Tag: shopping malls

Last week, the recently formed Property Industry Group announced the availability of industry-wide assistance and relief packages for all retail tenants during South Africa’s 35 days of lockdown.

While this will provide a much-needed stopgap for many tenants concerned about their operational viability post-lockdown, the announcement puts pressure on the various unlisted property groups, many which are not part of the Property Industry Group and were not consulted on the proposed packages, says Soria Hay, head of Corporate Finance at Bravura.

The Property Industry Group consists of the sector’s three biggest players, namely the South African Reit Association (SA REIT), the SA Property Owners Association (SAPOA) and the South African Council of Shopping Centres (SACSC), and is the mouthpiece for the South African commercial real estate sector.

The intention of the assistance and relief package initiative is to preserve the jobs of retailers, suppliers and service providers, with a qualifying criteria for tenants to ensure that no staff retrenchments are made during the relief period. Assistance and relief is to be at the discretion of the landlord, but the package stipulates the minimum that qualifying retailers can expect.

The package is to be made available for the periods of April and May 2020 and will provide basic assistance and relief as well as interest-free deferment recovery periods for SMMEs and tenants providing non-essential services. Relief can consist of rental reductions (between 35% to 100% for the first month and between 25% and 50% rental reduction for the second) or rental deferments.

The Property Industry Group acknowledges that the relief package comes at a high cost for the industry. Group spokesperson, Estienne de Klerk says that it is time for bigger and stronger companies to step up and form a buffer to protect smaller retailers so that the sector can collectively come out stronger.

Unlisted property groups and independent shopping centres are not part of the Property Industry Group collective. As such these industry players were not included in the consultation process that took place when obtaining buy-in for the proposed package. Yet the relief initiative undoubtedly sets an industry precedent which could see independent landlords and property groups challenged to provide similar relief to their own tenants.

Although the listed property sector has not been immune to the challenges experienced by the retail sector preceding lockdown (in fact it was named as the worst-performing asset class of 2019) there is arguably better liquidity and wiggle room here in which to provide tenant assistance than within their unlisted counterparts. Just recently leading REIT, Redefine Properties, which owns more than 300 retail properties across the country, said that it was in a position of strong liquidity with which to face off the lockdown, with access to R2.8 billion in committed undrawn credit facilities. This is certainly not the case for several thousand medium and small retail operations in South Africa.

Prior to lockdown, retailers were already experiencing the negative COVID-19 impacts. For example, in the short “stay at home” period leading up to the original 21-day lockdown, struggling retail group Edcon was hit with a 45% income loss and a reduction of about R400m in sales from flagship stores Edgars and Jet chains. The group anticipates a further R800m loss in sales over the lockdown period and a question mark remains over whether the group will be able to pick up operations once the lockdown is over. The ripple effect if Edcon folds will be felt throughout the sector – listed and unlisted.

The Property Industry Group has only stipulated the relief package for April and May, and it will be a different ball game should timeframes become longer. For the unlisted sector – and their tenants – with less concerted relief efforts available, the playing field may grow more uneven.

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.

Last week the US government received information that terrorist groups were planning to carry out near-term attacks against places where US citizens congregated in South Africa, such as upscale shopping areas and malls in Johannesburg and Cape Town. This information was later discovered to be from a discredited source. News24 reported that the source of the information the US acted on was an East African businessman living in South Africa who wanted money for the tip.

“A source with access to South African intelligence says‚ however‚ that the businessman was believed by South Africa to be a ‘discredited’ informer who was only after the money he’d be paid for the information‚” it says.

Director of the Terrorism‚ Research & Analysis Consortium in Southern Africa, Jasmine Opperman, says that if this was the source of the information‚ its credibility must be tested.

She adds that the US now has a responsibility to come out and prove that the information was gathered from credible sources.

“When I saw the initial statement [from the US] my gut feeling was‚ ‘this is an intercept’‚” she says.

According to Opperman the information might have been intercepted from communication channels‚ such as social media networks‚ between two parties.

If this is the case‚ a question of reliability must be raised as the identities of the parties may not be known to intelligence officials. Intercepted information must therefore be verified by a human source‚ she says.

Opperman also says that an East African businessman communicating from South Africa was not far-fetched‚ but that the terrorist organisation was off‚ as Al Shabaab was the most active terrorist organisation in that region.

“How does a guy from east Africa communicate on Islamic State? ISIS (Islamic State) is the flavour of the month in any intelligence agency … Information peddlers are the greatest risk. People will come up with any information because an intelligence service is more than likely to pay for it.

“Information peddlers present information in a context that is well known and then fabricate the rest.”

State Security Minister David Mahlobo on Monday assured South Africans that there was no immediate danger and no need to fear an Islamic terror attack.

Opperman agreed‚ saying there was no evidence that an attack on SA soil was being planned.

Shoppers unfazed by talk of terror
It appears to be shopping as usual for South African consumers despite the alerts issued by the US, Britain and Australia of possible terror attacks at Johannesburg and Cape Town shopping malls.

Listed property funds Hyprop, Growthpoint and Redefine reported on Friday that they had not been able to pick up any change in consumer behaviour.

Pieter Prinsloo, the chief executive of Hyprop, confirmed that they had a few telephone calls from customers raising their concerns and were “dealing” with those inquiries. He says security at Hyprop’s malls had been placed on high alert, particularly for any suspicious packages and behaviour, but it had not picked up any slowdown in trading in its malls.

Hyprop’s malls include Canal Walk in Cape Town and Rosebank Mall, Clearwater Mall and Hyde Park Corner in Johannesburg.

Malls up security
Estienne de Klerk, the MD of Growthpoint Properties, says there was insufficient time since the alerts to get any credible feedback about any change in the behaviour of shoppers.

But De Klerk stressed that Growthpoint took the alerts very seriously and had, for instance, called a special board meeting of the Victoria & Alfred (V&A) Waterfront investment company to ensure they were satisfied with the measures taken to ensure patron and shopper safety. Growthpoint owns 50 percent of the V&A Waterfront, with the Public Investment Corporation owning the balance.

De Klerk says across the board Growthpoint had contingency plans in place and had introduced additional security.

“It’s not something we can or should ignore and is clearly another headwind for the industry that we don’t welcome. South African shopping centres are part of the urban fabric and a place of pleasure for families and nobody wants to see anything go wrong.”

Growthpoint owns 58 retail properties valued at about R28,2-billion.

No noticeable slowdown in trading
Andrew Konig, the chief executive of Redefine, says there had not been any noticeable slowdown in trading at its retail centres, but it was something that was hard to gauge.

“I can’t say we’re anticipating any significant change to shopping behaviour as a consequence of the alerts. As a responsible owner of retail properties we have a duty to take reasonable measures to protect shoppers and tenants. We are proactive in this regard and liaising with the relevant authorities and our own security,” he says.

By Roy Cokayne for www.iol.co.za; Roxanne Henderson for www.bdlive.co.za

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