Perceptions of informal local traders on the influence of emerging markets : Umlazi and Kwa-Mashu townships.

Abstract

Mall development in South African townships has increased in recent times as large chains strive to increase their profitability. The emergence of township malls and suppliers’ expansion into the townships has the potential to create jobs and improve the quality of goods and services. However, it is important to note that these developments could negatively affect informal township traders. While the expansion of mainstream retailers into South African townships offers business opportunities and more choice to consumers, it also threatens to displace traditional local informal traders. Informal local traders are individuals who act as distribution channels that focus on moving products at a small scale, while formal retailers are large chain stores that provide a wide variety of goods and products in bulk and breaking bulk. Emerging markets are characterized by an increase in personal disposable income among previously disadvantaged groups. This study therefore, explored the effects of value-creating supply chain distribution systems and the perceptions of informal local traders in emerging markets in the two largest townships in KwaZulu-Natal province, Umlazi and Kwa-Mashu. Four key objectives underpinned this study: to explore informal township traders’ perceptions of the effects of value-creation supply chain distribution systems in emerging markets; to assess the influence of emerging markets on the optimal structured cost of the distribution model and propensity to improve product availability; to establish the extent of the transformation of informal retail enterprise development by formalized large scale chains through a configured supply chain; and, finally to evaluate the extent of the displacement of informal local traders as a result of the entry of both large scale suppliers and retailers into township markets. The study employed various univariate, bivariate and multivariate statistical techniques to analyse the data collected from 291 respondents. The study found that, while informal local traders appreciate the transformation and development of the townships brought about by mall development, their businesses have been somewhat or completely displaced by the emergence of township malls.