Tag: malls

The mall in 2029: imaging the future

Speaking at the recent South African Council of Shopping Centres Research Conference, Doris Viljoen – a senior futurist at the Institute for Futures Research based at Stellenbosch University – shared an imagined future for malls based on current retail trends.

With consumers moving from experiencing products in stores to ordering them online, smartphones and wearables play a big role in providing customised assistance while physical stores are already morphing into lively, immersive environments that rely on sensors to capture and analyse data in real time.

What is the next step? Presenting four different futures for the shopping mall, Viljoen’s work as a futurist often involves interpreting the history of retail – so what has happened until now – creating deeper layers of understanding, and then building a collection of plausible futures for consideration.

“It’s important to remember that people will still have an influence on the future that eventually unfolds. We cannot predict the future. We don’t know what is going to happen, but through the imagination of the different futures that could happen we can be prepared, and being prepared is more valuable than being right. All four of these futures could be wrong – but at least we then spend time thinking about what is possible,” she says.

Imagine a mall that recognises you the moment you walk through the door. As you enter the mall, your phone buzzes with a message from the mall, greeting you by name.

In this space, you are able to do anything with the smart device in your hand. If you see something you like, you can instantly get extra info about the product, where it comes from, pricing, and if you want to buy it, you can pay and arrange delivery from the palm of your hand.

Consumers can tag items they’re interested in, with notifications alerting them to the availability of these products in the mall, even guiding shoppers to their exact location – particularly useful for those instances where people still want to touch and feel before they buy.

Imagine meeting a friend for lunch at a restaurant and getting notified when she arrives, or even better, the restaurant using data smartly to predict what you want to order before you arrive.

Trends fuelling this scenario include consumers’ growing tendency to do their chore or convenience shopping online, saving their visits to the physical store for items they want to see and feel before buying. The growing use of facial recognition technology and customisation of both products and services have also contributed to the possibility that this could be the mall of the future – where people are able to directly influence their own shopping experience, creating useable data with each visit that retailers can effectively interpret thanks to machine learning analytics.

This may look like a normal mall, but some malls may start to empty, sitting with more and more vacancies as they struggle to fill the space. There is an opportunity here for developers to recreate these spaces into a gated community – where stores are repurposed and refitted into apartments, served by suitable retailers – think convenience and a place to socialise with friends and family.

In this future, Viljoen sees the rooftop parking converted into several green endeavours, including solar farms, running tracks and community gardens – building communities that thrive off the grid.

“And while this is a living space, there are still stores that provide food and personal services – so there is a lot of retailing and transacting is still taking place,” she says.

“South Africa is ranked sixth for the most shopping centres in the world, but urbanisation here is very rapid – in 2014 we had 34.2 million people living in urban areas, and by 2050 this figure will jump to 49.1 million. We need housing, and gated communities are becoming increasingly popular from a safety perspective, as well as the perceived value of going off the grid.”

Imagine a mall with a 2,000 seat auditorium for sports, where sport related retailers and activities become what the grocery anchors are now.

This mall consists of modular units that can easily move around, allowing retailers to continuously recreate the whole centre. Visitors might not be sure if it is a gym, adventure or a sports store. Here, they can eat a very healthy meal, or have personalised sports gear made specifically to fit them thanks to scans of their proportions.

This mall is built squarely on the concept of customisation, where experts are on hand to design programmes for you, while you have a new pair of running shoes 3D printed directly on your foot.

Connectivity, a major role-player in all four of these futures, will feature heavily here, but it is the rapid growth in the health and wellness industry that will bring this mall to life.

“People are looking for experiences, not things, so that they can share and post on social media.”

Here we’ll see a space filled with apprentices and trainees, from food and hair to graphic design and drafting – customers can go here and experience or buy from trainees.

This allows trainees to engage with real customers, while customers actively contribute to their learning while also benefiting from these services or products at a slightly cheaper rate.

