Analyst: Policy reforms vital for retail survival

DAR ES SALAAM: THE rapid rise of online businesses in Tanzania is transforming how people shop, offering speed, convenience and lower prices.

This shift signals a major change in the retail landscape, driving increased digital adoption but also threatening traditional brick-and-mortar stores.

Economist and investment banker Dr Hilderbrand Shayo warns that without policy reforms and targeted support, many small physical retailers risk being pushed out by informal, unregulated e-commerce players.

“The digital divide could widen into an economic fault line if strategic reforms are not implemented,” he said.

Online marketplaces and digital sellers are reshaping the industry, bringing opportunities but also significant challenges.

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Many traditional stores lack the capital or digital skills to compete, especially as informal digital vendors operate without costs like rent, full-time staff, or regulatory fees, enabling them to offer lower prices and flexible services such as mobile payments and home delivery.

“This trend is particularly evident among young urban consumers and middle-income earners who prefer the convenience of online shopping,” Dr Shayo explained.

For example, at Kariakoo market, established cosmetics shops are losing customers to Instagrambased vendors providing free delivery and mobile payment options.

Physical retailers face shrinking profit margins amid price wars with unregulated online sellers who often evade taxes and licensing. This creates an uneven playing field that harms the entire retail sector.

As a result, some traditional shops, including local boutiques and neighbourhood bookstores, have downsized or closed, unable to sustain declining foot traffic. Dr Shayo highlights another concern: the informality of many online sellers weakens tax collection and consumer protections, further disadvantaging lawabiding businesses.