Street trading as the interaction space by Andrzej Nowak

In complex systems interactions between elements of a system are the bases of dynamics. Interactions between people are also among the most significant aspects of a city. By concentrating a large number of citizens within a small area a city offers them enormous opportunities to interact. Sale of goods is an interaction. Vendors search for places which provide the greatest conditions for an interaction i.e. in this case for selling. Therefore, traders frequently put up their stands in the most congested places e.g. near railway stations, main crossroads or near other traffic junctions. The fact that street trading is concentrated in cities is not its peculiar attribute. It is one of numerous processes which depend on the interaction. It is specific to trade that it is carried on in places where people are willing to enter into such interactions. To put it another way, the best conditions for selling are not only in areas where there are a lot of people, but in areas where there is a large number of potential customers.

Based on an analysis of a fish market in Marseille, Kirman (2011) notes that it functions thanks to two types of customers: those who purchase from their trusted sellers and those who buy on a random basis i.e. who are guided by price. With regard to trusted sources, it is not worth selling low-quality goods, since there would be a risk of losing regular consumers’ confidence and breaking off relations with them. Thanks to random customers it does not pay to fix too high prices. In effect, both steady and random consumers are determinants of high quality of goods and simultaneously low prices. A more careful analysis of interactions in street trading shows that from the perspective of sellers the interactions have different value. Although interactions with customers are the basic value, there are also absolutely undesirable interactions with law-enforcement officers and sometimes with criminal groups that may try to racketeer. Vendors want to increase the number of desired interactions and diminish the number of the undesired ones.

Social networks

A structure of interactions between elements of complex systems is described as networks which currently constitute the strongest formalism used for description of complex systems (see: Barabassi 2002). The networks consist of ties i.e., in social networks, of people and links which correspond with social relations. The network shows a structure of relationships between elements of the system.

In street trading the networks comprise different kind of relations. Positive contact with local community is the basis for the sustainable functioning of trade in a housing estate. In interviews, sellers have expressly pointed out that after a change of location their sales results are much worse. It is necessary to enter into contact with residents anew. Confidence is the basic, but not the only significant, attribute of relations facilitating trade. Social interaction is important too. People frequently establish personal relationships with sellers, tell them about themselves, about their families and local events, or just talk about trivial matters. Positive value of the contact, getting to like each other or making friends with each other also translate into sales. Sales results are determined not only by a network of contacts between vendors and customers, but also by a network of contacts between consumers and other local residents. In fact, recommendation and reputation of sellers are built up in this network. Street vendors may also try to take over shops’ network of customers. This objective is usually attained by putting a stand near an entrance to a shop.

Relationships with suppliers and producers form another group of contacts. Interviews carried out by us have shown that a network of relations with suppliers may have an extremely diverse nature. A seller may represent an entrepreneur who arranges deliveries on his own. In this case, a vendor does not need to be in direct contact with suppliers, but only with a driver who delivers goods and with an entrepreneur who arranges organisational matters and receives takings. Some sellers buy on a market either from their favourite steady suppliers or they are guided by price. Other vendors purchase goods from producers, frequently craftsmen or small producers. Some sell own goods, most often they are pensioners who trade in products from their allotments or persons trading in home-made preserves. It is frequent for vendors to sell their own goods with products purchased on a vegetable market.

However, the networks of relationships with suppliers and producers may be significantly more interesting as one of our interviews has shown. A father and son sell goods from one of villages near Warsaw. They organise a local community around their commercial activities by activating the community and by ensuring an additional source of income. Interviews carried out by us have shown interesting relations between sellers. Traders who had stands near each other frequently did not have relationships with one another connected with trade. However, they cooperated by warning each other against police and city guards and by keeping an eye on goods of a neighbour in his temporary absence.

