Global sourcing in the shoe retailing industry in the Western Province, South Africa : a case study

Abstract

In an effort to remain competitive and maintain stable sales level and profitability, companies across the world have turned to global sourcing. This was a result of analysing the benefits of globalisation and advancement in technology which enabled this sourcing strategy to become very popular in many industries across the world. This was no different with the shoe retail industry in Cape Town. Shoe retailers have become dependent on international trade as it is synonymous with low costs and affordable shoes. However, despite these benefits, global sourcing is well known for being difficult to implement. For an industry so dependent on international trade, it was imperative to investigate how well shoe retailers have adopted global sourcing. This thesis aimed to investigate the implementation of global sourcing by shoe retailers in Cape Town, Western Province. Global sourcing is categorised into three main stages which include domestic sourcing, international procurement and global sourcing. These were the stages used to categorise the level of global sourcing adaptation by shoe retailers in the province. The challenges and improvements required were also examined and explored. A mixed-methods approach was implemented which involved adopting both quantitative and qualitative research. Eighty survey questionnaires were administered to retail buyers, logistics managers and executive management. This represented the quantitative research category, while twenty in-depth interviews represented the qualitative research phase which were conducted on global sourcing committee members in various shoe retail companies. The research outcomes unveiled that most shoe retailers in Cape Town source domestically through middlemen, known as sourcing intermediaries. The reasons for this included a lack of finance to support the global sourcing activities; the strategy is less risky as compared to global sourcing which is risk prone; a lack of adequate information to effectively execute global sourcing; and some retailers are too small in terms of business activity to fully implement global sourcing. The remaining retailers were split between international procurement and global sourcing. Fluctuation in exchange rates, internal communication problems, bad weather, and communication problems with manufacturers or suppliers were identified as challenges that retailers face. Areas highlighted by retailers which require improvement included internal communication between departments, increase in financial support towards global sourcing and quality control of shoes before shipment to Africa. In conclusion, global sourcing has yet to be fully adopted by most retailers in Cape Town, and sourcing intermediaries, wholesalers or agents are currently imperative for the existence of the shoe industry as they provide services which retailers cannot execute on their own