ABSTRACT
The study aims
at ascertaining the economic impact of the development of
shopping mall on the existing retail business in Enugu metropolis. The survey
research design was adopted and a sample size of 67 was gotten using
Taro
Yamani formula out of the population of a total of (255) residents. 67
questionnaires were administered to the respondents and 64 was returned,
which
was used for the data. The data for the study was gathered with a five point
likert
scale questionnaire. Analyses were made using the latest version of statistical
package for social sciences (SPSS) a well knownsoftware for the statistically
data
analysis, so that effective
conclusion can be drawn. The data for the study were
gathered with a four point likert scale model. Data was analyzed using SPSs.
The
study discovered amongst others that The existence of Shoprite Enugu affects
negatively on the existing small retail business in various dimension
such as
prices, profits, and business prospect. The existence of Shop rite has posed
serious
economic challenge and strong competitor on the existing retail business within
the region.. The study concludes that the entrance of Shoprite Enugu posed
serious
challenge to the existing retail business in the region, from the result, the entrance
of Shoprite Enugu reduce business prospect, price, profits and marginal sales
drops considerably. The recommendations are that the relevant government
authorities and agencies should take proper look on the development of these
multinational cooperation/industries to avoid sending our young establishment
to
its early grave. and The activities of these industries should be checked, so as to
encourage our local infant retail business to thrive in the midst of this
strong
competitor. Finally the researcher suggested other topics for further research.
CHAPTER
ONE
INTRODUCTION
1.1 BACKGROUND OF STUDY
Retail
in Nigeria was once confined to traditional open markets and small local
storekeepers loosely referred to as the informal retail sector of the
Nigerian economy which serviced communities. Between 1960 and the early
1980s, there were standard retail malls which operated chain stores across the
country; their number reduced because of the harsh business environment and the
decline in business in that era, leaving the country without standard malls for
retail business.
This gap led to the
growth of the informal or traditional retail market, which traditionally
constitutes a formidable part of the retail structure in Nigeria.
Today,
Nigeria is experiencing a tremendous shift to a more sophisticated structure as
formal or organizedretail continues to gain ascendency. The distribution
chain and the organization of outlets continue to reflect those of a
rapidly evolving economy as standards of living improve and as the population
continues to snowball. In the past eight years, Nigeria’s population has grown
from 150 million, as established by the population census conducted in 2006, to
a country with an estimated population of 171 million people by 2013. In the
midst of this, the middle class continues to expand even as 51 percent of the
country’s population now lives in cities.
The
rise of organized retail has been rapid in Nigeria in the last two
decades. NBS data shows that between 2001 and 2004, the wholesale and retail
sector grew by 10 percent per annum. By 2006, its contribution was 16 percent.
In the first halves of 2011, 2012 and 2013, it contributed 15.58 percent, 17.05
percent and 18.44 percent of GDP respectively. The old or traditional retail
system which is adjudged to account for almost 90 percent of retail activity in
Nigeria has continued to decline because of government’s policy, changes in the
composition of Nigeria’s population, rising income level and increasing sophistication
of the Nigerian consumer. In the last decade, the stable political environment,
consistently high oil prices, and rise in GDP have had positive impact on per
capita income, which has in turn moved more Nigerians into the middle class.
Today, more families shop together and organized facilities which
meet their need are attracting more shoppers. Therefore, the old or traditional
structure of retail continues to give way to the new.
More
than ever, the Nigerian consumer is interested in a decent shopping
environment, neatly-arranged and labeled commodities and the
experience that goes with buying at an organized outlet.
Opportunities
in wholesale and retail stem from the fact that demand has continued to rise.
NBS data shows that based on the structure and level of development of the
economy, the average Nigerian household spends as much as 80 percent of
its income on consumables like food and drinks, clothing, transportation,
shelter, education, electronics and power supply. The average amount devoted to
consumption has played a major role in elevating Nigeria to the status of a 171
million-populated retail powerhouse on the African continent.
Nigeria has evolved from
being a country with 150 million population with no real mega retail store in
2006 to one with 171 million people who have about 20 mega retail stores in
less than 10 years. The country has the capacity to support even more malls
across its major cities.
1.2 STATEMENT OF PROBLEM
In
shopping centers for instance, the rent paid by a tenant bears relation to the
ability of that tenant to trade profitably from that location. This has
always been a salient criterion but as competition has forced retailers to
accept lower margins for their profit levels, the impact of ‘cost’ on the
profit equation has become more important. Retailers of Shopping Centers
havebeen forced to look at the cost equation in terms of their space
requirement. They are therefore less willing to accept the level of rents
in the market and may consider relocating if they feel that current
rentals are too high for their cost requirement. This should mean that
the market will adjust to ensure that value in exchange (rental value) and
value in use (worth to the retailer) converge (French, 2000).