Location

A choice of location which determines spatial dynamics is at the same time one of the most significant decisions which needs to be taken by a person who decides to run a business on a street. For this reason, the largest conflicts arise between the city forces of law and traders. This choice largely determines whether a seller will function under lawful or illegal rules. Location is a decisive factor to win a customer and increase income. It is usually very difficult to find and occupy a good place. Sellers can reach an agreement with private land owners on their own account e.g. with housing cooperatives and can expose their products on their territories in exchange for monthly charges. They can seek a place within existing markets, fairs etc. where they need to pay fees and where there is not always a free place yet. Others may also decide to function illegally.
Assessment of a place directly depends on sellers. The vicinity of traffic junctions, stops, markets, supermarkets are the best location in terms of the amount of takings. The sharing of space with a stable or functional infrastructure of a city makes it possible to sell goods to customers in locations where they will occur anyway, where it is easy to foresee their needs e.g. a crossword for use during a travel, a bunch of chives for breakfast, fresh raspberries to work or a bouquet of lilies of the valley for a meeting. Here is the largest traffic and potential for income.
Also other factors determine the choice of location such as the feeling of being in a safe, friendly environment, not far away from home. The character of adjoining stands is significant too. Sellers adopt various strategies e.g. offer products, different from goods sold by their neighbours, which minimises competition between stalls. According to a contrary strategy, sellers expose similar goods next to each other, in line with the logic that customers like to have the choice. By providing them with the choice vendors win greater interest, and hence increase their turnover. Good neighbourhood is significant in particular to persons who trade illegally. They know by long-term and frequently unpleasant experience from which car or from which guards they need to hide. Sellers warn each other. Vendors whose stands are on the outside perform the most important function here. They are the first to be able to identify a danger, and give a signal to the rest; in addition, they are most vulnerable to being caught. Good neighbourhood also gives sellers an opportunity to diversify their workday, which is often monotonous, and to spend this time in a pleasant way.

Dependency and feed backloops

Feedback forms the basis of complex systems. An interaction between elements of a system can be boiled down to whether activity of one element increases activity of another element (positive correlation) or decreases the activity (negative correlation). According to the feedback, an element directly or indirectly influences itself. Positive feedback takes place when an active element by itself influences an increase of its activity in line with the principle: ’the more, the more,’ whereas negative feedback takes place when an element influences a decrease of its activity in line with the principle: ‘the more, the less.’ The positive feedback results in growth up to an explosion of intensity of a particular process, the negative feedback leads to a decline. A link of these two types of feedback results in stabilisation on given value, in reaching a balance point, equilibrium, called an attractor in the language of dynamic systems.

The positive feedback is the basis of trade. A seller trades in places where his goods can
be sold, and a purchaser appears where he can buy. The occurrence of a vendor builds up a
market of customers. A growing market of clients increases the intensity and profitability of the existing points of sale, and gives rise to the rationale for opening new ones. Customers attracted by one point of sale become potential customers of other sellers. A similar mechanism applies to confidence. Confidence helps to enter into transactions, and transactions with which customers are content enhance confidence. In the positive feedback also reputation of a seller is built up. A consumer market is created through a system of recommendations. New customers recommend a vendor to others. These processes are strong, and Paul Ormerod, a well-known economist, shows that frequently popularity of a product cannot be explained by its objective attributes, but by features of social transmission which has the character of positive feedback and by product recommendations in social networks. Customers want to buy everything that is popular, from those from whom others buy. These are typical examples of the positive feedback loops. They make popularity of already popular street traders grow, and of unpopular street sellers decrease.

In street trading there is also negative feedback. The more intensive the trade is, the more intensive the factors which impede the trade are. It means that the occurrence and intensification of trade give rise to processes which hamper it. Firstly, they include protests of residents. Unregulated trade may block pavements and passageways, pedestrian traffic increases, strangers gather, dirt occurs particularly if there is no infrastructure, and the public peace may be disturbed. Thus, people living nearby may protest, and they frequently do this, against trade and intensity of these protests will grow with increased intensity of trade. Protests force city guards to react. Unregulated trade presents a danger also for legal points of sale. It does not only take over their customers, but its competitive potential may result in a necessity to reduce prices. The more intensive the unregulated trade is, the more strongly the mechanisms aimed at putting an end to it are provoked.

Emergence

In complex systems cooperation of elements often leads to the occurrence of unplanned
and unexpected processes and attributes of the system. This phenomenon is called emergence. For instance, interactions between people give rise to the occurrence of circles of people with common views, lobby groups, clubs, associations, and to the emergence of cultures of organisations and ideologies. In turn, these emergent structures change their participants. For example, members of a particular group acquire its culture. This process is called the second degree emergence or imergence.

