This paper empirically dissects the intricate dynamics of the inter-relationship between Route to Market (RTM) regulations and the deteriorating competitive dynamics of the formal retail value chain within Zimbabwe's acutely challenging and highly informalized economic landscape. This occurs within the context of continued macroeconomic volatility and considerable policy uncertainty. The study examines how an intersection of onerous RTM related compliance costs, validated through document review confirming complex VAT and customs procedures, fierce asymmetric competition with a dominant informal sector, described by interviewees as operating with impunity on a fundamentally different cost structure, and pervasive supply chain vulnerabilities undermine the operability of formal retail. Employing a mixed-methods design comprising document analysis, in-depth interviews with key industry stakeholders and survey data from formal retailers (N=120), the study quantifies the perceived severity of these pressures. Quantitative results confirmed informal competition as the most severe challenge (Mean=4.7/5) and VAT compliance as the most burdensome regulation (Mean=4.5/5). Regression analysis indicated that the heavy cost of compliance (β = -0.25, p<.01) and the perceived intensity of informal competition (β = -0.41, p<.001) are significant negative predictors of overall competitiveness. Qualitative insights highlighted a relentless trail of compliance requirements consuming significant resources. In addition, the analysis points to policy incoherence by raising the possibility that continued formalization efforts, such as wholesale access restrictions linked to tax compliance, could disproportionately affect smaller formalized firms, a finding supported by ANOVA results (F(2, 117) = 5.82, p <.01) showing a significantly higher negative impact on smaller formal retailers. The study concludes with policy prescriptions aimed at regulatory and policy rationalization, improvement in policy predictability, and addressing major fundamental enabling environment deficits, alongside strategic managerial implications for improving adaptability and potentially leveraging technology (β = 0.19, p<.05) within the formal retail sector.