Retail patronage of Sowetan consumersafter 1994

Changes in retail patronage in the South African retailing environment since the advent of democracy in 1994 need to be further researched. Various factors have played a role in making the South African retail environment the dynamic place it is. Some of the major changes include the new retail planning that has occurred since democracy and the effect it has had on the disadvantaged black township areas. The aim of this study was to examine the influence of inshopping and outshopping as special instances of retail patronage in the Soweto township. Soweto was chosen for the study because it is one of the largest disadvantaged townships in South Africa. Both exploratory and descriptive research designs were used in the study. A disproportionate stratified sample was selected and interviewed, consisting of 690 households spread over 11 subareas of Soweto. It was found that there is a marked difference between the profiles of inand out-shoppers living in Soweto. Some of the findings correlate with the findings in other countries of the world, but there are also a number of major differences. South African retailers should take cognisance of these differences and adapt their retailing strategies accordingly.


INTRODUCTION
Retail development has been the catalyst in the upgrading of various economically and socially depressed areas in the world, resulting in improved social cohesion and safer living environments (Guo and Wang, 2009).Massive investments in shopping centres, greater personal mobility and better-informed consumers have resulted in changes in the nature and range of retail development.Generally speaking, today's consumers are spoilt for options because of retailing facilities ranging from near to home to regional shopping centres some distance away.Consumers can also travel further to outlying trade areas to buy goods and servicesthus spending a major part of their income outside the local retailing community.This activity of consumers, namely travelling and bypassing their local retailing facilities, can be described as outshopping (Engel et al., 1993;Choe et al., 1997;Sullivan and Savitt, 1997;Paddison and Calderwood, 2007;Dunne and Lusch, 2008).
Obviously retailers would like to see their customers shop locally, which refers to the concept of inshopping (the opposite of outshopping), implying that the customer purposely patronises the retailing institutions in the area in which he or she resides.These two concepts of outshopping and inshopping are the focus of the research on the retail patronage behaviour of Sowetan residents after 1994.
Retail patronage behaviour attempts to explain the mechanism of retail institutional choice by the customer and can be defined as "all the possible inner features of dynamism around the shopping behaviour phenomenon in terms of store choice" (Lee, 2009;Manana, 2009).The aim of this article is to look at the retail patronage activities of South African shoppers in general, and more specifically, in the previously disadvantaged township of Soweto where customers only recently acquired modern retailing facilities in the form of shopping centres and E-mail: strydjw@unisa.ac.za.Tel: +27 012 429 4455.Fax: 086 682 9222.brand name stores.The dialogue commences with a discussion of what outshopping and inshopping entail and refers to the trends worldwide regarding this shopping patronage behaviour.This will be followed by an explanation of the research methodology followed in the study in Soweto.Trends in these shopping activities are then compared with international shopping occurrences, and conclusions are drawn.

The occurrence of outshopping
Outshopping, also known as market gravitation or market leakage occurs in various arenas, ranging from international outshopping to domestic outshopping.International outshopping occurs across the borders of a country, as in the case of Chinese citizens, where it was estimated that about two million travel to Europe and one million to the Americas every year to buy products and services (Wang et al., 2010).However, the majority of Chinese shoppers involved in outshopping travel to neighbouring Asian destinations (referred to as transborder outshopping) such as Hong Kong, Singapore, South Korea and Japan.In various other countries, transborder outshopping occurs, for example, in Europe, America, Hong Kong, Singapore, South Korea (Wang et al., 2010), Malaysia (Piron, 2002) and in Southern Africa, where, for instance, Zimbabwean citizens travel to South Africa to buy products and services.In most cases, however, outshopping is seen as a more domestic shopping phenomenon occurring inside a country, usually in the rural areas where there are fewer retailing facilities and options.This usually results in a situation where rural retailers that have been serving the local community for years are put under severe strain to survive when local residents buy outside the area.The threat to rural retailers is further exacerbated by the entry of national retailers and global retailing groups such as Wal-Mart.These groups have developed smaller versions of their successful retail innovations such as hypermarkets and supermarkets to cater for customers in larger towns, attracting customers in the surrounding smaller rural towns and impacting further on the continued existence of rural retailers.
The general profile of an outshopper has been researched as young and more affluent and the type of product being purchased as high visibility status speciality products such as home furnishings, furniture, electrical appliances and jewellery (Ashley-Cotleur et al., 2009).Outshopping customers usually have household heads with a tertiary education and with a more urban and cosmopolitan orientation than inshoppers (Jarratt, 2000).Product-related factors were also mentioned as an important indicator of outshopping behaviour.According to Piron (2002), shopping goods and speciality goods in particular were bought inside the town or municipal area.Regarding price, it was reported that higher-priced products were more readily purchased during outshopping trips and that the outshopper felt that perceived process and selection options were better outside the local community (Wayland et al., 2003).Research also found that consumers' dissatisfaction with local shopping conditions was conducive to outshopping (Piron, 2002).Ownership of a car was also a significant contributor to outshopping activities (Powe and Hart, 2009).Length of residency in the community, however, was not regarded as a determining factor of outshopping (Singh, 2011).
Obviously rural and local retailers would prefer custommers to buy and support them in the face of the onslaught from the national and international retailers.This form of retail patronage behaviour is known as inshopping and will now be further discussed.

