Challenges facing small business retailers in selected South African townships

Abstract

Background: South African townships have a vibrant small retailing business which at some point was dominated by local traders. However, in recent times, the country has attracted migrants who are very competitive in the township retailing space.Aim: This study seeks to identify the challenges facing local small business retailers in the township retailing environments and then develop a business intervention model for traders to improve.Setting: Primary research was conducted in two townships of Cape Town -Delft and Eindhoven. Methods:The population of the study comprised two groups, namely, South African and foreign national small business retailers operating grocery retailer stores. The first group consisted of 55 South African small business retailers while the second group consisted of 75 migrant small business retailers. A random sample was targeted from each group and the quantitative research methodology was used in this study using a structured questionnaire with close-ended questions as a research instrument. Results:The results showed growth of foreign national retailers and decline in the number of the local retailers in the two townships. The study showed that migrant retailers have a competitive edge over local retailers. The study also revealed that most local traders have a lower level of education compared to their migrant trader counterparts. Conclusion:The local small business retailer requires targeted support from the government as suggested in the business intervention model proposed in this study.

Entrepreneurs’ endogenous attributes necessary for small enterprise success in Vhembe rural areas, South Africa

“…Collectivism, a product of networking in business, enables people with a similar mindset to join resources to create a successful enterprise. Studies have shown that networking capacity is a potent factor behind the success of most foreignowned small enterprises in South Africa (Charman, Petersen & Piper 2012;Nkondo 2017); this gives them a strong competitive advantage over the locals (Malgas & Zondi 2020). These researchers explained that foreign entrepreneurs in South Africa, especially the Asians, often network through various platforms, connect with one another and collaborate amongst themselves in business.…”

The role of microfinance institutions in enhancing the sustainability of women-owned SMMES

“…However, when viewed against the international norm, the opposite is true. Research shows that the South African SMME's failure rate has been cited frequently as one of the highest in the world (Malgas & Zondi, 2020). The failure rate of SMMEs is attributable to the lack of finance, the topmost stumbling block for start-up survival and development (Kumar, 2017).…”

Retailing Strategies of West African Itinerant Immigrant Traders in Ghana

“…The current evidence further conforms to the observation by Hay (1971) who stated that most itinerant migrant traders become mobile retailers to lower prices to forestall competition from their shop-keeping competitors. Generally, it is noted in the literature that price discounting was a competitive strategy adopted by itinerant migrant traders to remain in business (Malgas and Zondi, 2020;Naggar, 1992;Porter, 2008).…”

“…Additionally, the analysis indicates that about 40% of the respondents increased their sales using flattery/persuasions and lowering the prices of their wares than their competitors. In their application of these techniques, it was realized that while Togolese (55.6%) were numerous among those who applied flattery and persuasions to increase their sales, Malians were known for their use of price lowering techniques, as a competitive strategy, to attract customers ( (Malgas and Zondi, 2020;Naggar, 1992;Porter, 2008). This finding also, corroborates the observations made by Turner and Oswin (2015) who recounted how young itinerant Hmong girls and women began walking around Sa Pa town's main streets in Vietnam befriending newly arrived tourists using conversations involving the use of tact and flattery as strategies to advertise and sell their merchandise.…”

“…Similarly, Mui and Mui (1989) found in Carmarthen that itinerant immigrant traders generally sold goods at lower prices than their shop-keeping competitors, who demand that state authorities should curtail the unfair practices of these itinerant immigrants. Price discounting is noted as a major competitive strategy itinerant immigrant traders adopted as a balance between pricing the goods below those of their rival shopkeepers to attract clients without conveying the impression that the goods were of lesser quality (Malgas & Zondi, 2020;Mui & Mui, 1989;Naggar, 1992;Porter, 2008). Various methods were used by itinerants to account for the low prices whilst guaranteeing customers that the quality was comparable with similar products in the shops.…”