“The population in sub-Saharan Africa has seen huge growth. There are a lot of people who need to be skilled, and people are living longer than ever before. In South Africa, our qualification status is also worrisome – only 13% of the people in South Africa have a post-school qualification. As business and the economy changes, we are going to need more and more people with qualifications, and for that, we need more places suitable to upskill the people we need,” she says.

How Edcon is shrinking its footprint

By Glenda Williamns for Fin Week

Edcon’s current restructuring process includes significant space rationalisation.

JSE-listed real estate investment trust (REIT) Attacq, owner of Mall of Africa, announced that Edcon exposure, (25 499sqm at 31 December 2018, down from 29 262sqm at 30 June 2018) will settle at 22 945sqm of primary gross lettable area (PGLA) by 1 October 2019 for an estimated 3% of the REIT’s effective PGLA. Contractual gross monthly rental at this time will be R3.2m, down from R4.1m at 30 June 2018.

Owner of Sandton City, Liberty Two Degrees’ (L2D), says Edcon currently occupies 5.3% of its current portfolio, which is expected to reduce to 4.3% of gross lettable area (GLA) by 31 December 2019.

Redefine Properties, SA’s second-largest REIT and owner of Centurion Mall, has a hefty retail portfolio that at 31 August 2018 comprised 1.4m sqm of GLA.

The REIT is a significant landlord to Edcon with GLA exposure of 78 760sqm (down from 122 856sqm at August 2018) housing the Edgars and Jet brands.

Redefine’s equity contribution will amount to R54.6m, the REIT says. As a consequence, Redefine will receive 100% of its rental due from Edcon on 56 788sqm representing in force leases for profitable Edcon stores.

Redefine has also agreed to rental reductions up to a maximum amount of R13.8m over a two-year period in respect of leases totaling 21 972sqm.

Other major players in the listed property sector have yet to make their formal announcements on the recapitalisation process.

Some like Hyprop Investments Limited, owner of super-regional mall Canal Walk, have significant exposure to Edcon.

At 31 December 2018 that amounts to 9.4% of GLA (66 781sqm) and 7.6% of gross income.

Speaking at Hyprop’s interim financial results for the six months to December 2018, newly-appointed CEO Morné Wilken says that almost 7 600sqm of Edcon’s total 67 000sqm floorspace has already been taken back and mostly re-tenanted.

Hyprop has, in principle, agreed to support the Edcon restructuring proposal with a reduction in rentals, compensated for by equity participation in Edcon, says Wilken.

“While that will impact distributable earnings in the 2019 and 2020 financial years by 0.8% and 2.3% respectively, it is considered an acceptable limitation of the risk,” he says.

Others like top-performing SA REIT and low-LSM focused Fairvest Property Holdings have insignificant Edcon exposure.

In Fairvest’s case that’s a mere 0.8% and exposure is only to the still well-trading Jet Stores. “That,” CEO Darren Wilder tells finweek “was not by chance, but by strategy.”

New venture may shake up shopping malls

Steinhoff Retail Africa, along with partner Shoprite, is set to disrupt the retail market, if they implement plans to own shopping centres.

Shoprite CEO Pieter Engelbrecht said this week: “If you look at all the brands that are currently in the company [Steinhoff] and you add ours, they could be opportunities in real estate where we could open shopping centres just with these brands on their own.

“Once we’ve combined we’ll make such a decision. But it could be a possibility because the combined value of real estate is huge between Shoprite and all these brands within Steinhoff Africa,” said Engelbrecht.

The creation of Steinhoff Africa Retail, known as STAR, will include Steinhoff’s African assets such as Ackermans, Poco South Africa, JD Group, Timbercity and men’s apparel retailers Dunns and John Craig, Pepkor South Africa and rest of Africa, and Tekkie Town, to name a few, and will result in Steinhoff acquiring a 22.7% stake in Shoprite.