The occurrence of inshopping
Inshopping is defined as those shoppers who patronise retailing facilities in the area in which they live (Mullis and Kim, 2011).Extensive research has been done on inshopping (Kim and Stoel, 2010;Cole and Clowe, 2011).
The usual point of departure in inshopping research is the plight of the rural retailer and its efforts to survive when local customers buy their goods and services from outside the town in which they reside.This form of patronage behaviour occurred because of the worldwide trend towards retail concentration, where there has been a spatial and organisational move to a few geographically concentrated areas by a small group of large retailers (Powe and Hart, 2009).Rural retailers are therefore threatened by the so-called "triple jeopardy phenomenon", which means that there are fewer customers who shop less often and spend less per visit (Powe and Hart, 2009).This obviously impacts negatively on the economy of the rural community since the rural retailers are some of the main job creators in the community (Bhat and Fox, 1996;Vias, 2004).
The same threats pertaining to rural retailers worldwide are also prevalent in South Africa with a marked outflow of retail purchasing from the rural to the urban areas (Ravhugoni and Ngobese, 2010;Ruhigga, 2011).However, of interest is the amount of inshopping and the specific range of products that are purchased in support of local retailers.Overseas studies have found some interesting results on the profile of inshoppers.According to Mullis and Kim (2011), in general, inshoppers are older than outshoppers and their income and socioeconomic profile is also lower.Qiu et al. (2008) reported that, in general, inshoppers do not own a car or find it more difficult to travel to the shops.Jarratt (2000) referred to the negative association that exists between age and living in the area, with inshoppers being older and residing for a longer period in the area than outshoppers.
Having examined the retail patronage of aspects of outshopping and inshopping in other parts of the world, the focus now shifts to South Africa.

