Triple Trust Organization, South Africa SPAZA PROJECT UPDATES KEY LEARNINGS For the SEEP PLP in BDS Market Assessment

Transcription

1 TTO Spaza Shop Project Update Key Learning Triple Trust Organization, South Africa SPAZA PROJECT UPDATES KEY LEARNINGS For the SEEP PLP in BDS Market Assessment By Seth Tladi April, 2003 Page 1

2 TTO embarked on a study of the spaza shop market to gain a broad understanding of the market and the dynamics thereof. Through the research we were able to identify 12 key findings and 5 major constraints. Further analysis of the research findings, with the help of a consultant, revealed that there were still gaps in our knowledge and understanding of the spaza shop market. These gaps were identified as: 1. Lack of data on total amount spent on a basket of goods per month by township residents (by brand and supplier) 2. Understanding the purchasing behaviour / habits of the spaza shop customers 3. A further understanding of the types and size of spaza shops 4. Understanding the goods supply and distribution chain 5. What BDS exists in the spaza shop market, the levels of BDS consumption and the profile of BDS providers within this market To address the above knowledge and understanding gaps, we decided to embark on a focused research to gather more information on the above issues. Before we could embark on this process, we had to make decisions on: 1. What research approach / methodology to apply 2. Who do we target, i.e. do we approach the same Spaza shop owners interviewed in the initial study or different people all together? 3. What should the sample size be? 4. What questions to ask and how? 5. Who will conduct the research? 6. What geographical areas to target? 7. What research tools to use? The knowledge that we had gained by then helped to facilitate the process. At that stage we already knew: 1. The size of the market, 14,200 spaza shops 2. The major constraints faced by spaza-shop owners 3. What percentage is the spaza shop market of the total retail market in Cape Town 4. It is largely a cash-based sector 5. Most Spaza shop owners had no knowledge of BDS 6. There was very limited BDS, if any, and that it was probably mostly embedded 7. Spaza shop owners got treated the same as ordinary customers by suppliers and distributors. From this knowledge base, it became easy to focus on specific issues relating to our knowdedge gaps and understanding. At first we thought of conducting a UAI survey amongst ME s relating to BDS. The question in our minds was always, Is this the appropriate tool for our needs? as our initial survey did not yield much in terms of BDS or even BDS provision. After some help from the research consultant, we moved away from the quantitative approach to a qualitative approach. We decided to use Focus Group Discussions as a data collection tool. We felt that the Focus Group Discussions would provide us with the desired data since the nature of the information we needed was of a qualitative nature and would assist to enhance our knowledge and understanding. Page 1

3 After deciding on the use of FGDs we spent a considerable time adapting the questions to suit our needs. This entailed adapting the language and the use of terminology, so as not to overwhelm the FGD respondents with terminology and language they do not understand but rather concentrate on trying to establish what BDS exist and from where it is sourced. Questions were framed differently, e.g. instead of asking, What BDS support did you receive? we asked, Who do you turn to when you experience business related problems? An interesting adaptation or addition made in our research was the use of the products concept test technique in a qualitative assessment setting. What we did during the focus group discussions was to use the product concept test assessment tool which is usually applied in the form of a survey and adapted it into what we called the What if scenario s. We used the constraints identified in our initial survey and developed potential BDS services/products around them. We then floated these concepts during focus group discussions as related to the constraints and elicited responses from participants on: The MEs perceptions of the service Perceived benefits to MEs from the service MEs willingness to pay For example, to assess the demand for pest control as a service, we asked What if you were rendered a service that would enable you to deal with pests in your business and thereby reduce your stock losses and enhance the possibility of increasing your sales and profits. This approach resulted in us discovering that there was a limited amount of BDS provision taking place in the following areas: Transport Pest control Distribution of products The other areas that were tested applying this approach were around, payments mechanisms, storage facilities and the formation of a business association by Spaza shop owners. (Refer to the attached FGD guidelines document for more details.) We found this approach to be user-friendly and easy to understand by the Spaza owners. The next stage of the process is to quantify the level of BDS consumption on specific services with the use of a modified UAI. (Please find the sample questionnaire attached to this document). We decided to do a random selection of Spaza shop owners in 2 of the 10 areas that were part of the initial research. We did so in order to ensure continuity with the same people and also to confirm certain conclusions from the initial study. A sample size of 60 Spaza shop owners randomly chosen from a database of 360 owners was agreed to on the basis of the advice from our research consultant. Since this was a very small sample and the fact that we wanted to build research capacity within the organisation, we decided to conduct the research in-house. To do this we held a capacity building workshop for our staff in order to enable them to conduct the research. By then we had decided on using FGDs as an appropriate tool for this exercise and therefore the workshop was designed around using FDGs to gather information in weak markets. Since these were FGDs and not surveys, we could not quantify the responses coming out of these discussions. However the analysis of the information gathered shows that most of the Spaza shop owners were very positive about the proposed services. There was an expressed willingness to acquire and Page 2