Lucrative opportunity

Given the close relationship between Shoprite and Steinhoff, a move to combine the two groups’ own shopping centres could also mean Shoprite’s grocery brands, such as Checkers, Usave, Liquorshop and fast food brand Hungry Lion, could take up space in these shopping centres.
Engelbrecht added that because there was quite a big mix across the two groups, including furniture, food, liquor, pharmacies and electronics, this could be “quite a lucrative opportunity to explore”.

Earlier this month Steinhoff announced the details of the listing of its African and European assets into two companies, which would be listed separately.

This deal comes after a previous attempt to merge the two groups had failed. Under the new transaction, Engelbrecht said, it had panned out that Shoprite would stay “autonomous” and separately listed.

“For us that’s also more exciting as we as management believe that we should operate independently.”

But combining their brands in shopping centres could be one way to extract synergies and savings for Shoprite.

Keillen Ndlovu, head of listed properties at Stanlib, said “rental as a percentage of turnover and sales has been going up particularly in the bigger shopping centres. The bigger centres have been able to attract higher rents over time but unfortunately, the higher rental growth has not been catching up with sales and turnover growth.”

Slowing sales

This meant the cost of occupation for retailers had been rising with the average cost of occupation at 10% of sales as at the end of December 2016 from 8.5% as a percentage of sales between 2004 and 2016, Ndlovu said.

“Given the slowing sales and economic environments in general, this is likely to make it harder for landlords to bargain for rental increases from retail tenants. Therefore, rental growth is likely to slow down,” he said.

For Shoprite’s full year to end-July 2017, the cost of new operating leases rose 9.6% to R3.8-billion from the R3.5-billion in the previous quarter, “mainly due to a net 109 new corporate outlets opened during the year”, the company said.

And for the group that is focused on letting every rand fight for its life, a reduction in costs in the current trading environment will be welcome.

“We must drive our own strategic focus to create value for shareholders, but wherever there are synergies or saving or opportunities that we can share with the STAR group we will not be adverse to it at all,” Engelbrecht said.

Source: Business Live

Malls in crisis as Stuttafords shuts down

Stuttafords’ shutdown may be only the tip of the iceberg for mall owners, who are facing further tenant failures and store closures as consumer spending tightens. But it’s not necessarily all bad news.

The demise of Stuttafords and the looming closure of a number of Edcon stores will bite into the earnings of shopping mall owners, who increasingly face rising vacancies and falling rentals.

JSE-listed mall owner Hyprop Investments expects it will take six months to find new tenants for the 11,000m² of space left empty following last month’s closure of Stuttafords stores in three of its flagship shopping centres.

Hyprop CEO Pieter Prinsloo says it’s too early to say what the impact will be on the company’s bottom line.

“It will depend on how long the stores stand empty and what rental levels we can achieve on new leases.”’

However, he concedes that the Stuttafords store closures will negatively affect dividend payouts to shareholders for the year ending June 2018.

Hyprop is the JSE’s largest specialist retail-focused real estate investment trust (Reit), with a market cap of R30bn. It has in recent years consistently outperformed the sector, both in terms of income and capital growth.

In March, when the company reported results for the six months to December, Prinsloo said Hyprop was on track to achieve dividend growth of 12% for the full year ending June — well ahead of the 7% sector average. That level of growth appears unlikely to be repeated in the 2018 financial year.

Hyprop is already in talks with various retailers to fill the space vacated by Stuttafords. Prinsloo says international retailers, including Swedish fashion retailer H&M, and Zara, are still keen to expand their SA footprints. “Turkish fashion brand LC Waikiki is also interested in establishing a presence in SA.”’

The problem, says Prinsloo, is that it is likely to take six months to negotiate lease agreements with new tenants and fit out new stores. And there is a chance that Hyprop may have to let the vacant space at lower rentals than Stuttafords was paying. Says Prinsloo: “The reality is that trading conditions are tough, with retail sales under pressure across the board. So everyone wants to pay lower rentals.”

