Factors Associated With Profitability of Retail Businesses in Urban Areas: A case study of Mulago and Wandegeya in Kawempe Division Kampala District

Abstract

The main purpose of this research was to investigate factors associated with profitability of retail businesses in urban areas, a case study of Mulago and Wandegeya in Kawempe division in Kampala district. 50 retail shops were selected and included in the sample and research face to face interviews were conducted with retailers with a guide of a well-designed questionnaire. The collected data was analyzed with the help ofa descriptive statistic using average percentage of the profitability level at the univariate level, ANOVA, a Pearson correlation and a regression line plot were used at the bivariate level. A descriptive summary revealed that the average profitability level percentage was greater for the male gender at 46%, retailers who reside in Mulago at 27%, retailers with O level qualification at 44%, employees at 32%, retailers whose businesses were not registered at 46%, retailers who have access to loans at 49%, the youths in the ages of 20 – 29 at 45%. Based on the results under ANOVA, the researcher can conclude that profitability levels are statistically significantly dependent on location of the retail business and level of education at 5% level of significance since the P value was less than the given significance level. A correlation was run alongside a regression between profitability level and initial capital which revealed a correlation value of 0.5458 implying a positive strong relationship between profitability level and initial capital.Profitability level is significantly and positively influenced by location, A level qualification, loan accessand 30 – 39 age group while the not registering a retail business significantly influenced profitability level to the negative direction. From the study, retailers are recommended to start up business in areas that are densely populated and have high customer traffic. It is also recommended that retail businesses should register with KCCA. This will make it easier for authorities to assess the category of license and also stand a chance to enjoy government programs on retail business.