PROPERTY: The Changing Face Of Retailing
Recent Western Cape Business News
WHEN discussing the retail industry in South Africa, sentiments are often filled with doom and gloom as people focus on drops in sales percentages, declining feet through the door and an ongoing struggle to stay afloat.
However, it is not like this throughout the country. There are nodes which offer great retail opportunities for landlords and tenants alike. Retail in South Africa’s rural areas or ‘emerging economic areas’ is growing and this success is evident in the retail sales and trading densities in these centres.
Statistics show that the last decade has seen a significant increase in the number of retail centres being developed in townships and rural areas. Some 160 retail centres were developed nationally in township and rural areas of South Africa between 1962 and 2009, covering about two million sq m of retail floor space and generating about R34 billion worth of business sales, and have added about 54 300 permanent jobs to the national economy since the 1980s.
“Townships and rural areas have emerged as a new market for national retailers as we see an upward movement amongst township communities in terms of expendable income. This progressive movement has resulted in a considerable increase in shopping mall development in these previously untapped areas.”
This is according to Marc Edwards, the managing director of Cape Town-based Spire Property Management, which manages retail centres in both metropolitan townships as well as more removed rural areas across SA.
“Through Spire’s growing rural retail portfolio we have seen many national retail tenants going into rural areas and experiencing unprecedented success with considerably higher trading densities than in urban areas. However, a move such as this does need to be well researched and implemented,” advises Edwards.
“The first step is to partner with experts in the field. Landlords and tenants alike need to work with a property manager who understands the wants and needs of a national tenant as well as those of the consumers.”
“Landlords need to ensure that they appoint strong community based centre managers to ensure that centres are effectively managed. Landlords also need to work closely with national tenants to see where opportunities lie,” he advises.
Edwards notes that it is essential for retail centres operating in rural areas to stay close to the community and ensure that the centre is valued. “Landlords must guarantee that security is in place and effective, and that public transport is accessible for shoppers – making the centre the convenience hub for the area. Sponsoring events such as a music bandstands in the car park and running promotions are ways to bond with the surrounding community and also brings feet through the door.”
“Tenants must be prepared for a different shopping experience and to tailor their store to the consumers’ preferences. For example, in rural areas bulk buying is standard practise and retailers must accommodate this need, whilst at the same time the emerging middle-income market segment that one finds in these areas often has a strong drive to acquire household appliances and aspirational items and are looking for a ‘shopping experience’ rather than visiting stores to buy only basic essentials.” It is difficult to generalise about what works best in malls in ‘emerging economy’ areas. Tenants need to carefully research what the needs of the community are and ensure that they meet these needs. But it is evident that what works in one area does not necessarily work in another – tenant mix, product offering and size have to be very site-specific.
“It is a fact that there are growth opportunities for retailers in rural areas as opposed to saturated and over-populated urban ones. Rural areas offer a real cash economy and well marketed tenants who have done their homework will be successful,” Edwards says.
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