Though Stuttafords has paid its rent until the end of May, Hyprop will claim damages equal to the amount owed for the unexpired portion of the three leases. The Rosebank Mall lease was the longest and has four years remaining. But Prinsloo doesn’t expect to recover much. “Creditors are unlikely to get back more than 3c in the rand.”

Other JSE-listed mall owners that will be affected by Stuttafords store closures are sector heavyweight Growthpoint Properties and Liberty Two Degrees. The latter owns stakes in Gauteng megamalls Sandton City and Eastgate. The Stuttafords store in Growthpoint’s Brooklyn Mall in Pretoria shut its doors last month.

It’s not clear if and when its Sandton City and Eastgate stores will close. Liberty Two Degrees declined to comment on the issue.

Stuttafords’ shutdown may turn out to be only the tip of the iceberg for mall owners, who are facing further possible tenant failures and store closures. International fashion brands Mango and Nine West, which were brought to SA by House of Busby, closed their stand-alone stores in March. British retailer River Island, which has a presence in Rosebank Mall, Sandton City and Mall of Africa in Gauteng, Canal Walk in Cape Town, and elsewhere, exits SA this month.

Of particular concern are the looming store closures by the struggling Edcon group, the largest occupier of retail space in SA through its Edgars, Jet, Jet Mart, CNA and Boardmans brands.

Edcon CEO Bernie Brookes said last month the group plans to shut a number of stores when leases come up for renewal, in a bid to stem losses from falling sales and cannibalisation (when a new store lures customers away from an existing one in the same “catchment area”).

Though vacancies in the retail portfolios of larger property stocks are still relatively low at less than 3% typically of gross lettable space, vacancies are bound to tick up over the next 12 months.

Trading densities (turnover/m²), another key measure of retail performance, are already under pressure. Trading density growth in the mall portfolios of both Growthpoint and Hyprop slowed to the low single digits in the six months to December, from 7%-8% achieved 18-24 months ago.

Growthpoint head of retail Stephan le Roux says Edcon store closures will affect all mall owners, given how difficult it is becoming to replace tenants. “Everyone’s growth is flat or falling, so very few retailers are looking to expand in the current weak economy.”

To the (business) rescue
More financially distressed companies that have gone into business rescue since 2011 have been saved than have failed.
Le Roux believes there is also an increased risk of tenant failures among smaller, independent “mom and pop stores” as they often don’t have the financial resources to keep afloat amid continued pressure on retail sales.

The perfect storm has been created by developers’ and retailers’ overzealous expansion in recent years, amid dwindling consumer spending, says Le Roux. “Over the past decade the amount of new retail space added to the market grew at a much faster pace than retail sales. Until a year ago, it was mostly lower-and middle-income shoppers who were under strain. Now upper-income consumers are also tightening their belts as higher taxes and overall living costs erode disposable income.”

Property analysts say store closures by underperfoming retailers is not necessarily all bad news. Meago Asset Managers director Jay Padayatchi says Stuttafords closures could be a blessing in disguise as vacant space may be taken up by international retailers who could trade better and bring in more feet.

Stanlib head of listed property Keillen Ndlovu says the upside of tougher trading conditions is that SA landlords will be forced to improve the shopping experience for consumers. He says this is already happening in the US and UK, where mall owners have had no choice but to adapt to changing shopping patterns and the advent of online shopping.

In the US, he says, department stores seem to be a thing of the past. Landlords are converting big spaces into smaller, specialised outlets.

Ndlovu says globally the focus is increasingly shifting away from fashion/apparel to food, beverage and entertainment offerings. This has already delivered rental upside for large US-listed Reits such as Simon Property Group and General Growth Properties.

