South African shoppers return to malls, but stay closer to home

The South African retail sector is showing strong signs of recovery, with buyer activity returning to pre-pandemic levels.

John Jack, CEO of Galetti Corporate Real Estate. Source: Supplied

“While many feared that a combination of load shedding, the Covid-19 lockdown and the rise of online shopping would wipe out brick-and-mortar stores, this sector beat expectations with strong quarterly growth,” says John Jack, CEO of Galetti Corporate Real Estate.

“The steady growth of the economy as Covid-19 restrictions have eased is reflected in consumers’ purchasing power and their return to major malls and malls, where retailers are experiencing turnovers higher,” he added. “In addition, we are seeing a host of new developments in retail. The majority of them are smaller malls, the kind of places where you can park in front and just walk in, conveniently located in busy community areas.

Growthpoint Properties recently released its Investor Update, which reinforces the commercial real estate sector’s recovery path as the company reports revenue growth among retail tenants. The report contained additional positive indicators for landlords and tenants, detailing higher retail density, stabilized reversion rates and lower vacancy rates across their retail portfolio.

What drives recovery?

“Within our own commercial property portfolio, we have seen the sector embark on a steady path to recovery once the majority of lockdown restrictions have been lifted in 2021,” says Jack.

Some shoppers continue to use grocery delivery apps such as Checkers Sixty60, but since these apps require an internet connection, access to online payment methods, and only deliver within a certain radius, they do not serve the majority. consumers in the country.

Jack explains that transactions in South Africa have traditionally been very “cash-heavy” and given that there is still a significant “digital divide” (i.e. regular access to internet-enabled technologies), physical retail stores will continue to play a crucial role. role.

“For many South African consumers, a weekend at the mall is still seen as an exciting day rather than a place to shop,” he says. “If landlords want to attract shoppers to physical stores and prevent them from buying goods online, they need to emphasize the ‘experience’ aspect and convenience of shopping malls – the ability to instantly try clothes, a bite to eat between purchases and even offer attractions to keep the kids entertained while mom and dad shop.”

Growthpoint’s Investor Update noted that “value fashion” – stores such as Mr Price, Cotton On and H&M were a major draw for shoppers and contributed to much of the traffic in malls and malls over the past year.

“Galetti has seen the same trend in our retail listings, and we encourage landlords to take advantage of this – seek out retail tenants who meet the buying preferences of local consumers, especially those in their 20s and 30s. with disposable income like popular brands are the ones that will drive the majority of traffic to your stores,” adds Jack.

Fuel cost keeps shoppers closer to home

A major trend that commercial real estate experts have observed since the start of the pandemic is that people are choosing to patronize smaller malls and neighborhood convenience stores when they once preferred larger regional malls like Sandton City or CanalWalk.

“It started with lockdown, when people weren’t allowed to travel away from home for non-essential purchases and so had to make do with what was around them. Now, with the price of fuel rising, we we’re seeing this trend becoming more widespread as many shoppers are reluctant to spend more money than necessary to get what they need,” says Jack.

Previously, consumers were willing to sacrifice proximity and time spent in traffic to visit outlets such as shopping malls that offered higher quality products or a greater variety of options. But with the domestic price of petrol at over R25 a litre, it’s a luxury many have had to give up. “It also affects shoppers using public transport, because when gas prices go up, taxi and bus fares go up as well,” says Jack.

These external factors, combined with inflation and the rising cost of living, could mean additional challenges for the retail sector which is slowly recovering, which Jack believes the industry cannot cope with. allow to succumb.

“Owners need to be strategic to ensure the recovery continues. They need to pay attention to what consumers are looking for in a shopping experience and ensure that their commercial properties meet those needs: whether it’s offering free parking, free items at certain stores, ‘organize pop-up events or install children’s entertainment centers, they must be prepared to do whatever it takes to keep their feet in their tenants’ stores,’ he concludes.

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