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Significant trends in SA metropolitan retail development

Mark Souris, managing director of Periscopic Masingita. Mark Souris, managing director of Periscopic Masingita.

South Africa’s large-scale metropolitan and suburban retail sector is currently booming, despite the tough economic environment. With a sharp rise in international interest and investment across the country’s retail sectors, a number of both positive and negative trends have been identified. 

“There has been no slowdown in growth in terms of large-scale mall developments,” says Mark Souris, managing director of Periscopic Masingita, a commercial property development and management company.

“In fact, one could argue that development in this sector has picked up significantly, with quite a few large centres having being completed over the course of 2013, and more in the pipeline to open throughout 2014. Many of these are regional and super-regional scale malls, which can range anywhere from 50 000 m² to 80 000m², and up.”

Souris notes that tenant mixes seem to be ever evolving, with a variety of tenants constantly coming and going. “This is actually a benefit for shopping centres as there’s always something new in terms of tenant mix, and as consumers tend to get bored quickly that draws people back. Another attractive benefit offered by large scale centres is the ability for consumers to shop comparatively with a variety of product options and versions in one space.

As technology speeds ahead, so follow many other industries,” says Souris, adding, “Shopping centres are certainly no exception. It’s up to the malls to manage their buildings and tenant mixes to keep up with these proliferations.”

Another area of significant growth is the stand-alone store, such as fast food chains, big brand convenience stores and supermarkets, as well as new-comer international brands like Burger King. “We’re seeing more and more opportunities for stand-alone developments – where one store occupies the entire building rather than being part of a larger centre – and we’re expecting to see a gain in momentum in this area,” says Souris.

However, a major issue facing many major, national branded stores is that they are beginning to cannibalise on their own markets in terms of growth, due to a high market proliferation. “In the current environment we are seeing a large number of same-brand anchor stores within very close proximity to one another, which doesn’t necessarily assist them with attracting more customers; it dilutes their current customer base. Unfortunately many brands are facing a ‘damned if you do, damned of you don’t’ scenario, as opportunities in these areas will be taken by competitors if they don’t act. Their challenge is to find a way to open new stores in these areas without cannibalising their other stores’ customer bases.”

Souris advises potential investors to play close attention to the level of innovation a particular retail development demonstrates. “It’s important that you can see a centre that is consistent in growth, evolution and refurbishment. This is the only way for a large commercial retail centre to stay competitive in the current market,” he concludes.

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