It is impossible to foresee in complex systems. Emergent phenomena are difficult to be planned. Emergence of certain models and occurrence of regularities can be predicted. However, it is impossible to foresee concrete events or their consequences.Unregulated trade is an excellent example of emergence in urban space. It is possible to speak here of the so-called frozen accident. Somebody chooses a place which he likes, and where there are some people, or it just came up that way. If he manages to sell something in this place, he sets up a customer base. This in turn attracts other vendors who establish next points of sale. Afterwards, new narrations are made around this process, for example about what goods can be purchased in a given place at the lowest price or of the best quality. Trade participants enter into relationships with each other, confidence may occur and different social functions emerge. Some adopt the role of sellers, some act as suppliers, others assume responsibility for ensuring security, warn others against unwanted control. This is how a network of interdependent people is set up. Further emergent structures are established. They include tangible representations (such as stalls, goods), but also intangible elements (roles, narrations, relationships), and each
of these elements supports and shapes the others. In this stage, new affordances emerge i.e. convictions of what can be done in a given place. A complex, multidimensional system arises, which comprises people, functions and objects. Once it has been set up, it multiplies and grows. The system has its economy and self-organisation rules.

The process of development may stop reaching the number of several stands. It may be also continued until a market is set up. Thus, something that has happened by chance becomes new social reality, defines a new code of conduct to which others adapt. This is how a new affordance is created, urban space wins new opportunities and functions. An emergent structure has a set of sellers and relationships, a network of suppliers, cooperation and rivalry, has enemies, transport, tangible objects (e.g. stalls) etc. These new structures re-shape people. Factors which influence an atmosphere of a place start to change. The atmosphere may form a part of local identity. An ordinary market place turns e.g. into our market place. A culture of a given place is built up. It determines whether the place is ours, warm, amicable or hostile and dangerous where cheats ambush. This attitude re-changes participants. And, those who have changed build potential for new emergence.

Functions

Briefly, sale of goods is a function of street trading. Illegal street trading can be analysed
from the perspective of threats. In this context, illegal trade has an unregulated form and
in a distorted way performs the same function as an official trade network. Street trading
emerges when official trade is unable to function. In this sense, although unregulated street trading can fill in gaps in official supply, it gets out of control of the quality of goods,
sanitary conditions, legality of goods sold. In addition, it constitutes unfair competition,
since illegal sellers do not pay taxes, and this places them in a position of unfair advantage
in relation to an official trade network. Street trading marks a city, stains a planned structure, makes a mess of planned appearance of streets. Street trading prejudices the interests of a consumer, since it offers goods of potentially lower quality, which may be harmful or it offers illegal commodities which have been smuggled or stolen. By constituting unfair competition, street trading goes against the interests of legal sellers, and due to the fact that street vendors do not pay fees for a place or taxes they affect the interests of a city and country. In this context, the authorities may admittedly turn a blind eye to street trade if there is a supply crisis as for example in a period of transition from the centrally planned economy to the market-driven economy which took place in Poland at the end of the 80s and in the 90s. However, in a mature economy street trading needs to be eliminated as its functions are taken over by an official sales network. Ultimately, in this sense unregulated street trade should be completely liquidated, and niche functions which are unprofitable for an official shop network should be performed by legalised and controlled markets.

The foregoing outlook is based on extremely simplified understanding of the function of street trade and on lack of understanding of how a city functions as a complex structure. Street trade plays different and significant roles in social and economic urban processes. Contrary to conventional beliefs, it is not a process which has got out of control, but it is an example of how a top-down regulation can be replaced, at least partially, with natural self-regulation processes. To understand why street sellers are able to operate in a mature economy, it is necessary to analyse their offer in terms of goods which are not available in an official sale network or which are available in a lesser degree. So that street vendors can still operate selling on street it needs to bring in profits and it needs to be profitable for customers to buy there. This process has also important consequences for processes which take place in a city. Therefore, to understand the function of street trading it is required to analyse it both from the perspective of a seller and a purchaser.

