Evaluating compliance risk and ethical behaviours within selected department stores in the Cape Town Metropole

Abstract

It is common knowledge that consumers in South Africa are generally over-indebted. Retailers operating department stores need to exercise vigilance to maintain ethical standards and compliance risk awareness in accordance with statutory and governance requirements in respect of credit. Research has revealed a reckless credit environment, with inadequate training, instruction and sensitisation informing the process of making borrowers aware of the complexities of obtaining credit. This study sought to evaluate compliance risk and ethical behaviours within selected departmental stores in the Cape Town Metropole, South Africa, where credit facilities are extended to customers. Since these stores do not adequately assess the compliance risks and ethical behaviours in their credit granting process, they lose potential profits, which can affect the long term viability and sustainability of their business activities. The research assesses the processes encompassing the credit environment vis-à-vis the processes associated with credit granting to customers within departmental stores. A number of retail department stores in Cape Town were selected using the convenience sampling method. Structured questionnaires were used to collect data, which was analysed using quantitative research methods. The study’s findings indicate that although departmental stores have written procedures in place, and incorporate some level of training for staff on credit policies, their credit granting environments are not uniformly distinguished by the practical application of the appropriate ethical behaviour. The study adds value and contextual perspective to knowledge about the domain of credit sales and their risk attributes, and also proposes possible future research.