Abstract
The research objective of this study was to determine the key drivers of store success in a large food retail group in South Africa. The group currently operates in excess of 800 stores, managed by independent retailers on a franchise basis. Both the biographical details of the store owners and their management styles, demonstrate considerable variability. The effects of six categories of explanatory variables were related to two overall measures of store success – sales growth and an internal measure of store performance – first pairwise and second, by stepwise multiple regression. The bibliographical profiles of the owners, with the exception of age and marketing experience did not predict store success, nor did the family history or number of stores owned. The legal form of ownership had no influence on performance either. As far as competition is concerned, specific competitors and competition density did not contribute to success, but the distance to the nearest competition was positively related to store performance.The implementation of category management and an increased frequency of stock take, as examples of operational procedures, were positively associated with performance. Two leadership styles, one related to a clear articulation of values and the other to the management of deviations from set goals did positively impact on store performance. Active participation in the local community was also reflected in improved store performance.Disappointingly, there was little evidence of significant relationships between retail sales growth and the selected variables. The multivariate model, however, explained approximately twenty per cent of the store performance measurements.
Highlights
The concept of voluntary trading, uniting the efforts of both the independent retailer and wholesaler, first took hold in the late 1920’s in North America
This study examined a sample selected from 685 store owners in South Africa, and attempted to correlate measures of store success with some traditional, and some hypothesised, success drivers
DeHoratius and Ton (2001) found that over 65 per cent of inventory records were inaccurate at the store stock keeping unit (SKU) level in a large supermarket group and that the difference between physical and actual stock on hand was on average 35 per cent of the target level for any given product
Summary
The concept of voluntary trading, uniting the efforts of both the independent retailer and wholesaler, first took hold in the late 1920’s in North America It has been a long held belief that the independence of the store owners is one of their key strengths, and that the owner-based model transpires into a more effective and hands-on approach to managing a retail store. A key objective of this study was to develop insights into the contributions of owner characteristics, store characteristics and operational procedures, staff management practices, community involvement and different leadership styles in determining store success. This information may be valuable in selecting future franchise holders.
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