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SME liquor retailers operate in complex, strictly regulated, and competitive environments yet unlicensed liquor retailers are active in meeting demands of consumers, while large retail chain organizations with financial resources continue to enter the market posing a challenge for the SME liquor retailers to sustain themselves. This study uses competitive theory to investigate the effect of innovation management practices in enhancing competitiveness of SME liquor retailers in South Africa. A qualitative exploratory design was used with thematic analysis to analyze 21 empirical data collected through semi-structure interviews. Findings highlight that by practicing innovation management, specifically non-technological, incremental, and service innovations, liquor retailers were able to attract, keep, and maintain their customer base. The respondents collaborated with suppliers to deploy a reward system to encourage customer loyalty and repeat purchases. SME liquor retailers are encouraged to deploy different forms of innovation management to enhance their ability to attract, keep, and maintain customers and thereby enhance their competitiveness.