4 purchase the services. Even though they saw the benefits of the services, price and the quality of the service were important determinants for them. Their feelings were, if the service is of good quality and the price right, they will be willing to acquire and pay for the service. From the information gathered it is clear that there is an expressed demand for BDS within the Spaza shop market but very little supply. This is based on the fact that Most of the Spaza shop owners did not know of any service provider and any person/organisation they could turn to for assistance. Spaza shop owners expressed a willingness to acquire and purchase services but do not know where to go for assistance. There is an acknowledgement of major constraints being experienced by Spaza shop owners and the need for an intervention. Most BDS in the Spaza shop market is embedded and linked to suppliers of goods. What have we learnt? 1. The importance of using assessment tools and methodologies that enable one to gather information and uncover hidden BDS and to make decisions on appropriate interventions for a specific market. 2. With regard to the What if scenario, it was very critical that we focused on the selling of the service benefits and not being caught up in the technicalities of the service. 3. To be innovative in applying research tools and methods. For example, we modified the Product Concept Test technique into the What if scenario questions to test perception and potential demand for the service. 4. The focus group discussions had in itself many great aspects of learning. What we learnt the most as a team since this was our first attempt at conducting FGD s was: The importance of recruiting respondents for the sessions that know the market well and understand the constraints and the dynamics within the sector. To have contingency plans in case of a no show by respondents. We had some sessions in which we experienced no shows. As a contingency plan, a visit to the respondent s respective place or in the case of Spaza shop owners a visit to where they do their buying might assist as an alternative. The importance of planning for these sessions including the logistics, research tools, FGD teams, etc. There must be a sure follow-up/confirmation of all recruitees. The importance of clarifying FGD team roles and role playing prior to the actual FGD. The use of the right equipment for voice recording purposes. We lost a lot of recorded material and had to rely on hand written notes. The importance of team work in the planning and execution of the activity. This information is proving invaluable in the early stages of intervention design and implementation as illustrated by the attached diagrams. Page 3

5 SPAZA BDS TRANSACTION MODEL Key: Demand Supply SME Under performance 1. Percentage of retail market 2. High prices 3. Low growth / Stagnation Level of impact on Spaza performance General recognition of under performance FGD Surveys SME Problems / constraints 1. Transportation 2. Theft 3. Security issues 4. Environmental issues 5. Stock 6. Storage 7. Not being organised No forum 8. Middleman Do Service providers have capacity to solve ME s problems? Do MEs require these solutions? Sources of services 1. Service providers 2. Informal networks 3. Suppliers 4. Distributors 5. Friends and family Are MEs willing to acquire these service / solutions? Do Service providers have the ability to develop an offer or service that SME SME Solutions / Requirements 1. Formation of Business Association 2. Business management services 3. Dealing directly with suppliers 4. Payment mechanisms 5. Transportation services 6. Storage / warehousing facility services 7. Dealing with environmental issues Rats pests Page 4

6 KEY ISSUES TO BE EXPLORED FURTHER AS PART OF INTERVENTION DESIGN Supply side Service provider 1. Ability to develop offers 2. Capacity to solve problems 3. Impact on Spaza owners 4. No. of Service Providers Demand side Spaza owners 1. What solutions are required? 2. Willingness to acquire Need to test all of the above Method 1. Service provider workshop 2. Survey questionnaire Need to test 2 and 3 Method 1. UAI survey Design interventions based on information gathered from the above Possible interventions Supply side 1. Product development 2. Capacity building 3. Technical experts 4. Develop new Service Providers 5. Packaging of services Demand side 1. Information dissemination 2. Payment mechanism Bartering as a form of payment 3. Packaging of Services Page 5

