In this paper we explore recent developments in the retail industry in Botswana, especially the emergence of larger supermarket chain stores and their impact on the small retail entrepreneurs. Based on explorative research and case study analysis of 50 small retail entrepreneurs in Gaborone and Mahalapye, in Botswana, we examine the role and relevance of small service vendors in the face of tough-hostile business environment. Our findings show that despite the manifold problems inherent in this business model, the small retailers are still needed since they provide a stopgap measure of essentials goods for the neighbourhoods. We conclude that there is a relationship between competitive pressure and entrepreneurial innovation. Hence for small retailers to continue surviving they have to adapt and embrace new ways of managing, such as service innovation.

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