A seller’s perspective From the perspective of vendors who occupy themselves with informal street trade, a different type of functions, performed by this kind of activity, can be identified. Firstly, the barrier to entry is reduced. Large capital expenditure is not necessary here. It is often enough to have a small table and umbrella. Sometimes even they are not necessary. In addition, there is no need to waste time in offices, to fill in any forms or to declare income earned for tax purposes. This helps to reduce the competence barrier. Gainful activity is undertaken, but without its formalities.

A possibility of eliminating intermediaries, and hence avoiding high mark-ups, which
enables street sellers to maintain competitive prices, is another function. In addition, street
trading enables persons who for different reasons decide to operate on a small scale
to participate in the exchange of goods. For instance, those who have minor crops can
sell their products and carry out commercial activity with no fees which would make their businesses completely unprofitable. The fact that they evade official rules and controls of quality of products which they sell is another factor facilitating their operation. This may generate an additional risk, however, to be incurred by customers.

Informal street trading has potential which makes it possible to establish very close contact with consumers, as opposed to other forms of sale. In this context, it is possible to speak both of closeness in urban space and of symbolic and relational closeness. The first one consists in offering goods in places visited by a customer i.e. along his path, at a bus stop where he gets on and off, near his office. The latter refers to a possibility of entering into relationships with a purchaser, disposal of anonymity both among people and between a person and a product. Suddenly, it turns out that there is room here for a dialogue and story. Consequently, this generates very significant benefits for the business i.e. customer becomes attached to a given stand, is tied up with products of a particular seller who takes measures to make him come back frequently. This type of trade also assumes functions of inclusion of excluded persons in active functioning in the society. In addition, it enables them to find a sense in their everyday lives. For example, the elderly are provided with an opportunity to fill out and structure their time, to contact other people, to define objectives and derive satisfaction. This contributes to their social activation and makes them feel needed. In some cases, the business is run on an illegal basis only for some time to be legalised in the end. Some vendors, before they decide to trade officially, examine the market and demand for goods delivered by them. They develop a network of suppliers, learn the market and learn how to sell. This is the time for them to prepare a professional offer.

A customer’s perspective

From the perspective of consumers street trading, compared with large format shops, has a number of strengths. For a lot of customers price and quality of commodities are the most important factors which encourage them to purchase from street sellers. The price advantage, which frequently arises from the lack or smaller number of intermediaries, mainly refers to seasonal products such as flowers, vegetables, fruit, but also to secondhand books, crosswords, products from thecategory of everything from soup to nuts, and to a lesser extent to household chemicals and hygiene products. A wide range of goods and competition determine the quality. Customers can compare products offered by different vendors, and sometimes they can get something from under the counter. A possibility of talking to a seller who knows his goods very well and who acts at times as a producer is the asset. Consumers can get to know then where commodities purchased by them come from, when they were picked, how they were stored etc. And here another significant issue arises, issue which distinguishes street trading (but which is also applicable in large measure to markets or boutiques) i.e. direct contact and communication, and hence building relational confidence in a seller instead of in an impersonal supermarket. A trader takes care of goods (frequently one-off loss of confidence, sale of a bad or broken or damaged product may result in losing a customer forever). Customers of long standing may obtain purchase discounts, better goods and can hope for a flexible attitude of vendors (they can order larger quantities, place a special order etc.). And this is comfortable just as access to commodities on a street. Sellers are easily accessible. There is no need to look for them far off. In addition, some vendors fill in market niches with their products by selling goods which are not officially available (due to the fact that it does not pay off, it requires
complex logistics etc.). Customers also recognise other, less tangible benefits of street trading. By making a purchase on a street and initiating a relevant narration, consumers may also feel better, since they do not only buy an item which they wished to get, but they also support somebody in need. Thanks to them somebody’s life became easier—even if sometimes only in theory.