7 Focus Group Guidelines for Facilitator Topic: Understanding the supply and distribution chain and the constraints affecting Spaza owners in Mitchell s Plain/Khayelitsha Introduction of Facilitator: (10min) Good morning/afternoon/evening, Ladies/Gentlemen First of all, the Triple Trust Organisation, commonly known as TTO, would like to thank you for taking your time to participate and share your experiences with us in this Focus Group Discussion. I am and I will be facilitating the Focus Group discussion, which will take approximately. I have with me, who will be assisting me throughout the discussion by taking notes, operating the tape recorder, with your permission, (taking photos if there is a camera), and helping us to capture the key themes and important information coming out of our discussions. From time to time I will be referring to him/her to ensure that we cover all the important areas and not miss important information coming from our discussions. Note to facilitator: Explain the importance of the tape recorder and confidentiality of the information gathered Whatever you say in this group discussion is confidential and you will not be named in any research material. There are no wrong or right answers and you are free to agree or disagree with anything I say or anyone else says. The purpose of the tape recorder is to record the points that you make so that I don t forget and can also keep track of our discussions. Triple Trust Organisation, is a non-governmental organisation that has been involved in microenterprise development in the disadvantaged communities in South Africa for the past 14 years. TTO has embarked on a new project to develop Spaza markets that will benefit the poor. To this extent TTO embarked on a study of the Spaza shop market earlier this year. The study has highlighted 12 key findings and 5 major constraints or problems experienced by Spaza shop owners. The purpose of this FGD is therefore to: 1. Share our findings with Spaza shop owners and to gain a better understanding of the constraints and problems highlighted in the research. 2. Understand how products are supplied and distributed in the Spaza shop market. And that together with you, we want to identify and test possible solutions to address constraints or problems that your business faces so that TTO could develop appropriate interventions or solutions. We are therefore here to seek your advice to help us understand the Spaza market better by sharing your experience with us. Page 6

8 We also have,, who are also from Triple Trust, who will not be participating in our discussion, but will merely be observing the proceedings, and lastly we have who will be our host for the day. If you need any assistance with refreshments, toilet facilities, etc, he/she is the person to talk to. Introduction of participants: It is now your turn to introduce yourself to us. Tell us your name and something about your business whatever you wish to tell us. Because we are a group of people, it will be appreciated if we could set some ground rules in order to allow everyone an equal chance to participate. Here are some of the rules we thought could help. This is a group discussion on a specific topic and therefore we need to try and stick to the topic All Cell-phones must please be switched off at all times during the discussions When expressing an opinion, you are please asked to speak up so that everybody should hear We will try by all means to stick to the time schedule as agreed We expect participation from all participants There is no wrong or right answer Each person must be given a chance to say whatever they want to without being interrupted Do you have anything else to add to the list? Topics for Discussion: Note to the Facilitator: Remember to ask all the prompts listed below each main question. List the 12 key findings Get the participants to reach consensus on the ranking of the top 5 constraints. The study highlighted the following12 key findings: Bread, Paraffin and Matches are the common products sold at Spaza shops. Spaza shops sell approximately R worth of goods per week Spaza owners see their businesses as a way of making a living Most Spaza shop owners did not receive any formal support to start their businesses. Spaza shop owners have very little direct links to manufacturing industries; they shop at a mixture of retailers and wholesalers and seldom receive any discounts or any other special services. Key constraints/problems faced by Spaza owners: o Insufficient & limited range stock o Transport o Storage o Environmental problems and Page 7

9 o Theft Almost all township residents buy from Spaza shops, 75% use Spaza shops every day 57 % of Spaza owners would consider registering their businesses Most customers cite convenience as the main reason why they shop at Spaza shops A conservative estimate of the of the number of Spaza shops in the areas of the study is shops The estimated annual turnover (sales) of Spaza shops in the ten townships based on an average turnover of R1500 per week amounts to R2.56 billion per annum Note to facilitator Ascertain what stock is purchased where Stock Brand Product Substitution 1. As Spaza owners you need stock to run your businesses. From whom do you purchase your stock? Where do you buy your stock? Why do you buy your stock from a certain supplier Are you happy with where you buy your goods? (Please explain your answer) Do you buy all your stock from one supplier? Would you like/prefer to buy goods from other suppliers? (If so, why don t you?} What will make you buy from other suppliers? (Please explain your answer) What do you normally purchase from suppliers? (Frequency, possible constraints) Do you have any special relationships with manufacturers or suppliers? What else do you sell? What problems do you experience in buying stock? If suppliers do not have your preferred brand, do you buy substitutes What do you consider when choosing a substitute Now lets talk about products (refer to Annexure 1) Transport Supply chain 2. Lets now talk about how the goods you purchase gets to your shop (refer to supplier) Note to facilitator Probe each distribution system Do you collect your own stock or does somebody deliver it to you? Which of these suppliers deliver? If any, who does not charge for this service? Does it cost you anything? Is there anybody else that provides a delivery service that you know of? Why don t you use that service? Do you know of anybody who uses these services (if yes ask if they know anything about those peoples experiences) What problems do you experience in delivery of stock? Page 8