Hence Sirmans and Guidry (1992) noted that understanding the
determinants of shopping center rents is important to the Estate
Surveyors and Valuers who are involved in market analysis and
site selection of such properties.
Nevertheless valuers fail
to account for variation between retail function and the impact
of individual property factors on rental value. This potentially leads to
misguided valuations. In determining the rental value of a subject
property, inappropriate evidence may be undervalued to determine a unit value
even though in the market place the subject and comparableproperties belong to
distinct tiers (that is the occupier of the subject property would not
be expected to make a bid for the comparable property).
Also, valuersinterpretations of evidence may lead to over or under
estimations of rents as the perceived impact of a factormay have a positive
impact on trade and hence rental bid for one type of retailer and
a negative impact for another. Hence Hager and Lord (1985) stated that
“the success of a valuation relies extensively on personal knowledge,
expertise and interpretation of manyvariables which exist”.
However,
the complexity of the property price formation process requires an
analytical approach which makes it possible to settle the cross-influences
between the numerous dimensions affecting property values (for shopping
centers) and to assess the marginal contribution of each attribute
underlying property buying decisions (Des Rosier et al., 1996).Much work has
been done in the determination of property values (residential and
shopping centers) in the United Kingdom, United States and Australia
(Trott, 1980; Fraser, 1988; Kihore, 1996). In Nigeria, very little effort
has been made. The few that exist only looked at the determinants of
residential and office property values (Bello, 2000; Oladapo, 2000).
1.3 Objectives of the Study
As a central objective,
this study seeks to assess the economic impact of the development of
shopping mall on the existing retail business in Enugu metropolis. The specific
objectives are to:
1. To determine if increase in the development of shopping mall
will lead to extinction of retail business in Enugu metropolis.
2. To examine the correlation between the development of shopping
mall and performance of retail businesses in Enugu metropolis.
3. To assess the economic contribution of the development of shopping
mall on the retail prices.
1.4 Research Questions
From the aforementioned
research objectives, the following research questions were formulated
1. To what extent will the development of shopping mall leads to
extinction of retail business in Enugu metropolis?
2. What is the correlation between the development of shopping mall
and performance of retail business in Enugu metropolis?
3. What is the economic contribution of the development of
shopping mall on the retail prices?
1.5 Research Hypotheses
Based on the above
research questions, the following hypothesis were formulated
Ho: Shoprite has no
significant impact on specific dimension of the local retailers business
in Enugu state.
H1: Shoprite has no
significant impact on specific dimension of the local retailers
business in Enugu state.
1.6 Significance of the Study
This study is
significant in that it attempts to pinpoint some of challenges facing owners
of retail business because of the increase in the development of shopping
mall in Enugu metropolis. It has both theoretical and practical
significance. Theoretically, the finding of the study will be useful to both
students and scholars who wish to advance their knowledge on economic
impact of the development of shopping mall on the existing retail business in
Enugu. On the other hand, the findings will be of practical significance to the
management of retail business operators and other medium scale
business organizations, employees and the government, as it will help
them to improve the challenges facing retail business operators
in Enugu metropolis.
Significantly, the
findings are expected to make the sole proprietor to see the need to improve
staff strength through employment and development of skilled manpower. This
will help them to plan adequately and suggest the need to organize seminars to
the general public on the danger of the aforementioned challenges,
adding to the above, it will specifically create awareness on
how the challenges facing retail business operators can be managed.
1.7 Scope of the Study
The research work
covered the assessment of the economic impact of the development of
shopping mall on the existing retail business in Enugu
metropolis Nevertheless; it focused generally on enumerating the challenges
and tested ways of averting/managing it.
1.8 Limitations of the Study
The study was limited by
the fact that it relied solely on one enterprise and some of the personnel did
not volunteer the necessary information. Finally, time available for me was
limited when compared to other activities I need to engage myself in the
school.
1.9 Definition of operational terms
Shopping Centre/Mall: ICSC (1999)
defined a shopping centre as a group of commercial establishment, planned,
developed, owned and managed as a unit related in location, size and
types of shops to the trade area the unit serves. It provides on-site
parking in a definite relationship to the types andsizes of shops.
Real estate: According to
Wikipedia definition, real estate refers to land plus anything permanently
fixed to it, including buildings, sheds and other items attached to the
structure. Real estate can also refer to the rights and interest inherent
in ownership of real property.
Residential property: Realtors
Commercial Alliance(2005) defines Single- or multifamily housing units
that are used, serve, or are designed as a place ofresidence
Real estate or property
market: CEM
(2006) defined real property market as the interaction of individuals who
exchange real property rights or interests for other assets such as money.
The function of the real estate property market is to establish a pattern
of price so that given sufficient time, land resources are allocated
according to their most profitable (highest and best use) relative
to other land resources.
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