Adaptation

The capacity to adapt is among the most significant attributes of complex systems. It is often possible to speak even of complex adaptive systems. Learning and evolutionary mechanisms are two basic mechanisms in which systems adapt themselves to the environment (see: Holland 1975). In the learning process a system changes and ultimately becomes more functional in a particular environment. The evolutionary mechanisms include copying, mutation and natural selection. The best adapted specimen reproduce (are copied). Mutation takes place in the copying process (a copy does not ideally mirror an original) as well as natural selection i.e. the least adapted specimen are eliminated. Street trading is a typical example which shows how the adaptation mechanisms function. The trade needs to be profitable for all parties. Evolutionary dynamics is applicable here. The best adapted trade participants win.

Learning means openness to the market,specialisation in fields for which there is demand.
It is the market that determines a range of goods offered and their prices. However, the market does not have an invariable nature: fashions, products, people’s financial situation change. Trade participants need to be open to adaptation, be able to identify customers’ needs and potential threats. Apart from learning, evolutionary mechanisms are also apparent in trade. These stands which are most successful are emulated i.e. copied. A copy is never precise enough, those who emulate usually try to make some improvements or do something their own way. This corresponds with mutations. Those who have failed to adapt themselves are eliminated from the market. This is an equivalent to natural selection. Adaptation mechanisms make street trading change in the course of time and become dynamic.

Narrations

In social complex systems narrations are among the main factors which build the value. They shape reality, because people start to behave in line with them, but they also determine to a large extent the attitudes and conduct of objects of a narration. There are a number of possible parallel narrations describing street trade in its less or more legal dimension. The choice of each of them leads to different consequences. Individual experience is relevant too. Official narrations regarding trade, which is described as illegal, frequently include strong arguments against its uncontrolled existence. They refer e.g. to dishonesty: according to them illegal street traders are tricksters who do not pay taxes, people who break rules on fair competition and who prefer to pay fines at times rather than live honestly as the rest of the society, because it is cheaper.

Narrations may also refer to poor quality of goods sold by street vendors who trade in
products of doubtful origin, which may have been stolen and which are so poor that they would not undergo a control satisfactorily to be sold in shops. Narrations refer to the aesthetic dimension: street trading generates unwanted chaos, is not subject to any rules; sellers change streets into market places, leave dirt and mess behind. Some narrations are
even more radical: the trade is under control of criminal structures; it is an area of exploitation and lawlessness. A number of these arguments convince the urban population, some of them are also true. Under such banners the illegal trade is systematically removed from streets as such which does not fall within the city’s structure.

These negative narrations can be contrasted with a considerably more positive picture of street selling, including dramatic stories which are, however, more acceptable by the public. A narration about the elderly who grow, on their allotments, plants such as flowers, vegetables, fruit and who sell them afterwards to earn in addition to their low pension pays is a typical example here. Their activities have more the features of a hobby than gainful work, they counteract exclusion, isolation, give pleasure, enable them to keep contact with people and manage their time off. Another narration is a story about people who for different reasons have been forced to take up street trading: lost their jobs, never had jobs, their life circumstances changed, lost a husband or wife, need money on unexpected expenditures, for sick relatives.

Street trade may be the only way out for these people (other options turn out to be either too costly or too demanding or for other reasons unacceptable). However, a new situation is a huge challenge, completely changes the way in which they function and requires them to frequently adapt. Some of them are victims of the emergence of supermarkets and the changing dynamics of the functioning of people who live in housing estates. Small shops are no longer popular with consumers (they were unable to compete with large format shops by exploiting their attributes and by offering a variety of products), and their customers adopted, with pleasure, new purchasing standards which are so attractive after the times of permanent shortages and product monotony. Shops located in housing estates lost a number of clients, and some of their owners decided to move to market places or to take up street trading (lower costs and location ‘on the way’). In narrations, street selling may also perform a function which positively integrates and mobilises during a crisis and in poverty. For instance, our interlocutor who has organised in his village a kind of an informal cooperative falls within such a narration. Every day except Sundays, those who want pick berries and then store them in a farmer’s house. Afterwards, the berries are transported to a city, over 70 km away, and are sold. They never know how many berries will be and how many of them will be sold. Despite this fact, the cooperative operates very well.

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Andrzej Nowak, Institute of Pschygology, University of Warsaw
Marta Kacprzyk, Istitute of Social Studies, University of Warsaw