Assessing New Product Development strategies in the South African retail industry

Abstract

Small and medium-sized enterprises (SMEs) play a critical role in employment creation, innovation, and inclusive economic development in emerging economies. However, within South Africa's highly concentrated and buyer-dominated grocery retail sector, many SMEs struggle to secure and sustain access to formal retail supply chains despite demonstrating product creativity and entrepreneurial intent. Persistent new product failures and limited retailer listings suggest an innovation-commercialisation gap, in which firms generate ideas but lack the structured capabilities required to translate them into market-ready, retailer-compliant offerings. While prior research has largely focused on external constraints such as finance and policy support, comparatively little empirical attention has been paid to the internal new product development (NPD) capabilities that underpin SME market legitimacy and retail access. This study addresses this gap by assessing the state of NPD strategies among South African SMEs and examining how organisational capabilities influence product success and participation in formal retail value chains. Grounded in the Resource-Based View, Dynamic Capabilities Theory, and signalling and institutional perspectives, the research conceptualises NPD as a strategic organisational capability through which SMEs sense opportunities, validate products, coordinate internally, and demonstrate reliability to powerful retail buyers. A sequential explanatory mixed-methods design was employed. The quantitative phase surveyed 74 non-listed SMEs to evaluate the relationships between strategic orientation, research-led validation, and internal collaboration and their influence on retailer access outcomes. The qualitative phase comprised semi-structured interviews with 20 listed SMEs to explore how successful firms institutionalise, adapt, and sustain NPD practices in real-world retail contexts. Statistical analyses, including exploratory factor analysis and regression modelling, were integrated with reflexive thematic analysis to generate meta-inferences. Findings indicate that structured, research-based NPD routines (particularly systematic validation, documentation, and cross-functional integration) significantly enhance SMEs' credibility and likelihood of retail inclusion. Conversely, informal and ad hoc approaches are associated with higher product failure and exclusion. The study develops an integrated Retail-Ready NPD iv Capability Model demonstrating how internal capability configurations translate into external legitimacy and sustained market participation. The thesis contributes theoretically by extending capability-based explanations of SME innovation within buyer-dominated systems, methodologically by illustrating the value of mixed-methods integration for capability research, and practically by providing actionable guidance for SMEs, retailers, and policymakers seeking to strengthen inclusive participation in formal retail markets. Collectively, the findings offer a contextually grounded framework for enhancing SME competitiveness and reducing new product failure in emerging-market retail environments.