10 Problems other than the top 5 3. What other problems are you experiencing in your business other than the top 5 constraints? Are there any other problems not listed in TTO s 12 findings? How often? How do you experience this? What is it like for you? How do these problems affect your business? Has it been resolved? Who did you turn to for help? Did you get the desired outcome? Were you happy? Do you know of any other way in solving this problem or person that could have helped solve the problem? In solving your problems did you pay and how much? Would you be willing to pay to have these problems resolved? From our previous research, TTO was able to identify problems that most Spaza shop owners experience. We have used this research and identified possible solutions to help Spaza shops with these problems. We now need your inputs and experience to help us see if these solutions could address the aforementioned constraints What if scenarios Product concept testing Note to facilitator Mention each concept separately Payment mechanism What if you were able to use your electronic payment card (ATM) to pay for all goods delivered to your shop, saving you the inconvenience of having to always have cash on your shop premises to make payments for goods and services. The intended benefit of the service to your business would be: To minimize the carrying of cash on your business premises To minimize the possibility of cash losses due to robberies, theft, etc. Saving you time and money by not having to go into a bank or stand in long queues Would you make use of this service? If not, why? Would you be willing to pay for this service? And how much would you be willing to pay? Environmental problems What if you were to be introduced to a Pest control service that would deal with environmental problems that your business is experiencing and allow you time to deal with the Page 9

11 much more important aspects of your business. This service would entail a service provider come to your premises on a regular basis to help you address the pest problem your business is experiencing at an agreed upon fee. You would also have expert advice on how to deal with pests in your business as part of the service. This service will be designed to minimize stock losses as a result of pest problems and thereby save your business money and possibly contribute to your business profits. Would you make use of this service? If not, why? Would you be willing to pay for this service? And how much would you be willing to pay? Transportation service What if a service provider would provide your business with a service that transport your goods from the goods suppliers to your shop at a fee. This service would: Ensure that your stock arrives at your shop safely Save you time by enabling you to spend more time at your shop Save you money in terms of transport fees Give you the flexibility of moving from one supplier to the other when stocking for your business Would you make use of this service? If not, why? Would you be willing to pay for this service? And how much would you be willing to pay? Storage problems What if a locally based storage facility were to be set up that would stock a wide range of products that are normally sold by Spaza shops. Such facility could be set up with the option to be owned by the Spaza shop owners themselves. This would save time and money that you will be traveling less, as the service will be based locally which means no more long queues, all the items within one roof, etc. Spaza owners will all then be able to decide what quantities of which stock items they would like to buy in bulk based on the demand. This could as well address the environmental problems, such as rain, any pests that are faced by many Spaza owners. Will you make use of such a facility? Are you willing to pay for this? Page 10

12 And how much are you willing to pay? Business Associations/Linkages What if it was possible for you to belong to a network or association in which you as a Spaza Shop owner could derive these benefits? Discounts as a result of bulk-buying Special arrangements with suppliers, Group buying of Spaza specific products Would you want to belong to such a network or association? Are you willing to pay a fee to be a member? Do you think this will be beneficial to your business? Do you know of any associations of this nature that do exist? TTO has proposed the above services. Are there any other services that you think would make your business grow? (Facilitator will probe where necessary). Closure Now that we all had a chance to discuss the different problems we face and have looked at some type of solutions, we, the triple Trust Organisation, will continue with these type of discussions with other groups and then will compile our findings and make it available to the Spaza owners to see how we can improve the Spaza market for all the different stakeholders The facilitator thanks the participants for their time, inputs and their co-operation Note: Questions do not have to be asked in this specific order. Tick off when you have asked a question or when the topic has been discussed. (Do not repeat questions) Page 11

