The response of small informal firms to global trends : the case of clothing stalls at the Essenwood Craft Market.
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Globally, the nature of competition is changing. Growing international prosperity, combined with the forces of globalisation, are creating a demand for greater product variety and quality. For producers this has meant the need to focus production on niche markets and to move from Fordist mass production to post-Fordist- flexible production systems that emphasise small batches of high quality customised products. Accompanying this shift is an increasing awareness within industry of the need to respond flexibly and rapidly to changing customer demands. In this increasingly cornpetitrve environment marketing and retailing arrangements are becoming critical to firm success. Close contact with customers has become increasingly important, promoting new forms of retailing arrangements, and a growing understanding of the role retail arrangements play' in satisfying consumer demand. At the same time, the growth in batch production for niche markets has created room for small enterprises to effectively compete with larger firms in producing for increasingly fragmented markets. Internationally, small firms have found that their competitive position can be strengthened through geographic clustering into what are sometimes called Industrial Districts. Clustered firms co-operate around a range of issues such as input purchasing, marketing and exporting. Finally , a shift to flexible production has been reflected in informalisation, the systematic shifting of production into the informal sector. These trends - the shifting basis of competition, the growth in flexible production, widening opportunities for small enterprises and growing informalisation - are particularly obvious in the clothing sector. They are especially relevant in South Africa where competition from low cost producers in Asia is forcing local clothing enterprises to concentrate production on high quality , high fashion garments for upper market segments in order to retain a share of the domestic market. This study attempts to determine to what extent the behaviour of a particular group of clothing enterprises - the small, mostly informal clothing enterprises operating at the Essenwood Craft Market - reflects these global trends. The activities of the Essenwood clothing enterprises were found to reflect the shift in the nature of competition, and particularly the growing importance of retailing and marketing arrangements for competitiveness. The enterprises were targeting niche markets , and emphasising product quality and design innovation. Retailing through the Craft Market allowed these small enterprises to benefit from an environment conducive to consumption, while facilitating close contact with customers. The firms were not, however, taking advantage of the clustering of retail arrangements to co-operate with one another on matters of mutual interest. The informal nature of these enterprises seemed to reflect a desire for economic independence, rather than the negative effects of economic restructuring, or a strategic shift of production from the formal to the informal sector. The study suggests that informal enterprises can be dynamic and growth-orientated, and questions whether the White Paper on Small Business recognises this. Useful support for dynamic, growth-orientated informal enterprises could include domestic and export marketing support, and the facilitation of co-operation between enterprises to encourage improved purchasing and lobbying power.