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Title of Thesis SOCIAL MEDIA AS A MARKETING COMMUNICATION STRATEGY AMONG INDEPENDENT FOOD RETAILERS IN THE CITY OF CAPE TOWN By José Antonio dos Santos Thesis submitted in fulfilment of the requirements for the degree Master of Marketing in the Faculty of Business & Management Sciences at the Cape Peninsula University of Technology Supervisor: Prof Rodney G. Duffett Co-supervisor: Mrs Nayeema Bray District Six Campus July 2020 CPUT copyright information The thesis may not be published either in part (in scholarly, scientific or technical journals), or as a whole (as a monograph), unless permission has been obtained from the University. DECLARATION I, José Antonio dos Santos, declare that the contents of this thesis represent my own unaided work, and that the thesis has not previously been submitted for academic examination towards any qualification. Furthermore, it represents my own opinions and not necessarily those of the Cape Peninsula University of Technology. 15 July 2020 Signed Date ii ABSTRACT Independent food retailers face ongoing challenges to protect the viability of their stores as retail groups and franchise operations expand their footprint into areas previously dominated by the independent retailers. Unlike the corporate retail chains and franchise stores, which have resources at their disposal for marketing purposes, independent retailers are regarded as being resource scarce. It is possible that independent food retailers might be spending energy and financial resources to promote their businesses, whereas the opposite might be true. The objective of this study was to ascertain whether independent food retailers trading in the greater City of Cape Town area actively promote their stores, with particular focus on their relationship with social media as a communication channel to achieve this end. Current literature suggests that social media has become an essential communication contact point between businesses and consumers alike. Consumers use platforms such as Facebook, Twitter, Instagram and WhatsApp to connect with friends and voice their views and opinions on individuals or businesses as perceived by them. There are a growing number of studies that have investigated the use of social media and social network platforms by small and medium businesses as a resource. However, currently there is a lack of available literature that focuses specifically on the use of social media by independent food retailers. This exploratory study therefore fills in the gap by investigating the extent to which these retailers use this medium as a marketing communication strategy. It also interrogates the enabling factors, the motivation to engage this medium, as well as the elements that retard the adoption and application of this channel as a promotional resource. Secondary data was collected through a review of the current literature investigating the adoption and use of social media as a promotional resource among small and medium businesses, including retailers. Primary data was collected using a semi-structured in-depth interview approach of a non-probability judgemental selected sample of eleven respondent retailers regarded as key informants capable of addressing the research questions. Facebook was found to be the predominant platform of choice and application among the respondents with minimal activity recorded on other platforms. The cost effectiveness, reach and accessibility of social media as a customer contact was found to enable the adoption and use of this medium as communication channel. The converse is true with regard to the perceived risk associated with social media engagement. Restricted resources relating to human, financial and technical capacity were found to influence the level of adoption negatively and use of social media as a communication channel as well. Notwithstanding these challenges, respondents were motivated to engage social media by the possibility of raising the visibility of their stores as individual brands. Building relationships with customers as a consequence of engaging them on social network platforms was an important iii consideration among the respondents, as this raised the possibility of benefiting through improved sales performance. This study provided confirmation that independent retailers do engage in online communication. It was able to describe the conditions that influence the adoption and application of this medium as a communication channel. It was able to illustrate the linkages behind some of the results with human behaviour models, such as the diffusion of innovation, technology acceptance model, and the theory of reasoned action. This study not only advances the understanding of the relationship independent food retailers have with social media as a communication