EFFECT OF SURVIVAL STRATEGY ON GROWTH PATTERN OF SMALL SCALE RETAIL OUTLETS IN NIGERIA (A STUDY OF SOME SELECTED RETAIL OUTLETS IN LAGOS STATE)
ABSTRACT
The study examines the effect of survival strategy on growth pattern of small scale retail outlets in Nigeria. In this study, relevant literatures were reviewed. The survey research designed was used for the study. Sample of one hundred (100) retailers (traders) were surveyed. Self-constructed questionnaire was the instrument used for the data collection. The data were collected and analyzed using the chi-square statistical method. The findings shows Small scale retail outlets in Lagos state do survive through the application of some sales and marketing strategies such as cash discount, gift, and credit sales. Also location of the small scale retail outlets contributes to the rate of patronage they receive on daily basis and thereby determines the rate of growth of the business. In the light of these findings, some suggestions and recommendations were put forward by researchers to enable the growth and development of small scale retail business.
CHAPTER ONE
INTRODUCTION
- Background to the Study
Every small-scale retail outlet in Nigeria operates within two sets of constraints. Internal constraints, that is those problems within the business organization which the small-scale retail outlet has considerable amount of control. Personnel problem, capacity utilization and the techniques or process of sales are some of such constraints.
External constraints could pose formidable problems to a small-scale retail outlet. The problems are made more severe by the fact that these problems are caused by factors beyond the control of a given small-scale retail outlet. Examples of such factors include: government regulation, traditional or cultural beliefs and religious belief. Other factors include the state of the economy which adversely affects the purchasing power of the consumers thereby weakening the rate of demand and supply (Schewe, 2007).
The service of small scale retail outlets to their customers is very important and imperative for the survival strategies to be clearly spelled for the existing and intending owners. It is the need for the study to make a viable and purposeful rectification, so as to clearly identify the impact of survival strategies for small scale firms that should be in decision relating to establishment. This study is targeted at mapping out effective strategies for promoting small scale outlets through consumers’ satisfaction (Roger, 1996).
Goods in this respect are so vital that no result could be achieved without a good distribution network. To this end, retail outlets must have a clear set of strategies to satisfy the consumers and achieve its set goal of survival. The researcher is faced with the problems of investigating how small scale retail outlets use cash discount, location and relocation, product line, and diversification of goods and services to accommodate market changes and as a means of survival.
Strategies are integrated programmes, which an organization employed in order to achieve her objectives or the overall response of a local organization to the demand of her environment. Every organization must as a matter of necessity have a strategy either consciously or unconsciously formulated (Ansoff, 2000).
Strategies provide a business organization with the concept for its business activities hence, the logic of the importance of well formulated strategies is that every business has strategies either conscious or unconsciously formulated. This is why stoner (1992) defined organization over its overall response of business environment.
There are many strategies a small-scale retail outlet can operate with. The first one is the market retention strategy. This involves maintaining and extending the activities of a small-scale business in established market through product line and adoption.
The second strategy is the balancing strategy, which a small-scale business operates when the organization for financial and other logical reasons, want to balance cost and revenue.
The third strategy is the market development strategy, which occurs when a business organization concentrated on market development tailored to the need of new market while at the same time attempting to expand business in existing market.
However, the risk involved in the market development strategy is greater than the risk involved in the market retention strategy and the balancing strategy. But well managed small-scale business with good track records will usually adopt this strategy in the fulfillment of business objectives for growth and development in business strategy as well as encouragement of improved profitability in the entire enterprise.
According to Ansoff (1995) Components of good strategy include:
Synopsis: these are the advantages got from a good business strategy. The proper understanding of business strategies by business managers goes a long way to achieving the proper, effective and efficient upgrading of small-scale business organization.
Competitive advantage: An organization is said to have competitive advantage in business when it has workable strategies, which aid the improvement of business activities in the midst of its competitors.
Product market strategy: this is the main target of any business organization in the effective and efficient market of a particular product. This strategy is aimed at improving the sale of the products and services. Many business entities adopt different product market strategies depending on the environment in which they carryout their business activities as well as the nature of their competitors.
Retailing, the sale of goods and services to the ultimate consumer for personal, family or household use does not only provide value to consumers by offering an assortment of goods and services, it also contributes significantly to gross domestic product (GDP) through investment in technology, employment income, and generation of government revenue through taxation and tax collection (Berman and Evans, 2004; Cox and Brittain, 1996).
Retailing includes all activities associated with selling of goods and services to ultimate consumers. In the case of retailing activities one might say the bulk start here since the sale of product at retail begins the movement of payments back through the member of the channel that is the position to understand the specific wants and needs of the markets that derive the entire distribution and production systems (Schewe, 2007).
The retailing is the business functions involving selling of good to customers. It incorporates and also rendering services to them. Retailing entails selling good to customers. The goods and service produced to the final consumers should be made convenient for the consumers to acquire them. Retailing can be classified along with many dimensions. Among these are consumers, method of operation required, the amount of shopping effort and type of ownership, width and mix of product lines carried (Udegha and Okeke, 1993).
To better appreciate the different types of retailing institutions, one should examine the different basis of categorizing retailers. Five general basis of categorizing retailer have been suggested by Curtsied (2006), as retail outlets are expanded by customers. Using this basis, retail outlets can be categorized into three:
Convenience stores: convenience store stock and sale convenience goods. Examples are the small stores (kiosks) dealing on basic items such as tobacco, tea, biscuits just to mention but a few. They are located mainly in residential areas in towns and villages.