Retail patronage: Outshopping and inshopping in South Africa
Outshopping has always been an issue in the South African retailing community with a continuous and increasing shift of buying power from rural to urban and metropolitan areas.There has been a general decline in retailing activities in the rural areas, which goes back decades.Evidence of this is the general decline in the number of wholesale and retail facilities in these rural areas and increasing informalisation of retailing activities with increasing informal street trading by hawkers.All of this resulted in the reduction of patronage levels in these small towns and rural areas and the subsequent reinforcement of the outshopping pattern by consumers (Ruhigga, 2011).
What is interesting is the special case of outshopping in South Africa, driven by Socio-political influences on which the political dispensation of apartheid had much influence.The establishment of separate black residential areas (known as townships) in South Africa (of which Soweto is one), and the restriction of retail business development in these areas led to historically disadvantaged township retailers struggling to survive.It also resulted in local consumers being underserviced with only rudimentary retail services provided, thus encouraging outshopping activities.Additional reasons given for outshopping in the townships include the lack of alternative retail institutions, which coupled with limited merchandise selection, poor service and high prices, forced the township customer to travel further distances to the surrounding cities to shop for products and services (Strydom, 2011).
Until recently, the South African retail environment was a dual retailing system split between a modern First World shopping infrastructure in previously traditionally white townships and disadvantaged black township areas with poor retail infrastructure.The limited number of formal retailers in these townships was either clustered in small formal neighbourhood centres or classified as general retailers.There was, however, also a growing number of informal retailers with informal retailing structures of which spaza shops (a convenience retailer operating from a room in a house), hawkers (selling mostly perishable products) and shebeens (selling beer and other forms of liquor) being the most obvious examples.In the black townships, retail businesses were scattered throughout the area.
After 1994, the government decided on a review of the commercial sectors in the townships so that these could be properly planned and developed.This opened up new retailing infrastructure opportunities in the townships such as shopping centres and regional shopping malls.The lack of planned retail development in these townships before 1994 greatly fuelled the outshopping activities of consumers from traditionally black residential areas to the regional shopping malls and central city shopping areas in South Africa.This was confirmed by a study conducted in 2004 in Soweto, which indicated that Sowetan households at that time spent only 25% of their retail expenditure at retail outlets situated in the townships, while 75% was spent on outshopping activities (Kloppers, 2009).
Research conducted in 2005 indicated that the estimated demand for retail goods in the Soweto area during that period amounted to R4.2 billion, of which only R1.05 billion was spent inside Soweto (inshopping).The results indicated that it was the lower household income groups that spent the most of their disposable income inside Soweto.In fact, it was reported in 2005, that households with a monthly income of R800 spent 49% of their income inside Soweto, while only 9% of the highincome groups spent their disposable income on inshopping activities, indicating their preference for outshopping (Group, 2005).At that stage, the Dobsonville Shopping Centre, which was erected in 1994, was the largest in size with a gross leasing area of 17 317 m².However, this research was conducted just before the opening of the Jabulani and Maponya Malls.The Maponya Mall is situated in Old Potchefstroom Road in Soweto and is classified as a major regional shopping centre consisting of 65 000 m² gross letting area (GLA).It houses 170 shops with the anchor tenants, Pick n Pay, Woolworths, the Foschini Group, Truworths and Ackermans.Jabulani is a smaller regional centre with 45 000 m² GLA and 107 retail shops.By 2005, with the opening of these two centres, there was a massive increase of 62% of the total retail floor space in Soweto (Zondi, 2011).
Government therefore focused particular attention on rectifying retail infrastructure deficiencies and addressing the needs of residents in the townships.The government's economic strategy was to increase black economic empowerment and black participation in the mainstream of the South African economy.This was reflected in the development of shopping infrastructure preferably by black-owned businesses in the townships and included the major development of retail infrastructure in South African townships such as Mafikeng, Durban, Cape Town and especially in the Gauteng area in the townships of Tembisa, Lenasia, Jabulani, Soshanguve, Atteridgeville, Alexandra and Soweto.
In Soweto, at least six shopping centres were developed after 2005 with the Maponya and Jabulani Malls being the largest in size (Kohler, 2010).These developments occurred as a result of the increase in spending power of the black township consumers and the fact that most of the middle-income township residents decided to remain in the township (Tustin and Strydom, 2006;Kohler, 2010).Ligthelm (2008) reported that the townships have a fairly stable middle-income population of which more than 60% resided in the township for a period of more than ten years.
With the new shopping centre developments, retail patronage patterns also changed with townships becoming favourite shopping destinations.A report prepared for Commuta-Net (Thys, 2009:7) indicated that township shopping centres in Pretoria attracted 56.25% of the local population's spending power, whilst the figure was 52.17% for Johannesburg.The same trend was evident in Durban, where 52.17% of the population bought from township centres.Only in Cape Town did the township population buy less than half of their purchases from township shopping centres (41.67%).This was ascribed to the fact that there are fewer township centres located in the Cape Town townships.Research for Commuta-Net also found that it was primarily the LSM groupings of 4 to 7 that are supporting these township stores and that the major reason for inshopping was convenience and the lack of public transport.Since 1994, the public sector investment in Soweto has amounted to more than R500 million.This opened the way for private investors to invest more than R3 billion in, inter alia, transportation services, hotels and various shopping centres.Having examined the reasons for inshopping and outshopping and indicated that there was a major shift in patronage behaviour in the township areas towards buying inside the townships (inshopping), we will now look at empirical research on inshopping and outshopping patterns in Soweto to determine whether the retail patronage patterns found in Soweto duplicate those of other countries discussed previously.

