Significant trends in SA rural and urban retail sectors

Significant trends in SA rural and urban retail sectors

Over the past year there have been some significant trends and changes within the South African rural and urban retail environment. These changes are reflective of a number of shifts within South Africa’s communities and the subsequent adjustments in consumers’ needs.

In terms of rural and urban community shopping sectors, there are a large number of upcoming developments coming into fruition. “In many cases, we’re seeing these types of centres being opened in already-established markets,” says Mark Souris, managing director of Periscopic Masingita, one of the country’s most prominent commercial property development and management companies. “They may not be the first centres of their kind in any particular area, but there is still clearly opportunity being identified by these developers, and we’ve seen that most of these centres are unbelievably busy.”

We are also seeing more and more centres positioned in alternative locations, in order to fill certain gaps. “For example, more centres are being built on the outskirts of towns and communities, making them far easier to access for commuters, rather than them having to drive into the busy centre of town if they can avoid it – CBD’s have become increasingly difficult to get into, and the cost of travel continues to increase,” explains Souris. “These types of trends are entirely based on convenience,” he continues. “Another example is the many centres we’re seeing opening on main highways and national roads – often seemingly in the middle of nowhere, but they serve an important purpose for commuters.”

Souris goes on to add that these non-central malls are also more practical for planning and development, saying, “There’s only so much space and infrastructure available for building in established towns and cities. As we see the resulting trend of residential developments growing outwards, in the same vein shopping centres will follow suit. More than that, in fact many centres are built in anticipation of these new residential developments.” This practice is commonly referred to as ‘land-banking and entails developers earmarking and purchasing space and land long before the residential market has developed in an area. “You may notice quite a few bridges being built, such as in Diepsloot, which connect built up areas to seemingly empty expanses of land,” says Souris. “These are also being built with the expectation of future developments.”

Another major trend identified by Periscopic Masingita is the uptake in smaller centres investing in much-needed refurbishments. “Many landlords are beginning to realise the importance of upgrading their facilities,” explains Souris. “In many cases these are independent landlords, and for that segment of the market there is not much choice – it’s either upgrade or face the risk of becoming an empty ‘ghost centre’ or ‘dead mall’, as they’ve become known, which no longer attract customers.” Souris adds that face-lifting is not enough, and many independent landlords are also revisiting their tenanting strategies in terms of attracting strong anchor tenants, which can greatly benefit a small centre’s chance for survival.

Souris also notes that a new breed of entrepreneur has emerged in these rural and urban centres who are opening unbranded, independent stores and supermarkets. “While some follow a ‘slap-bang’ approach which tends to be short-lived, many more of these independent stores are beginning to follow tried and tested franchise formulas of other major brands – which is proving to be very successful for them,” he says. “These savvy store owners are opening ‘first-world’ establishments by duplicating existing models and concepts, which attract good quality customers.”

Another aspect that assists these store owners with their survival is their massive purchasing power, which they achieve by banding together, sharing their resources and buying stock in bulk, which is then distributed across a number of regions. “This makes them very competitive with their pricing and stock availability, and this has contributed to the high level of support these independent traders receive in rural and urban areas. Another major factor is, again, convenience, with these stores being well positioned in communities.”

 

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