strategy, it also makes recommendations that might be beneficial to other retailers in similar circumstances as well as direction for expanded future research. iv ACKNOWLEDGEMENTS A special thanks to Professor Duffett for the guidance, support and crazy work ethic that pushed me along this journey to completion. The undying support, patience and encouragement from Lucy and the children kept me going even when the energy was lacking. This body of work would not be possible without the grace and support of the God of my understanding. When I gave up, he gave me the will to continue and see this journey through to completion. And lastly, to Bobby who was the spark that ignited my interest in the topic and the journey that followed. “Valeu a pena? Tudo vale a pena se a alma não é pequena Quem quer passer além do Bojador Tem que passer além da dor.” From Mar Portugués by Fernando Pessoa v ABRIDGED TABLE OF CONTENTS Declaration ii Abstract iii Acknowledgements v Abridged table of contents vi Table of contents vii List of figures xii List of tables xii List of abbreviations xiii Clarification of key terms and concepts xiv Chapter 1 Introduction and background to the study 1 Chapter 2 The retail environment 12 Chapter 3 Social media 46 Chapter 4 Research methodology 86 Chapter 5 Data analysis and summary of findings 102 Chapter 6 Discussion of results 138 Chapter 7 Conclusions and recommendations 163 Reference list 178 Appendices 198 vi TABLE OF CONTENTS CHAPTER 1: INTRODUCTION AND BACKGROUND TO THE STUDY 1.1 Introduction 1 1.2 Background to the study 2 1.2.1 Economic factors 2 1.2.2 The independent retailer 3 1.2.3 Marketing communication 4 1.3 Problem statement 5 1.4 Research objectives 6 1.5 Research questions 7 1.6 Research design and methodology 7 1.7 Delineation of research 8 1.8 Significance of research 9 1.9 Thesis flow 10 1.10 Summary 11 CHAPTER 2: THE RETAIL ENVIRONMENT 2.1 Introduction 12 2.2 Retailing 13 2.2.1 Classification 13 2.2.1.1 Supermarkets 15 2.2.1.2 Supercentres and hypermarkets 15 2.2.1.3 Warehouse clubs 16 2.2.1.4 Convenience stores 16 2.2.1.5 Department stores 16 2.2.1.6 E-tailing 17 2.2.2 Stores by type of ownership 17 2.2.2.1 Independents 17 2.2.2.2 Corporate retail chains 18 2.2.2.3 Franchising 18 2.3 The South African retail industry 18 2.3.1 Developing trends in retail 19 2.3.2 Evolving retail formats 20 2.3.3 Omnichannel and modern retailing 21 2.4 The South African retail market structure 23 2.4.1 Retail sector sales 24 2.4.2 South African retail groups 24 2.4.3 Independent retailers 25 2.4.3.1 Importance of independent retailers 26 2.4.3.2 Challenges 27 2.4.4 Informal retail 28 2.4.5 e-Commerce as an additional retail channel 29 2.4.6 Acceleration factors and trends 30 2.4.7 World events influencing online shopping 30 2.5 Multichannel to omnichannel retailing 30 2.6 Multi- versus omnichannel retailing 31 2.7 Competition 32 2.7.1 The smaller retailer competitive environment 33 2.7.2 Evolving competition 34 2.8 Marketing communication of retailers 35 2.8.1 Advertising spend 35 2.8.2 Top South African spenders 36 2.8.3 Online communication 36 vii 2.8.4 Retail groups 37 2.8.5 Independent retailers 38 2.8.5.1 Strategic options 39 2.8.5.2 Promotional tactics 39 2.9 The future of retail 40 2.9.1 Technology 41 2.9.2 Visual display 41 2.9.3 Consumption and engagement 42 2.9.4 Big data collection and usage 42 2.9.5 Proactive retailers 43 2.9.6 The device as a customer 43 2.9.7 The frictionless retail experience 43 2.9.8 Customised products 44 2.9.9 Extreme personalisation 44 2.9.10 Loss prevention 44 2.10 Summary 44 CHAPTER 3: SOCIAL MEDIA 3.1 Introduction 46 3.2 Social media background and development 46 3.3 Zones of social media 48 3.3.1 Social community 48 3.3.2 Social commerce 49 3.3.3 Social entertainment 50 3.3.4 Social publishing 50 3.4 Types of social interactions 50 3.5 Social network sites 51 3.5.1 Facebook 52 3.5.2 YouTube 53 3.5.3 Twitter 53 3.5.4 Instagram 54 3.5.5 Messenger platforms 54 3.6 Social media as an element of marketing communication 55 3.6.1 Evolution as a communication medium 58 3.6.2 Considerations before implementing a social media strategy 59 3.6.3 Motivation for implementation of social media as a communication 60 medium 3.7 Factors influencing the adoption of social media as a communication 61 strategy 3.7.1 Organisational factors 63 3.7.2 Compatibility 64 3.7.3 Cost effectiveness 64 3.7.4 Trust 65 3.7.5 Interactivity 65 3.7.6 Acceptance of new technology as a factor in social media adoption 66 3.7.6.1 Technology acceptance model 66 3.7.6.2 Theory of reasoned action 67 3.7.6.3 Diffusion of innovation 67 3.7.6.4 Technology, organisation and environment framework 68 3.7.7 Resources 69 3.7.8 Environmental factors 69 3.8 Use of social media 70 3.8.1 Social media and retail
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