Malls must evolve to survive
A conference about bricks and mortar retail outlined trends that will affect this property segment
Shopping malls were not dying, but they needed to innovate and become much more than only places to shop, it was revealed at the South African Council of Shopping Centres (SACSC) annual research forum. The 2017 SACSC Research Conference took place on May 17 2017 at The Maslow hotel in Sandton. The conference brought together thought leaders, economists, futurists and researchers who offered insights into retail trends. Here are seven key takeaways from the event:
1. Consumer spending power
Elna Moolman, an economist with the Macquarie Group, says her projections show that SA’s gross domestic product will grow about 1% this year and the same next year, despite economic concerns and some downside risks. “On the consumer side, there will also be more or less 1% growth in spending power, despite tax increases and unemployment,” she says. “The short-term outlook for the consumer isn’t that dire, and there will be some real spending power in the short to medium term.” She projects that inflation will drop to 5.5% this year, and 5% next year, which will allow the Reserve Bank to cut interest rates.
2. Malls as destinations for social influence
Malls should not just pay influencers to talk about them, but should become places with which influencers will want to be associated. Instant Grass International head of anthropology Kate Snyder says it is important for malls to interact with influencers on social media. When Instant Grass International asked its research subjects or “grasses” why they went to malls, shopping usually only appeared third on the list.
Ahead in the queue were visiting restaurants, and the need for people to see and be seen. She says one aspect of this is the trend of “glocalisation”, which is conducting business in line with both global and local trends. Local brands are inspirational (whereas international brands are aspirational) and should be given the space to perform, she says. “It’s time to invest back into our own economy. We have really amazing stuff in SA.”
“The short-term outlook for the consumer isn’t that dire, and there will be some real spending power in the short to medium term”
Elna Moolman, economist, Macquarie Group
3. In-store trumps online
According to Kirsty Laschinger, a retail analyst at Investec, there are only three goods categories in SA in which online shopping has passed the 50% of all sales mark: books, music, DVDs and videogames; toys; and sportsware. And only 1% of shopping is currently carried out online. “So we think online will become bigger in SA, but our forecast is that it will account for 3% of retail sales in five years’ time, which is pretty underwhelming. It gives us time as retailers, but please don’t put your head in the sand and pretend it’s not going to happen,” she says.
4. Food is a distinguishing feature
Malls are adapting globally, with more space dedicated to food and beverage outlets than ever before. “Food is a culture. Gone are the days when people shared news of a music festival or a CD on social media — now it’s all about the latest dining experience,” says Yvonne Court, partner and head of international consultancy EMEA Cross Border Retail & Leisure. “Malls will have to adapt to this and by doing so, will bring in new customers.” Court’s research shows that the food and beverage footprint ranges from 5% of total floor space to as much as 30%-35%.
5. Retail innovation is everything
Joven Pillay, customer and digital consulting leader at PricewaterhouseCoopers, says the importance of investing in innovation cannot be overstated. Amazon, as a relative newcomer on the retail landscape, has clawed its way up to eighth largest retailer on the planet. “Look at what they are doing — they are delivering using drones; they have launched Amazon Echo to allow you to use your voice to place an order; they have a Dash button so you can reorder regular monthly products; they are piloting a check-out-less retail store. They are taking away the pain points. These kinds of businesses are constantly pushing the boundaries,” he says.
6. Retail catchment areas are shrinking
Lynne Krog, business manager for Tshwane at Caxton Community Papers, carries out market research across 120 communities in SA to get a clear picture of consumer behaviour. Her research has found that with the proliferation of malls in SA, the catchment area for each mall is shrinking. “People who would have travelled 45 minutes to an hour to get to a shopping centre are now only willing to travel for 15-20 minutes,” she says.
7. Malls offer secure entertainment spaces
Krog says people support malls because they seek entertainment. Good security is also relevant, and free Wi-Fi is a given. “My hypothesis is that people need to see other people, and malls provide an environment that’s safe. “Shopping is going to slowly get replaced by online, but people still need to get out and a shopping centre provides a good opportunity to do that,” she says.
“Shopping is going to slowly get replaced by online, but people still need to get out and a shopping centre provides a good opportunity to do that” – Lynne Krog, Tshwane business manager, Caxton Community Papers
AFRICAN MALL AWARDED
Mall of Africa was honoured internationally in the Viva (Vision, Innovation, Value, Achievement) Awards’ design and development category in Las Vegas, US, on May 21. Africa’s geological features and iconic landscapes inspired the retail centre’s architectural appearance. Mall of Africa is SA’s largest shopping centre built in a single phase, offering more than 300 shops, restaurants and services. The Vivas are an initiative of the International Council of Shopping Centres. The Viva Best-of-the- Best Awards honours outstanding examples of shopping centre design and development, sustainability, retail store design and marketing, worldwide. Says Cobus van Heerden of Atterbury Property Development: “As developers of Mall of Africa, Atterbury is thrilled it has received international recognition among the most esteemed shopping centres across the globe. From its conception to its design and development, Mall of Africa was envisioned to create a world-class mall with a unique shopping experience unlike anywhere else.”
Credits: Photos: iStock and Supplied, Text: Georgina Guedes