Ndlovu notes that SA retail landlords will, similarly, also have to become more innovative to stay ahead of the game. “There’s huge room for SA property owners to improve the tenant mix in local malls as well as to embrace new technology through apps, free WiFi and use of data analytics to better understand shoppers’ changing needs and preferences.”

By Joan Muller for www.businesslive.co.za

There are many factors that contribute to the success – or otherwise – of a shopping centre, and getting the right tenant mix is right up there at the top of the list. The general manager of a major mall weighs in on what “tenant mix” really means.

“First impressions count,” says Olive Ndebele, general manager of Pretoria’s Menlyn Park Shopping Centre, the largest mall of its kind in Africa following its two-year R2-billion redevelopment. “We want our customers to be blown away by what we’re offering. We want them to find not only everything they need under one roof but also to be absolutely thrilled by the many, many additional ‘nice-to-have’ and unique offerings they’ll find at Menlyn Park Shopping Centre.”

To achieve this objective, says Ndebele, you have to know the mall catchment area and exactly who your mall will be servicing, and that’s generally the community in which it is located – although the very popular Menlyn Park Shopping Centre is also a magnet to residents of the outlying suburbs of Pretoria, the large contingent of the foreign businesspeople and diplomats who live in South Africa’s executive capital city, and keen shoppers from the African diaspora including Sadec and Sub Saharan Africa.

“You have to ensure there’s as close a match between the needs of your target markets, their buying capacity, and the kinds of tenants present in your mall,” says Ndebele. For this reason, Menlyn Park Shopping Centre management conducted extensive market research in order to have insights the demographics, needs, size and disposable income of their target markets, as well as their aspirations and preferences.

But getting the tenant mix right isn’t important just to bring feet into the mall. It’s vital for the tenants themselves too. “Ideally, you want complementary stores feeding off each other, meeting shoppers’ needs and enhancing revenues,” Ndebele says.

Niche retailers, which are the many little stores that provide the variety in a shopping centre, don’t usually have large marketing or advertising budget, so they rely on the larger retailers in the mall to bring in the customers. “Anchor tenants, which are generally grocery offerings in South Africa, bring the critical mass into the mall,” Ndebele explains. “If, as a shopping-centre manager, you get the right anchor tenants, the smaller retailers will feel reassured that a certain type of consumer will definitely be visiting the mall, and that the footcount will therefore be assured to at least a certain degree, and that will probably encourage them to set up shop in your mall.”

These retailers include what Ndebele calls the “non-retail services”, such as (in the case of Menlyn Park Shopping Centre) a Fives Futbol, Fun company, a speciality store, a dry-cleaner, a barber, an internet-browsing store, a travel agent and an e-toll outlet. “These offerings ensure a more holistic approach to our tenant mix, and they do also contribute invidually to the mall’s footcount,” she points out.

And there are a couple of further important criteria when it comes to tenant mix: where your tenants are located, and how much space their shops take up are also vital. “Your customers don’t want to have to walk from one end of a shopping centre to another to tick off specific items on their shopping list,” Ndebele says, “which is why, for instance, at Menlyn Park Shopping Centre we’ve grouped all the large anchor grocery stores together in Grocery Avenue. This ensures a very accessible, convenient experience for consumers who may want to visit two or three large retail grocery outlets to fill their exact needs.”

The same applies, says Ndebele, to the mall’s Fashion Wing, where cutting-edge fashion brands are grouped together over three levels; and the new spacious food and entertainment area, with popular eateries clustered together, offering a very wide choice within a pleasant space where customers can linger.

And on that subject, says Ndebele, “We must bear in mind that malls are no longer primarily about simply shopping. When consumers visit malls, they’re looking beyond traditional shopping – they also want relaxing and entertaining experiences. So, ideally, you want to maintain a good balance between all the categories in a shopping centre – between food and beverages, fashion and beauty, electronics, groceries, and entertainment, plus a healthy number of smaller ‘non-retail’ offerings. This side of getting the mix right is as much an art as it is a science.”

