Product Diversification and Performance in Spaza Shops: The Role of Community Leadership
DOI:
https://doi.org/10.51137/wrp.ijarbm.356Keywords:
Product Diversification Strategies, Community Leadership, Business Operations Management, Informal Retail Sector, Need For Achievement TheoryAbstract
This study examined the role of product diversification strategies on the performance of spaza shops in the informal retail sector. A quantitative cross-sectional survey was conducted among 359 owners and managers of both locally owned and migrant-owned shops in selected municipalities of the Eastern Cape Province. SEM was used to test hypothesised relationships. For locally owned spaza shops, product diversification did not significantly predict performance (β = 0.108; p = 0.102), and community leadership alone was not significant (β = -0.032; p = 0.639). However, the interaction between diversification and leadership was positive and significant (β = 0.244; p = 0.008), with the model explaining 12.2% of the variance in performance (R² = 0.122). In contrast, among migrant-owned shops, diversification (β = 0.139; p = 0.351), community leadership (β = -0.074; p = 0.166), and the interaction term (β = 0.282; p = 0.074) were not statistically significant, though the model accounted for 17.3% of variance in performance (R² = 0.173). The results suggest that locally owned shops benefit from diversification only when supported by strong community leadership, while migrant-owned shops rely more on structural advantages such as bulk purchasing, extended hours, and cooperative networks.
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