Criteria for measuring resilience of youth-owned small retail businesses in selected rural areas of Vhembe District, South Africa

Abstract

In South Africa, various government and private sector-led initiatives have been directed towards promoting youth involvement in small retail businesses. This was designed to counter the high unemployment and poverty rates among youth. However, high failure rates of the initiatives consistently frustrate these noble efforts. Even though this is the case, neither attributes of youth-run small retail business resilience nor the factors that predispose them to the high failure rates are well-known. This situation demands taking urgent action to foster resilience in the youth-run small retail business sector. Thus, the current study focused on identifying the major threats and strengths to business and determining a set of objective criteria and indices for use in measuring resilience. Potential resilience strategies were also sought. The study was conducted in Vhembe District of Limpopo Province in South Africa. An explorative mixed research approach was employed. Participants were selected using both snowball and cluster sampling procedures. Data were collected using semi-structured interview guides and questionnaires. Qualitative data were analysed using Atlas ti version 8 software techniques such as network diagrams and code primary document tables. For each objective, in-depth results were obtained, further interrogated in a survey and analysed using the Statistical Package for Social Sciences software (IBM SPSS; version 25) in the subsequent phase. The main statistical techniques utilised were Principal Component Analysis (PCA) and Kruskal-Wallis tests. Significance was determined at P< 0.5. Results from PCA test reviewed three major threats to small retail business resilience that included poor infrastructure (28.54 %), financial infrastructure (20.97 %) and competition (14.94 %). The three factor structure accounted for a total variance of 64.46 %. Poor infrastructure and financial inadequacy threats did not vary with distance from the urban area (P > 0.05) while competition significantly varied with distance from the urban area (P< 0.05). With regard to strengths, PCA analysis produced a four factor structure that explained a total variance of 54.59 %. The four major strengths included marketing ability (16.97 %), good customer care (14.42 %), business knowledge (12.08 %) and commitment (11.13 %). A six dimension criteria for measuring small retail business resilience was established using PCA. The six dimensions encompassed security measures (18.01 %), outsourcing abilities (13. 70 %), marketing strategies (10.07), risk management (8.54 %), financial management (8.43 %) and innovation (7.89 %). The six factor structure explained a total variance of 66.67 %. These resilience pillars were related to threat detection, prevention and adaptation business mechanisms. Four resilience dimensions (security measures, marketing abilities, risk management and innovation) were similar across distance variations from the urban area (P> 0.05). However, significant differences between urban and rural areas were observed in two variables, that is, joining business alliances (P=0.012) linked to outsourcing abilities and keeping money away from the business premise (P=0.034) associated with financial management. Resilience indices were further developed utilising the six building blocks of the criteria. The indices for measuring small retail business resilience were expressed in the formula: R1= ƒ (SM1, OA1, MS1, RM1, FM1, I1, S1) + e where SM=Security Measures; OA= Outsourcing Abilities; MS= Marketing Strategies; OM=Risk Management; FM= Financial Management; I= Innovation; S= Subjective resilience dimensions and 1= particular time; e= error. The assumption underpinning these indices was that, small retail business resilience is not observable and thus it can be measured through assessing each dimension separately at a particular time. The outcomes reflected that, measuring youth-owned small retail businesses resilience encompasses a clear understanding of area specific threats and the subsequent customised performance measures. Resilience dimensions may change with time due to socio-economic changes, government policies and local conditions. As such, it is crucial to constantly assess youth small retail businesses in order to determine their current status and changes in resilience components. Current strategies and potential interventions for promoting small business resilience were also reviewed. Small retailers were currently utilising strategies such as business collaboration, specialisation and stock diversification. To, address the weaknesses associated with presently utilised strategies, potential interventions that encompassed financial support, provision of cheap stands, need for financial assistance and provision of business training and infrastructure upgrades were proposed. The present study provided a criteria and resilience indices that can be used by policy implementers, development agencies and funders to determine resilience drivers, monitor changes in resilience attributes over time and identify necessary interventions in the small retail sector. This assists decision makers to make pre-informed decisions before providing support to youth small retailers. The use of participatory research methods in the present study helped to ground the work in the youth small retail sector and thus, contributing to community engagement practices. The use of mixed study approaches has been consistently recommended in studies related to resilience measurement methods. As a result, the mixed research methods utilised in the present study provides directions for future replication in studies aimed at developing approaches for measuring resilience in the small business sector. Lastly, the simplicity of the criteria and indices make it easier for small retail business owners and other practitioners to use in future.