Comparative analysis of the performance of Asian and Black-owned small supermarkets in rural areas of Thulamela Municipality, South Africa

Abstract

Studies conducted in some parts of the world have highlighted the fact that Asian-owned small, medium and micro enterprises (SMMEs) always thrive better than those that other racial groups own. For example, a Global Entrepreneurship Monitor study revealed that in South Africa, Blacks owned few businesses and rarely took advantage of the entrepreneurial opportunities available to them even though there are policies that underpin the promotion of SMME. The aim of this study was to compare the determinants of performance of Asian and Black-owned small supermarkets in Thulamela Local Municipality. Specific objectives of the study were to: (1) assess the indicators of performance of small supermarkets; (2) compare the performance factors of Asian- and Black-owned small supermarkets; and (3) suggest intervention strategies to improve the performance of the small supermarkets. A cross-sectional study underpinned by a mixed methods approach and techniques was applied in two sequentially integrated phases. The first phase was qualitative in nature and participants were officials from the Local Economic Development units in Thulamela Local and Vhembe District Municipalities, representatives of Associations of Business Owners, Blacks (Venda and Shangaan speaking) small supermarket owners and Asian (Indians/Pakistanis and Chinese) small supermarket owners. Snowball sampling was used to select interviewees. Data was analysed using the Atlas- ti.7.0.81 software. The second phase was quantitative in nature. Small supermarket owners who were involved during qualitative phase also participated in phase two. Data was analysed using the Statistical Package for Social Sciences (SPSS) ver 24.0 for windows. Mann-Whitney tests were conducted to establish if there were differences in the perceptions of participants due to race, gender and geographic location. The indicators of success commonly mentioned were number of employees, profit, survival of the business over a long period, and stock or inventory and growths. Asian-owned small supermarkets were performing better because they used more effective and efficient purchasing plus supply systems. Their collectivist culture and networking abilities made them realise higher levels of efficiency when purchasing goods compared to the Black entrepreneurs. Black-owned small supermarkets were performing poorly because of their weak entrepreneurship culture, human capital and business ties. Unfair competition from spaza shops negatively affected their performance. Other factors hindering the performance of the latter were crime and rigid labour laws. In small supermarkets owned by Asians, shoplifting and burglaries were monitored using surveillance cameras during the day. Security companies were deployed during night hours. iii Regarding perception of motivation to start a business, there were significant differences due to race of small supermarket owners and location or area of operation (P < 0.05). Significant differences in perception (P < 0.05) among the races and due to gender and location were attributed to the culture of business owners. Effects of social capital on performance of small supermarkets were reported (P < 0.01). Based on the findings of this study, small supermarket owners should strengthen their human capital through participating in training programmes, especially on supply chain management, marketing and financing. The need for creating networks that help to access information needed to take advantage of the support from the state institutions and the non-governmental sector was evident. Thus, it was concluded that improved performance of small supermarkets could be realised through strengthening human capital, joint purchasing, establishing effective networks and diversifying business activities.