Shopping stores: these store stock and sale shopping example are cloths furniture and major appliances. Examples of shopping stores are supermarket store found in the urban areas.
Specialty stores: these are mainly relating institution dealing on a known and limited line of products. Examples are different hair dressing stores located in most towns in Nigeria, chemist shops etc. These stores deal on specific brand products (Udeagha & Okeke, 1993).
Services provided to customers on the basis of retailing are defined based on the amount of services retailers render to customers. The retailers performing the full range of retailing functions is regarded as a limited service retailer, other categories of retail service using this basis are self selection and self–service retailers. Self-service and self selection retailers are those retailers that give room for private selections and self service. Here you serve yourself by pricing the goods with already pasted prices this is commonly found in supermarkets.
- Statement of the Problem
Any research work is prompted by problem. Many retail outlets are operating sub-optimally because they could not adequately manage their retail business. Many small-scale businesses have emerged and closed up as a result of uncertainties and inconsistencies in business policies in the Nigerian business environment. However, it is a well known fact that measures of security enjoyed by government departments does not extend to private sectors.
Fake products also affects some retail outlets, since the production of similar products are not possible may be due to lack of capital to import the needed machinery, most people who are used to the product then diverts sort for available ones. While most retail outlets may not recognized the shift due to lack of knowledge of marketing research on the market environment which is the cause of failure of most retail outlet owners. Within Lagos state the story is not different except for some well established supermarkets. They survive through the application of some sales and marketing strategies such as discount, gift, product line etc.
This research seeks to address among other things, to examine and control the goods and services in order to improve the profit performance of the retail outlets especially as it relates to the patronage of customers. The sub-optimal operation of many small scale retail outlets had given rise to more questions than answers about the capability of the store managers in the business. Many small scale retail outlets (shops or stores) as a result of these problems have lost their customers completely to their competitors and were forced to close down the business.
1.3 Purpose of the Study
The study seeks to generate empirical knowledge about the survival strategies adopted by small scale retail outlets in Lagos state. Specifically, the study is aimed at identifying the following.
- The major problems that pose a threat to the survival of small scale retail outlets in Lagos state.
- The growth vector of small scale retail outlets in Lagos state.
- The effects and type of location and relocation of stores or retail outlets.
- To identify the type of incentive adopted by these retail outlets.
- To intimate the owner of small scale business outlets to the use of discounts, product line and diversification as a strategy to boost his business.
1.4 Significance of the Study
The study will arouse consciousness to the benefit of professional marketers in our business organizations. The resultant finding and recommendation will contribute and lead to a more effective decision making by owners and managers of small- scale business outfits toward continued existence and successful operation. It can equally provide a useful guide for prospective owners of small scale outlets who may wish to choose self–employment as a career, particularly in a depressed economy. Nigeria as a nation is blessed with so many industries and academic institutions whose service to the nation would forever remain invaluable. These industries are charged with the responsibilities of producing goods of high qualities and standards at a very reduced and affordable cost for the citizenry.
1.5 Research Questions
- Small scale retail outlets in Lagos state survive through the application of some sales and marketing strategies such as cash discount, gift, and credit sales.
- Location of the Small scale retail outlets contributes to the rate of patronage they receive on daily basis and thereby determine the rate of growth of the business.
- Small scale retail outlets are business outfit that deals with finished products and other household items which is the reason why it is being located in residential areas.
- Small scale retail outlet business activities are affected by traditional, cultural and religious beliefs.
- Economic situation affect the forces of demand and supply by reducing the purchasing power of the customers.
- What are the effect of survival strategy on growth pattern of small scale retail outlets in Nigeria
1.6 Research Hypotheses
H01 Small scale retail outlets in Lagos state do not survive through the application of some sales and marketing strategies such as cash discount, gift, and credit sales.
H02 Location of the Small scale retail outlets do not contribute to the rate of patronage they receive on daily basis and thereby do not determine the rate of growth of the business.
H03 Small scale retail outlets are not business outfit that deals with finished products and other household items but are manufacturing concerns which is the reason why it is being located in residential areas.
1.7 Delimitation of the Study
The scope of this research is mainly on some of the retail shops within Lagos state urban community, the study of these shops also covers other communities in Lagos state for it seems to be a well and special area aim at business imperatives where greater retail outlets are located in Lagos state.
On the course of undertaking the study, the Researcher observed certain limitations to the study, such as lack finance, lack of business knowledge interest pursuance and time factor among other problems associated with growth and development of small scale retail outlets in Nigeria.
1.8 Definition of Operational Terms
Competitor: this is an opponent in a business, especially in a commercial market.
Market Research: study of consumers’ wants: the gathering and analysis of information about what people want or like or what they actually buy.
Market Strategy: this is a method by which marketers or sellers use draw the attention and get the patronage of buyers.
Patronage: this is the regular purchasing of goods from a store or business.
Retail outlet: this is a shop or stores where petty goods are sold in retails by petty traders or retailers.
Specialty stores: these are mainly relating institution dealing on a known and limited line of products.
Strategy: planning in any field: a carefully devised plan of action to achieve a goal, or the art of developing or carrying out such a plan.
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