Academic journal article Journal of Marketing and Management

Entrepreneurial Orientation and Performance of Small Businesses in the Retail Sector in the Eastern Cape Province of South Africa

Academic journal article Journal of Marketing and Management

Entrepreneurial Orientation and Performance of Small Businesses in the Retail Sector in the Eastern Cape Province of South Africa

Article excerpt


Background to the Study

The retail sector plays a vital role in the South African economy in that it has a positive contribution to the growth of the economy. Since the early 1990s economic growth has been driven mainly by the tertiary sector which includes wholesale and retail trade, tourism and communications (South Africa's economy: Key sectors, 2014). As the country's economy grows to become one that is more consumer driven given the decline of the mining and manufacturing industries, there has been a significant development of the retail sector which has been observed over the past few years (Baneke, Hayworth, Hobson, & Mia, 2012:27-31).

South Africa continues to develop new malls and shopping centers to accommodate the expansion of the retail industry. This rapid establishment of trade centers has not only seen cities expand their retail area, but also some townships have been developed through the establishment of malls and shopping centers (South Africa's changing retail market, 2013). According to the Provincial economic review and outlook (2010), the Global Retail Development Index (GRDI) annual publication ranks the top developing countries for retail expansion internationally where countries are ranked on a 100 point scale. In 2011 South Africa was ranked 26th out of 30 developing countries with a score of 42.2 in comparison to 2010 when South Africa was ranked 24th with a lower score of 41.7. Even though the country's ranking dropped, the GRDI score improved. The growth of the retail industry has taken place both in the formal and informal sectors (The retail industry on the rise in South Africa, 2012).

The economic contribution made by the retail industry is of great value to the economy. According to the IHS Global Insight (2012), in 2011 the tertiary sector contributed 69 percent to the economy of which an estimated 13.8 percent was from the wholesale and trade industry. In terms of employment contribution, the retail industry has the ability to absorb unskilled workers and train them into cashiers in stores. The Wholesale & Retail Sector Education and Training Authority (W&RSETA) (2012) provides the necessary training which promotes skills development and affords people the opportunity to obtain better employment, particularly to the youth. In addition, the training also helps address the skills shortages as well as fill them within the industry.

In the year 2011, according to Consumer and retail industry solutions (2012), out of the nine provinces in South Africa, the Eastern Cape ranked fourth contributing a total retail Gross Value Added (GVA) of 8.7 percent after Gauteng, the Western Cape and KwaZulu-Natal as shown in the pie chart below. In addition, in the year 2000 the Eastern Cape Province had the highest comparative advantage in the trade subsector.

According to Ruhiiga (2000:190-192) there has been a strong retail growth in townships and rural areas which are also known by retailers as "emerging economic areas". The ongoing economic development opportunities in the retail industry, particularly within the townships and rural areas have the potential to raise the economic value of various hubs, not only to the surrounding communities, but also to the region as a whole. This has been observed through the establishment of malls as well as the expansion of existing shopping centres within the Eastern Cape Province taking place mostly in outlying rural areas and former townships (Eastern Cape Provincial growth and development plan, 2004-2014). In addition, the Eastern Cape Province's continued development of retail industry plays a key role in not only filling a need within communities, but by contributing to the social upliftment of various communities and the development and upgrading of infrastructure (Kenako Mall sets the tone for future township retail development, 2013).

The Eastern Cape has retail patterns which are quite far removed to those in other parts of the country. …

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