RESEARCH DESIGN
Because of the dynamic nature of retail developments in South African townships, a special approach was needed to conduct this research.For this study, both exploratory and descriptive research designs were used.Owing to a lack of secondary research in the Soweto township area, it was decided to first perform exploratory research into the existing Soweto retail infrastructure.The target population for the research was the residents of Soweto because it was one of the previous biggest understored townships in South Africa, with a population of more than one million.A disproportionate stratified sample design was used.This process involved, firstly, an exploration of the size of the Soweto consumer market, focusing primarily on the number of people residing in Soweto.This process was further complemented by gaining a spatial orientation of existing retail shopping malls/centres located within the demarcated geographic boundaries of Soweto.For this purpose, personal site visits were undertaken.The final stratified sample consisted of 690 households with respondents spread over 11 subareas of Soweto (Tustin, 2008).The subareas and the number of respondents per area are indicated in Table 1.
Mixed research was used, implying that a combination of descriptive and quantitative information was used because it involved observing and describing the retail patronage behaviour without influencing it in any way.Questionnaires were used to determine the retail patronage patterns of Soweto residents.Content validity was established in the research on the Soweto township (Tustin, 2008).No summated construct scale was used in this research and no reliability test was applied.
This research focused on the reported education levels, use of transportation to visit the retailing facilities and the respondents' length of residency.For the purpose of the study, a distinction was made between outshoppers and inshoppers, as defined in the theoretical discussion above.The inshopper group was further split between those inshoppers visiting the new shopping malls and those frequenting the older format of retailing institutions inside Soweto.

The impact of education levels on the retail patronage of Soweto consumers
The descriptive demographic information on the education levels of the responding Sowetan households was analysed and the following five categories identified for the purpose of investigating the impact of education levels on the retail patronage: (1) Single person in household with a postgraduate qualification (2) Single person in household with an undergraduate degree (3) Single person in household with a postmatric diploma/certificate (4) Two persons in household, one with a postmatric diploma/certificate and the other with a postgraduate qualification (5) Two persons in household, one with undergraduate degree and the other with a postgraduate qualification Various iterations were done to ascertain whether statistically significant differences exist between the education level groups defined above with respect to the average monthly inshopping and outshopping expenditure, inter alia, using ANOVA.Although the results indicated that there are statistically significant differences between the educational groups with regard to monthly average expenditure on inshopping in the new malls, those frequenting the older format retailers and outshopping expenditure outside Soweto, the results could not be used because Levene's test for homogeneity of variances was significant for all three types of shoppers.This implied that the assumption of equal variances required for the use of ANOVA was not met.
The overall means of the different groups indicated in Table 3 show that the largest average spending occurs in the new shopping malls inside Soweto (inshopping).The highest average spending in the new malls was found in the category of "Single person in household with an undergraduate degree" (R2 358).The households with a single person with a certificate/diploma had the lowest average spending (R1 510).
Although the results were not statistically significant for differences between average monthly expenditure of the groups outside Soweto and inside Soweto but outside the new mall complexes, it is interesting to note the following: -The overall average monthly expenditure for shopping outside Soweto was only slightly lower (R1 755) than the spending at the new malls, but the overall average monthly expenditure outside the malls but within Soweto was substantially less at R830. -Average monthly expenditure at businesses outside Soweto malls is low for categories 1, 3 and 4 (between R605 and R718), but much higher for the educational categories 2 and 5 (between R1 004 and R1 162).
-Average monthly outshopping expenditure is once again in the same range for educational categories 1, 3 and 4 (between R1 331 and R1 581) and higher for educational categories 2 and 5 (between R2 336 and R2 429).The highest overall expenditure by a specific educational category is outshopping by the group with two graduates in the household (one with an undergraduate degree and the other with a postgraduate qualification).This can be explained by the fact that this group of respondents had the highest qualifications and therefore the best opportunity to earn higher salaries.
-The group with the lowest level of education, namely the group entitled "single person with postmatric diploma or certificate" spends most of their disposable income on small luxury goods such as TV sets and computers.The group with the highest level of education, namely one person with a postgraduate qualification and another with a undergraduate qualification, spends most of their disposable income on more expensive products such as cars and houses.

