An investigation into the key growth factors for small Indian retailers in some of the previous group areas of Pietermaritzburg : the role of marketing.

Abstract

The problem this study addresses is the key factors which have played an important role in the growth of small Indian retailers situated in some of the previous Group Areas of Pietermaritzburg. More particularly, the intention was to examine what role marketing played in this growth. The main reason for undertaking this study is that it seems that many small Indian retailers appeared to have exhibited growth despite having been affected by Apartheid and other problems commonly associated with being small. This study is unique in that it studies growth ie. a positive phenomenon amidst difficult situations ie. Apartheid and problems that are inherent in being small. This problem is explored by firstly analysing literature on the history of small Indian retailers in South Africa with the intention of identifying possible factors which may have played an important role in their growth. Stemming from this exploratory study into the history of small Indian trade in South Africa were the following factors which seemed to have played an important role in their growth: a. business experience and skills, b. hard work and support especially from family members, c. good knowledge of the needs of Indian customers, d. superior service, e. competitive prices, f. keeping overheads low, g. adequate capital possessed particularly by small Passenger Indian retailers, h. effectively identifying and exploiting opportunities. Secondly, the literature was once again explored to ascertain and examine factors which have been known to play an important role in business and more specifically small business growth. Having examined the literature, it was found that such growth factors could be grouped under six broad headings viz. Personal, Marketing, Financial, Technical, Management, and General. Relating what seemed to have played an important role historically in South Africa in the growth of small Indian retailers to what has been known to play an important role in small business growth generally, it was found that there were a number of common associations. Hence, this allowed for the generation of the following hypotheses: The growth of small Indian retailers in some of the previous Group Areas of Pietermaritzburg was because of: Hypothesis I (HI) - Personal Factors, Hypothesis 2 (H2) - Financial Factors, Hypothesis 3 (H3) - Marketing Factors, Hypothesis 4 (H4) - Management Factors, Hypothesis 5 (H5) - Technical Factors, Hypothesis 6 (H6) - General Factors. A survey was conducted in two areas which were part of the previous Group Areas of Pietermaritzburg and are often referred to as the 'hub' of Indian retailer activity in Pietermaritzburg with a high concentration of small Indian retailers. The areas in question were the 'bottom end of town' which included all those businesses in Church Street between East and Retief Streets; the other area included businesses in Old Greytown Road between Naidoo and Allandale Roads. A total of 67 small retailers were interviewed who survived for at least three years, were in business during the Apartheid era, and exhibited some form of growth during this period. Cluster/area samples were chosen on the basis of convenience and judgement to suit the financial and time constraints of the study; and elements were included in the sample randomly but in proportion to the size of their clusters/areas in the total cluster/area population. The 67 businesses studied were classified as low, medium, and high growth using Hatten's (1997) and Walker's (1988) growth models. There were 31 low growth, 32 medium growth, and 4 high growth businesses. The most important factors in this study were found to be in order of importance: personal, financial, marketing, management, and technical. In addition, the results of the qualitative study revealed that Culture and Religion, Group Areas, and past business experience also played an important role in business growth, in this study. The 'top ten' sub factors in this study were found to be: Honesty, Hard Work, Commitment, Involvement, Common Sense, A belief in Superior Quality and Service, Learning from Failure, Knowledge of Business and Market, Adequate Capital, Price. In testing the hypotheses, using the Chi-squared test, it was found that there were significant relationships between business growth and personal, financial, marketing, management, and technical factors, at the 95% confidence level. For all factors, using the Chi-squared test, significant differences, and high frequency counts were apparent at levels of importance thus suggesting that all factors studied were at least important in the growth of small Indian retailers situated in some of the previous Group Areas of Pietermaritzburg. The results of this study may be useful to: a. prospective small business people wanting to increase their chances of growth, b. those small businesses that want to increase their growth, c. those small businesses experiencing growth problems, d. small business operators from disadvantaged backgrounds, e. organisations involved in small business development, support, and training. The limitations of this study include: a. the lack of a pre-prepared sampling frame, b. unique results which may not be applicable to other small businesses, c. lack of literature on small business growth and the history of Indian trade in South Africa, d. inapplicability of the chi-square test for businesses in the high growth category due to a small cell size, e. restricted response from the Likert scale measurement used.