The bottom line, says Ndebele, is finding the sweet spot for your customers between convenience and experience. “And mall management must never forget that all tenants affect footcount – both the big destination stores that anchor a mall, and the smaller ‘impulse-buy’ and ‘non-retail’ stores that make up the mix.”

Value for money is always going to be a key motivator when it comes to shopper behaviour. But to keep customers loyal over time, their overall emotional connection with your shopping centre is vital, says one veteran shopping-centre manager.

“The most significant positive impact of a great customer experience is long-term loyalty,” says Olive Ndebele, general manager of Menlyn Park Shopping Centre in Pretoria. And one of the many challenges facing shopping centres today is how to consistently give their customers this great experience.

The 37-year-old four-level Menlyn Park mall has just undergone a two-year, R2-billion, three-phase expansion and refurbishment project that will position it as the largest shopping centre in Africa. Usually during giant projects of this kind, shoppers tend to swap loyalties to other malls to avoid the chaos and inconvenience of construction but footcount numbers to the centre actually increased during some phases of the building at Menlyn Park Shopping Centre, showcasing unusual resilience. Included in the reasons Ndebele cites for this atypical customer behaviour is the fact that the centre went to great lengths to ensure their customers were inconvenienced as little as possible, and to keep them engaged throughout the process. “We ensured that our customers continued to have great customer experiences in our mall, regardless of what was happening behind the scenes,” she says.

This philosophy is being carried over into the new Menlyn Park mall, which is much more than “just” a shopping centre: aside from a greatly expanded fashion wing hosting a range of international and local fashion brand stores, there’s the reconfigured two-level food and entertainment hub that includes 3D Nu Metro cinemas and the massive Fun Company centre, and a number of restaurants situated around a beautiful outdoor piazza. And, acknowledging the ever-growing number and diversity of its client base, a Prayer Centre will cater to Pretoria’s growing Muslim community.

The key to delivering a great customer experience, says Ndebele, is finding out what your customers need and want, and giving it to them. In the case of Menlyn Park Shopping Centre, which has long been a popular mall in the country’s executive capital with its 100+ foreign embassies and consulates, customers include “residents of all the surrounding and outlying suburbs of Pretoria, a large contingent of foreign business people, diplomats and holidaymakers, and keen shoppers from other African countries, such as Nigeria and Mozambique, where big-name items are hard to find”, according to Ndebele. And, she adds, “We’ve put together a comprehensive tenant mix that caters to all our shoppers.”

But having great tenants doesn’t necessarily automatically translate into a great customer experience. “We live in a dynamic age of technology and innovation, and one in which caring for our customers has never been more important,” says Ndebele. “An unhappy customer can instantly share a negative experience with thousands of people through social media – but so can a customer who’s had great service. Customers are always looking for ways to feel valued, and ways to make their lives easier.”

Delivering this, says Ndebele, comes down to the personal touch – arguably, the one thing that online shopping can’t compete with in the bricks-and-mortar version. As an example Ndebele cites Menlyn Park Shopping Centre’s lightbulb concept of a “concierge service” during the last phase of the refurbishment, when friendly, efficient and well-trained staff members were stationed at busy nodes in the mall to answer queries and give directions, spoil shoppers with refreshments, and generally make sure that everybody felt genuinely cared for.

While many of today’s shoppers regard a visit to a mall like Menlyn Park Shopping Centre as an outing in its own right – during which they not only treat themselves to luxury purchases, and perhaps see a movie, play games or have a meal with family or friends – there are still those who want to simply “get in and get out”. “Career and business people, especially, don’t regard grocery shopping as a social event,” Ndebele points out. “They’re just trying to get a lot done in often very limited time.” For these shoppers, convenience and accessibility are paramount, and that’s the essence of the thinking behind the mall’s “Grocery Avenue”, with a Checkers Hyper, a Food Lovers Market and a Pick n Pay alongside each other in one section, with easy access to parking. The Pick n Pay offers even more for the busy shopper: banking services, drawing social grants, booking flights and car hire.

