Agricultural retail businesses in South Africa : the higher demand on competition

Abstract

Since the establishment of agricultural co-operatives they have been in a privileged situation of having a captured market in the sense that farmers were shareholders in these stores which ensured some loyalty and commitment. Hardwares trade in the same product ranges as the agricultural retail businesses which imply direct competition. The main concern is seeing the rate in which these non-agricultural stores are growing in the sense of opening new stores and competitiveness compared to the agricultural retail stores. For the purpose of this paper, Fleener's model for retail success was used as key success factors to measure the agricultural retail business against the hardwares. Fleener's model is based on a combination of three components namely Product, Process and People. By product he means; the type of product to be sold, the price the consumer pays for the products offered and the promotions done. By process he means; financial performance, the organizational structure and the physical site and location management. By people he means; what the customer experiences when doing business with the retailer, what the employee experiences when working for the retailer and the quality of service delivered by the retailer. Information was gathered with the aid of two questionnaires; the first questionnaire measures the response of the hardwares against the response of the agricultural businesses with the key success factors in mind; the second questionnaire was aimed at suppliers who supply both the hardware industry as well as the agricultural retail industry. Conclusions reached include the following: To be able to become competitive, agri businesses should focus on their skill levels, not only on retail level but also on management level. They should increase effective training opportunities and get creative in the presentation of their stores and products. They also need to have some strategic vision and plan their product strategies, pricing strategies and marketing strategies to align with their strategic vision. They should further drive marketing campaigns that would build awareness around them as being the preferred suppliers of goods to the DIY, hardware and farming community. The agricultural retail businesses should investigate ways to strengthen an already well-structured infrastructure of retail outlets to increase the barriers of entry for newcomers through means of cooperations, joint-ventures or franchising. They should guard their market share and aggressively start implementing growth strategies to show the market that they are serious about retailing.