hapa kwetu haina msimamo kila kukicha inapaa kama njiwa
angani.

Kwa Taarifa hayo ya kwenu unayozungumzia yameshaanza kufungwa mda,tunakwenda kushuhudia anguko kubwa sana la uchumi miezi miwili ijayo.
Hata ninyi wakina Rejao mtakwenda kubadili kauli zenu,kwani ushabiki utawashinda.

Josephine,
Tanzania ni nchi huru. Tuna sera ya soko huria. Hamna mtu anayelazimishwa kwenda kurent. Au kushop kwenye hizo malls.
By then josephine, kuongezeka kwa kodi za majengo tena baadhi tu, kutasababisha vipi anguko la uchumi? Hebu nidadavulie kidogo.

 

[Rejao]

Kaka kwenye malls kwa hela ipi? Hali mbaya wengi twakimbilia vya bei rahisi kariakoo bila kujali quality ya kitu

Ni kweli kabisa mkuu, kama nilivyosema hapo awali, wawekezaji wengi ndani ya hiz malls wanashindwa kufanya market assesment. Hawajui mifuko ya watanzania ikoje..

 

[Saint Ivuga]

Na sababu zoote hizo fine! Pia nguo zao ni za poor quality bado mr. Price naye anauza poor quality clothes. Ukinunua tshirt ukifua inageuka kanzu inafika kwenye magoti

hawa wakenya hawatujui nini wabongo?

 

[Gurta]

Huyu CEO Muchiri niliwahi kumsoma kwenye The East African akidai kuwa Tanzania bado ni "agrarian economy", kwamba watu hapa (hata hao middle class) "are not spending".

Ukifanya tafakuri ukitumia Maslow's Stages of Economic development ni kweli kuwa uchumi wa TZA na shopping malls or rather spending in its totality, we are yet to reach there. Hata concept ya supermarket bado wameachiwa Wahindi, Waarabu na Wazungu tu sisi "Waafrika" bado tunaona kwenda kufanya manunuzi huko ni swala la umagharibi zaidi.

Radical changes in attitudes and the whole institutional machinery zinahitajika.

 

[NGULI]

Josephine,
Tanzania ni nchi huru. Tuna sera ya soko huria. Hamna mtu anayelazimishwa kwenda kurent. Au kushop kwenye hizo malls.
By then josephine, kuongezeka kwa kodi za majengo tena baadhi tu, kutasababisha vipi anguko la uchumi? Hebu nidadavulie kidogo.

Josephine is right, hayo majengo mengi yamejengwa kwa mikopo, yakikimbiwa na wateja yatashindwa ku meet banks installments. Yatatakiwa kuuzwa, je nani atanunua kitu kisicho na demand? Banks zilifanya research too late wamegundua kuwa biashara ya real estate itaangua baada ya mwaka 1 na itakuwa na big impact kwenye uchumi wa TZ. Na sasa ma bank hayakopeshi tena Mortagage financing

 

[Tinker]

Huyu hana habari
hastuki

and she doesn't care about the job loss kwa watanzania

she doesn't care about the loss Government will get

and she has supporters hapa JF kuwa anaonewa

 

[Mpita Njia]

Hizo reasons walizotitaja hususani rent ni kitu cha kuangalia sana.
Rent kwa tanzania ipo juu sana, hii inafanya garama ya uendeshaji iwe kubwa!

Ni kweli kabisa Mkuu. Wakati mwingine tunakosa kujitendea haki wenyewe. serikali imekuwa ikiahidi kila mwaka kurekebisha mambo kadhaa ili kuwezesha urahisi wa kufanya biashara, lakini imebakia kuwa blah blah tu. Wenzetu kenya, Uganda na Rwanda wanaangalia sana hizi ripoti za doing business na kufanya yale yanayoonekana kuwa yanawakwamisha... sisi tunazidi kupiga siasa tu

 

[mzurimie]

I guess tutaanza nasi kuhamia nchi hizo. very sad eti nchi yetu iliyojaa mafisadi tunabei kubwa hivyo. nimeshaona na nyumba zinauzwa nje kuchafu ndani panachosha, marketing skills zero eti mamilioni ya figure tatu.

hatutafika.. na hiyo ya kukomboa mizigo TRA shame on you

 

[Mpita Njia]

Pole mkuu, ukiacha suala la rent Wabongo pia hatuna tabia ya kushop kwenye malls.

Watu wanatamani sana kwenda kufanya shopping huko, lakini wamepigika