And proving that Menlyn Park Shopping Centre truly has gone the extra mile to cater for everyone, there are options, too, for those who like to shop at leisure while they stock their kitchen cupboards, says Ndebele: “There’s an in-store coffee shop and a take-away burger bar in the Checkers Hyper, and a seated eating area in the Food Lovers Market.”

The South African retail industry has changed dramatically over the last decade. Improved and up-to-date infrastructure in the country has given rise to a more competitive environment dominated by a number of major players and several aspiring smaller retailers who are selling merchandise to people willing to shop by truckloads in a large quantity. The improved roads network has benefited the retail industry facilitating an efficient distribution of goods to most areas of the country including townships and rural areas.

Malls have mushroomed not only in traditional inner-cities but in suburbs and townships too. Urbanisation continues to increase in South Africa with the country now having 64.3% people living in urban areas compared to 52% in 1990. Rapid construction of high-density housing in the surrounds of major urban areas has led to the demand for and increased developments of malls in these residential areas.

South Africa has the 6th largest number of shopping centres globally according to the South African Council of Shopping Centres (SACSC), consisting of over 2,000 shopping centres with a floor area covering a whopping 23 million square metres. With more and more malls opening in South Africa, retailers are desperately seeking strategies of how they can gain market share in the fiercely competitive market.

Research has shown that a retailers’ global competitive advantage may be reflected through efficient sourcing and supply management techniques, or well-developed operational procedures. A major criterion for evaluating these advantages is the effectiveness and essentially measured by the most important retail metric-sales volume. Sales volume later translates into revenue and profits and ultimately a gain in market share.

The recent craze of mall openings in South Africa has seen most retailers scrambling for space hoping that the extra square metres could gain them a bit more market share. Research in developing markets such as Malaysia has shown that hypermarkets are one of the fastest growing formats there. In commerce, a hypermarket is a superstore combining a supermarket and a department store. The result is an expansive retail facility carrying a wide range of products under one roof, including full groceries lines and general merchandise.

In theory, hypermarkets allow customers to satisfy all their routine shopping needs in one trip. In South Africa, hypermarkets recently have been seen as more attractive through their offer of more variety products and services. Food retailers such as Woolworths, Pick n Pay and Checkers have therefore continued to expand via this format, but the question is “Are Hypermarkets effective in a South African context?”

Grocery shopping behaviour in South Africa can be described as a routinized and functional behaviour. It is also be best described as being heavily dependent on location related factors. In a country like South Africa where the number of road vehicles per 1000 people is 165, then does a retail format which is heavily dependent on customers travelling potentially long distances with big loads of groceries suffice? In the main cities where these hypermarkets are located in big malls, it is next to impossible for the predominantly working population to make more than one trip from home to the mall especially during the week. It therefore implies that these malls only get the footfall on weekends when customers have time to travel.

South African consumers have different reasons for preferring different store formats, either modern hypermarkets or traditional supermarkets. In the case of hypermarkets, the main motives for preference, in decreasing order are: low prices, the possibility of buying everything in the same place and the general appearance of the store. Research has shown that most South African customers are bargain hunters. Defined as people who look for a place to buy something at a price that is cheaper than usual, bargain hunters view hypermarkets as cheaper because of their ability to source in bulk and hence enhancing their ability to pass on lower costs to customers.

The truth is, this probably never happens in some of the South African retailers who do not operate franchise models due to constraints imposed by systems which prevent them from operating a multi-priced system allowing their retail outlets to sell the same item at different prices at different locations. For those retailers who try and implement this multi-price system, it becomes such a nightmare to manage the analytics in the long run especially considering that most of these retailers use one supply chain and therefore one costing method for all merchandise they sell.

