Retail patronage of Sowetan consumersafter 1994

J. transp. supply chain manag.

2018

Background: The importance of South African small businesses, especially retailers, in improving communities’ standards of living necessitates sound business strategies to survive and remain competitive. Selecting appropriate business strategies is cardinal for the sustainable development and growth of all types of businesses, including small businesses. The supply chain strategy defines how operations in the supply chain will support the overall competitive strategy and is orientated to promote either responsiveness or cost-efficiency. It is imperative that all inventory decisions be aligned with the orientation of the selected supply chain strategy.Objectives: The aim of this article was firstly to determine how small retailers operating within the boundaries of Soweto, a township in Gauteng, South Africa, manage their inventory decisions considering the orientation of the supply chain strategy; and secondly, to investigate whether retail industries differ in terms of inventory decisions.Method: A survey was conducted among 650 formal, independent small businesses operating within Soweto of which 556 were classified as retailers based on the Standard Industrial Classification. Structured interviewer-completed questionnaires were used to obtain quantitative data from owners or managers. Both descriptive and inferential analyses were performed to determine the orientation of the retailers’ supply chain strategy based on their inventory decisions relating to the average rate of purchasing inventory, the amount of inventory purchased, as well as the quality and variety of products offered to customers. Five hypotheses were formulated to determine whether a difference exists between six industry groups with regard to the management of inventory.Results: It was established that small township retailers predominantly manage their inventory decisions responsively. It was also concluded that differences exist in terms of how small township retailers manage their inventory based on the industry in which they operate. The results showed that retail hardware stores are focused on making inventory decisions more cost-efficiently than the other industry groups, whereas retail general stores are focused on making inventory decisions more responsively than the other industry groups.Conclusion: The owners or managers of small township retailers need to be educated in terms of inventory management decisions. This article can be used as an educational platform to show how small township retailers can identify the aligned inventory decisions for supporting a selected supply chain strategy orientation. Generally, small township retailers may maintain their competitive advantage if they align all business strategies to promote responsiveness. Since the industry in which small retailers operate influences inventory management decisions in terms of responsiveness and cost-efficiency, owners or managers must consider the specific industry in which they operate before making such decisions.

Section: Methodsmentioning

confidence: 99%

Inventory decision-making by small Sowetan retailers

J. transp. supply chain manag.

2018

“…In this article, business age and annual growth in income were selected as predictors of small retailers' survival. Strydom 2013Strydom , 2015. According to Ligthelm (2013:73), informal small businesses operating within townships are not regarded as the foundation of successful and productive township small businesses.…”

Section: Predictors For the Survival Of Small Retailersmentioning

confidence: 99%

“…After 1994, the new South African government prioritised the development of black-owned businesses, which included the development of small businesses in townships (Rogerson & Rogerson 1997:33) Although the Gauteng Department of Economic Development acknowledged the numerous initiatives aimed at developing townships (which included the erection of large shopping malls), they were concerned that townships were still characterised by low levels of entrepreneurial activities, a low survival rate of small businesses and a lack of business skills by the owners and managers of these businesses (Gauteng Department of Economic Development 2014:4-5). Research by Strydom (2013Strydom ( :2870 on the patronage of Sowetan retailers established that the high-income group still mainly bought high-value items outside the township and that individuals shopping within the township (so-called inshoppers) formed part of the middle-to lower-income groups. It therefore seems that the retailers located within Soweto have mainly been serving the price-sensitive inshoppers (Strydom 2011(Strydom :2870.…”

Section: Introductionmentioning

confidence: 99%

Managing logistical supply chain drivers: A predictor of small township retailers’ odds of survival

2019

Acta Commercii

Formal independent small Sowetan retail businesses operate under challenging economic conditions that impede their ability to survive. However, the management of the logistical supply chain drivers can increase these small retailers' odds of survival.Research purpose: To investigate whether the management of the logistical supply chain drivers can serve as a predictor of formal independent small Sowetan retail businesses' odds of survival.Motivation for the study: Assisting formal independent small Sowetan retail businesses to integrate with local and formal supply chains, as well as increasing their odds of survival amidst the difficult economic conditions under which they operate.Research design, approach and method: A quantitative survey was conducted among 650 formal independent small Sowetan businesses, of which the responses of 556 retailers were analysed. Two binary logistic regression models were developed to determine whether the management of the logistical supply chain drivers could predict the small retailers' odds of survival. Main findings:The results of two binary logistic regression models showed that the management of the three logistical supply chain drivers influences the odds of formal independent small Sowetan retail businesses surviving for 5 years or longer, as well as their odds of growing their annual income.Practical/managerial implications: Assisting policymakers when designing developmental initiatives for townships. Contribution/value-add:This study strives to assist formal independent small Sowetan retail businesses operating within a developing country to manage their logistical supply chain drivers to increase their odds of survival and contribute to the economic development of their country.

“…By not paying an additional fee to receive inventory faster, the retailers are focused more on being costefficient than responsive. As transportation costs could influence the price of the product and retailers in Soweto are mainly serving price-sensitive customers (Strydom 2013(Strydom :2870, an increase in the price of a product could negatively influence sales. If a small business paid a supplier more than its competitors to receive its inventory faster, it would increase responsiveness but at the same time decrease cost-efficiency, which could lead to a loss of sales because of subsequent higher prices.…”

Section: Higher Payment Than Competitors For Faster Deliverymentioning

confidence: 99%

“…The development of the retail industry in Soweto had a positive impact not only on the township in terms of increasing employment opportunities and stimulating economic growth (Gauteng Quarterly Bulletin 2012:26) but also in influencing the management of these businesses as opposed to how they were operated in the previous basic retail infrastructure (Nkosi et al 2013:4;Strydom 2011:151). Although Soweto had moved from unplanned, scattered formal and informal businesses to a township with modern shopping centres by 2012 (Strydom 2015:463), the retail patronage of Sowetan retailers showed that high-value items were still mainly bought outside the township by the high-income group and that the individuals shopping within the boundaries of the township come from the middle-to lower-income groups (Strydom 2013(Strydom :2870). Therefore, it seems that Sowetan retailers are mainly serving those price-sensitive customers who still shop within the township boundaries.…”

Section: Introductionmentioning

confidence: 99%

Transportation decisions of small businesses in Soweto: Balancing responsiveness and efficiency

Journal of Transport and Supply Chain Management

2016

Background: The performance of small businesses makes an important contribution to the South African economy. Although the South African government implemented various initiatives for the development of small businesses in townships, the full advantage of such initiatives has not yet been experienced.Objectives: To investigate how formal, independent small retail businesses operating in Soweto manage transportation as a logistical supply chain driver to be financially sustainable.Method: During 2014, a survey was conducted among a sample of 556 formal, independent small retail businesses in Soweto to determine if these retailers focused on responsiveness or cost-efficiency when managing their logistical supply chain driver of transportation.Results: The results showed that the retailers manage transportation decisions by focusing on either cost-efficiency or responsiveness, depending on the type of transportation decision and the industry in which the retailer operates. In terms of the profile of the older businesses (5 years and older) that showed a growth pattern in income (turnover) over the past year, responsive transportation decisions based on having inventory available (either by direct delivery by suppliers or by using own transportation) was a higher priority than considering cost.Conclusion: The type of transportation decisions made by the older, growing businesses could serve as an example to younger businesses showing a stagnating or contracting growth pattern.