The use of transportation by Sowetan consumers
The question relating to the use of transportation to shops at the retailing facilities was asked individually per mall or other type of outlet in terms of frequency of visits, distance and mode of transport used.The data structure thus did not facilitate statistical testing for differences between the average monthly expenditure based on mode of transportation.For the purposes of the study, the group classified as inshoppers was further subdivided into the following four subcategories: -Inshoppers visiting the new/existing shopping complexes -Inshoppers visiting the industrial areas -Inshoppers frequenting home-based businesses such as spazas -Inshoppers buying from street vendors/hawkers Table 4 provides more details of the average monthly spending by mode of transport by the inshoppers and outshoppers.
One can infer from the table that own transportation is a preferred means of transport for outshopping and that the average monthly spending by this category of outshoppers is the highest.Taxis are also a major form of transport for outshoppers.One should bear in mind that a fairly large number of Sowetans work outside the Soweto area and do their shopping while at work or waiting for their taxi to arrive, thus forming part of their daily shopping routine.What is also interesting is the amount of expenditure on street vendors/hawkers which obviously could be classified as a form of convenience shopping.The impact of length of residency on average monthly in-and out-shopping expenditure The researcher decided to combine the demographic information on the length of residency in Soweto by the respondents into the following eight categories: 1. one to five years 2. six to ten years 3. 11 to 20 years 4. 21 to 30 years 5. 31 to 40 years 6. 41 to 50 years 7. 51 to 60 years 8.Over 60 years The means for the eight groups regarding the length of stay in Soweto and average monthly spending inside and outside of Soweto are depicted in Figure 1.
Using the Kruskal-Wallis test, the information in Table 5 indicates that the average monthly expenditure differs statistically significantly between the "length of residency" groups for all three shopping types.
The above information shows that the average monthly expenditure differs statistically significantly between the "length of residency" groups for all three shopping areas.The means, however, indicate no specific pattern (e.g.longer residency in Soweto results in less outshopping) regarding the length of stay in the Soweto township.

MANAGERIAL IMPLICATIONS
Research in other countries and the evidence in this article indicate that, in general, shoppers are more inclined to have a tertiary qualification, whereas outshoppers tend to buy pricier shopping and speciality goods while on an outshopping trip.This implies that retailers should take note of this trend and entice these consumers to spend more of their disposable income on inshopping for products and speciality products, in particular, at the Soweto malls and shopping centres.
Regarding mode of transport, it was reported that car ownership in other countries is a prerequisite for outshopping.In the Soweto study it was found that the situation is somewhat different.Here the average monthly expenditure for those residents who make use of a taxi or those who did not own a car was higher than the next category, which was inshopping at the new centres in Soweto.Market leakage in the Sowetan township therefore occurs with or without ownership of a car and is directly dependent on the Soweto residents' place of work.Research in other countries has indicated that inshoppers are generally older than outshoppers.The Soweto study found the length of residency which could also be an indicator of the stage of the life cycle of the respondent to be nonconclusive.The results indicated that residents who have lived longer in the area tend to spend less at the Soweto malls, which is an accepted economic reality because their disposable income stream is smaller than that of the younger group of residents.The means reported, however, did not indicate any consistency to make further deductions possible.The results indicate that even older persons can be outshoppers in the South Africa townships, thus defying the belief that older people do the majority of inshopping at retailers in the area in which they live.

CONCLUSION
Research in other countries has indicated that there is a marked difference between the retail patronage of inshoppers and outshoppers.Inshoppers are generally older with a lower income, do not own a car and have resided longer in the area in which they do their inshopping.Outshoppers, however, are typified as being younger, more affluent and better educated and they usually own a car.Length of residency was reported as not playing a role in their retail patronage behaviour.
In South Africa, the situation is unique in that sense that Soweto outshoppers are forced to do outshopping because of past injustices such as poor planning, the lack of retail facilities and the poor quality of service.With the dawn of democracy, these were the people who turned to inshopping in their township.From the results, it was determined that it is the higher-income and higher graduated households that now form the bulk of the outshoppers.
Inshoppers in Soweto are described as middle-to lower-income people who have been living in the township for more than ten years and who have access to mostly public transport.It would therefore seem that there are some commonalities between inshoppers and outshoppers in the rest of the world and South Africa.However, there are also a few major differences owing to the unique social political circumstances that have prevailed in South Africa in the recent past.

Figure 1 .
Figure 1.Duration of stay in Soweto and outshopping and inshopping average monthly expenditure (rand).

Table 1 .
Soweto sample distribution by household location.

Table 2 .
Nonparametric testing on specific educational groups.

Table 3 .
Means of the five groups of respondents regarding educational level.

Table 4 .
Average monthly spending per mode of transport and business location.

Table 5 .
Kruskal-Wallis test result: length of residency in Soweto.