Retailers by using the concept of store image, consider the way consumers see their stores in their minds, based on tangible and intangible attributes. Therefore, some South African retailers have been working on using their store image as a “marketing tool”, or as a “competition tool”. They have used store images to provide themselves with useful indications about the most and the least appellative attributes to consumers, and therefore, getting further insights for designing strategies about their marketing mix.

In conclusion, the hypermarket is still the preferred kind of store by consumers in South Africa, even though the consumers buy in several establishments and not exclusively in the hypermarket, which indicates that there is no single loyalty to a type of format. Although the majority of food and household products are offered in supermarkets and in small retail outlets, hypermarkets offer obvious benefits to their customers. The impact of hypermarkets has also been felt in other types of retail, namely toys, stationery goods and house-hold appliances. Competition gets more intense in other sectors, such as clothing and furniture where there has been an influx of international retailers seeking new markets in Africa.

By Girland Chibaya for www.cnbcafrica.com

The South African Council of Shopping Centres has reported some welcome festive season growth coming out of the country’s malls and retailers at the end of 2015, notwithstanding tough trading conditions in local markets.

Amanda Stops, CEO of SACSC, notes that recent figures from Statistics SA show retail sales increased at 3,9% year-on-year for November 2015. This is much higher than expected.

Plus, updates from retailers themselves also reveal sales growth for the final months of the year, including Truworths, Woolworths, Massmart, The Foschini Group and Shoprite.

The council’s own review of festive trade taken from a sample of the country’s shopping centres shows a trend of growth in turnovers, despite shopper numbers generally remaining unchanged from 2014.

“Of course, there were outperformers that far outstripped this with significant growth in sales and shoppers. However, these were the exceptions and often the result of a major extension or upgrade taking place at a centre,” says Stops.

“There were also some underperformers, mostly in communities particularly hard-hit by economic strife.”

Stops says the country’s shopping centres play and important role in the festive season and most worked hard to create a festive spirit for shoppers at the end of a tough year, serving up all the ingredients needed to support retailers’ sales and spread a little cheer among South Africa’s hard-pressed consumers.

“Many shopping centres began their year-end campaigns in November, dressing up in beautiful festive décor, helping shoppers by offering longer opening hours, presenting fun seasonal entertainment, offering big competition prizes and, of course, the all-time favourite attraction of photos with Father Christmas,” says Stops.

There were also many less glamourous preparations to ensure a pleasant shopping experience, even at the busiest times. This included increased cleaning, security and parking support. Fostering a safe festive season in places where many South Africans gather, there was also increased visible policing from the SAPS at shopping centres across the country.

Trends show South Africans left shopping to the very last minute, according to Stops. “The 23rd and 24th December were the busiest shopping days at many malls. However, several shopping centres, especially those in seaside cities, showed peak shopping and parking on Friday, 19 December,” she points out.

“Interestingly, some malls are also telling us the US retail phenomenon of Black Friday made a blip on sales charts at the end of November,” says Stops. “It was the first year the local retail sector took part in the retail event in any meaningful way, and it will be interesting to see if this trend continues in 2016.”

Stops reports the value for money and having an enjoyable experience were at the top of shoppers’ wish lists for the 2015 festive season.

Family and community were two strong themes at the country’s malls this festive season.

“Many families get to enjoy precious time together during the holidays, so many shopping centres place a strong emphasis on providing attractions for children and adults of all ages to enjoy,” says Stops.

With the season being a time for giving, community projects are also at the heart of most shopping centres’ festive campaigns. “Many shopping centres partner with local charities for a gift-wrapping service to raise funds to boost good work in their communities, or collect gifts for the disadvantaged.”

The SACSC is the official umbrella body of all involved in shopping centres, including: owners, developers, managing agents, brokers, professionals, retailers, marketers, service providers, financiers and researchers. It was officially launched in 1991 to advance the retail and retail property sectors of South Africa.

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My Office News Ⓒ 2017 - Designed by A Collective


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