Retail development is one of the focus areas in terms of local economic development according to the municipal documentation. According to the Greater Tzaneen Municipal IDP the municipal area has tremendous natural and heritage potential for development. However, the performance of the trade sector has shown slower growth rates. As a result specialist research was required to develop an approach for retail development in the Greater Tzaneen area.
Population and Household Profile
The population is fairly well distributed across the Greater Tzaneen area with a large portion of the population resident in the rural villages scattered across the entire region
A small portion of the population, only 1.9%, is resident in the Tzaneen urban node where the majority of the retail facilities are located. The majority of the population is located in villages between 10km and 50km out of town. The majority of the population is located in villages between 10km and 50km out of town especially in Bankuna (40.9%), Modjadji (23.1%), Nwa?Mitwa (8.7%) and Bathlabine Ba Magoboya (4.2%). Implication: The largest potential retail customer base is located in: Bankuna (40.9%) and Modjadji (23.1%).
The majority (58.8%) of the Greater Tzaneen population falls within the Potential Economically Active (PEA) population group. This portion of the population represents the working age group, which does not necessarily mean that they are willing and able to be employed, i.e. a portion of the population is excluded from the workforce as they prefer to stay at home as housekeepers, some are full time students and others are disabled. They do still however form part of the potential labour pool. The PEA population is regarded as one of the main drivers of economic growth due to this portion of the population 's potential to generate income and wealth. They are also the group with the highest expenditure and consumption of retail products.
Implication: A high PEA population group could indicate a high consumer market disposable income which could be translated into expenditure capacity and subsequently demand for retail products.
The education profile of a population often indicates the level of community development providing insight on the quality and potential skill of the labour pool. Qualifications and skills are normally a direct influence on labour compensation and subsequently household income.
The majority of employees in Greater Tzaneen are involved in elementary occupations which represent roughly 40% of the total employed population. Elementary occupations indicate occupations that require low skill but often also deliver limited labour compensation. The downside of this is that the total income of the workforce can be expected to be lower which has negative implications for the area?s expenditure capacity.
The majority of the other leading occupation categories range between 7% and 10% with a small minority of the population involved in specialist occupations such as professionals (4.0%) and senior officials (2.5%). It can therefore be concluded that employment in Greater Tzaneen is comprised mainly of elementary occupations with relatively equal distribution among other sectors.
Implication: The high prevalence of elementary occupations could indicate a smaller expenditure capacity by the local population and would subsequently greatly influence demand.
Employment is not only an important indicator of human development, but also of the level of disposable income and consequently the extent of expenditure that could be expected in the area. The official employment definition is an industry standard used by Statistics South Africa. For a person to be classified as unemployed according to the official definition the following three conditions must be satisfied:
1. The person did not work during the seven days prior to the survey interview, and does not have any job attachment.
2. The person wants to work and is available to start work in two weeks.
3. The person has taken active steps to look for work or has taken initiatives to start a business in the four weeks prior to the interview.
Implication: Approximately 30% of the population in Greater Tzaneen is employed and generating an income. This income can be translated into market purchasing power.
Household income is one of the dominant demand indicators in the retail market. The level of disposable income is often a reflection of the size of retail floor space that can be supported by the consumer market.
Implication: A lower expenditure capacity indicates that a larger population is required to sustain a retail development and that the demand will be more focused on basic goods and services rather than luxury shopping.
Mode of Transport
Accessibility is one of the key influencing factors in the retail industry as facilities should be accessible to potential consumers to conduct shopping there. Transportation forms the primary indicator to indicate mobility and subsequently accessibility of a local population.
A large portion of the population (approximately 43%) in all three areas of the analysis does not have adequate access to motorised transport. This portion of the population?s mobility is limited to distances that can be travelled on foot. Only 5.2% of the population utilise public transportation and 4.4% have access to private motorised transportation.
Implication: Retail facilities developed in Greater Tzaneen would have to be convenient in terms of location and accessibility.
Based on this analysis, development option number two, a network of smaller centres, will be more beneficial to the development of the rural area of Greater Tzaneen Local Municipality. A network of smaller centres would ensure that a larger portion of the market can be captured and that development would be more evenly distributed in the area.
The capacity of the market to sustain development in Zone 2 is high and there are currently very few retail facilities available in Zone 2. For this reason the investment in Zone 2 should be greater.
If development option one is selected it is recommended that the larger centre be developed in Zone 2 at one of the priority intersections identified in the previous section. The development location should preferably be at one of the two entry points from the R71 main road at the intersections of the D1375 and D1350 roads or at the intersection of the D3247 and D3246 roads. The majority of the population residing further north in the rural areas pass these intersections. This would provide the proposed development the opportunity to capture purchasing power from passing traffic. The way forward for this project would involve the following actions:
=> the Development Agency and other stakeholders should select a preferred development option;
=> based on the development option the site or sites should be identified based on the priority list;
=> a detailed feasibility study needs to be conducted for the proposed site or sites to market the opportunity to investors or to apply for funding;
=> the Development Agency should also look into the expansion of this study to include a retail trade value chain analysis to determine how the local population could receive higher benefit from the economic spin offs delivered from the retail development;
=> the final deliverable would be to start construction in cooperation with a development investor or a consortium of investors with the Development Agency playing a facilitating role.