13 Comments Page 12

14 Appendix 1 Product Basket Lets now talk specifically about products 1. This is a list of products that most Spaza shops stock. Do you agree with this list? 2. Now from this list, which products sell quicker than others or which products do you re-stock more often than others. 3. From this list which of these products make you the most profit 4. What brands do you stock for all these products Products Maize meal Samp Rice Sugar Cake flour Anchor yeast Imbo beans Ricoffy Tea bags Beef stock Fish oil Long life milk Tobacco Bread Chicken Pieces Powder soap Eggs Tin fish Matches Cool drinks Paraffin Yes/ No Fast Movers Slow Movers Most profit Brands Page 13

15 TRIPLE TRUST ORGANISATION SPAZA BDS UAI SURVEY QUESTIONNAIRE PROJECT: SPAZA SHOP BDS FIELD DATE: Respondent Name: Position: Name of the Business: Physical Address: Questionnaire #: Telephone: (Bus) Interviewer s Name: Length of Interview: ( Cell) Main Questionnaire SECTION A AWARENESS OF SERVICE For Q1 Q20 refer to the table in page 5 (Show Card) Question 1 a. Have you made use of any of these services? b. Are their any other services that you are aware of that is not listed above? For services indicated in Q1a (Show Card) Question 2 Are you aware where you could purchase this service? Yes 1 No 2 Page 14

16 For services indicated in Q1a (Show card) Question 3 How well do you know about these services? Not well 1 Somewhat 2 Very well 3 SECTION B ACQUISITION OF SERVICES (Show Card) Question 4 Have you used these services before? (Refer to the show card) If yes, have you used these services in the past 2 years? Interviewer: Ask Q5 Q15 for a service used in the last 2 years (answer in Q4). Repeat Q5 Q15 for each of the services answered in Q4. Refer to the multi-response table to indicate responses Question 5 When was the service used for the first time? Date Question 6 When was the last time you used this service? Date Question 7 Have you used the service more than once? (refer to table below) Yes 1 No, just once 2 For services used more than once Question 8 How often did you use this service in the past two years? times Page 15

17 SECTION C PURCHASE BEHAVIOUR (Show Card) Question 9 Did you pay every time you used this service? Paid every time 1 Go to Q Paid sometimes and got free sometimes 2 Go to Q Free every time 3 Go to Q Others (specify) 4 If paid: (Show card) Question 10 How did you pay last time? Up front 1 In instalments 2 On commission 3 Bartered 4 On regular service 5 As invoiced 6 Other (specify) 7 Question 11 How much did you pay the last time you used the service? R R Question 12 What benefits did you get for the amount you paid for the service? (Show Card) Question 13 How satisfied were you with the service you used the last time? Extremely dissatisfied 1 Somewhat dissatisfied 2 Somehow satisfied 3 Very satisfied 4 Page 16

18 (Show Card) Question 14 From your experience, how satisfied are you with the service provider? Extremely dissatisfied 1 Somewhat dissatisfied 2 Somehow satisfied 3 Very satisfied 4 SECTION D REASONS FOR USING THE SERVICE (Show Card) Question 15 Please tell me why you decided to use this particular service? If more than one reason: (Show Card) Question 16 Which is the most important reason to you? Q15 Q16 My business was growing and needed the service 1 1 I saw a problem in my business that needed outside help 2 2 It was free 3 3 A friend/colleague recommended it 4 4 Others (specify) 5 5 Question 17 If the service is not available to you, what would you do? Question 18 What kind of improvements would this service need to make to make it more beneficial to your business? Page 17

19 SECTION E AWARE OF SERVICE, BUT NOT USED Interviewer: Ask Q19 Q20 for services aware of but not used (coded 1 in Q1a but not coded in Q4). Repeat the questions for each service. Show Card Question 19 Why have you not used the service? (Refer to table below) If more than one reason: Show Card Question 20 Which is the most important reason to you? Q19 Q20 Timeframe of the service is too long 1 1 Cannot leave the family to get the service 2 2 The service was delivered by a person that does not respect me 3 3 The service was delivered by a man 4 4 The service was only delivered by women 5 5 My husband/wife does not allow me to get the service 6 6 It was not free 7 7 Do not feel the need 8 8 The cost to obtain it is to expensive 9 9 Others (specify) SECTION F COMMENTS Page 18

20 MULTI-RESPONSE TABLE Q1a Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 Q19 Q20 SERVICE Y/N Y/N Awareness Y/N Date Date Y/N Number Y/N Y/N Amount Number Number Number Number Options Benefit Level of satisfaction Benefit Costing and pricing Transport Security Record keeping Pest control Promotion/ Advertising Stock Management Other Page 19