Mall of Africa jitters
Four major malls and smaller shopping centres are likely to feel the heat in the months ahead as billions of rands in spending and millions of customers relocate to the Mall of Africa. Dirk Nico Prinsloo, an analyst at market research group Urban Studies, said the Mall of Africa, which was launched last month, and the shops within the centre were likely to generate R2 billion or more in revenue in the first year of operation, climbing to between R3 billion and R4 billion by the third or fourth year.
Marjike Arran, a Mall of Africa spokesperson, said that super-regional malls across South Africa had a trading density of about R2 500 per square metre per month.
“Using this as a benchmark, we estimate that Mall of Africa will achieve a trading density of R2 000 per square metre per month, based on the fact that we are a new mall and still have to establish trading patterns. Based on this, we estimate an annual turnover of R2.6 billion [in the first year of trading],” Arran explained.
Prinsloo said the four megamalls that were likely to be affected by the Mall of Africa’s launch were Sandton City, which is 16km to the south of the Mall of Africa; the Fourways Mall, which is 16km to the west; the Centurion Mall, which is 22km to the north; and the Menlyn Park Shopping Centre, which is 35km to the north.
But Andrea de Wit, Menlyn Park Shopping Centre marketing director, said the opening of the Mall of Africa had had no measurable effect on the centre, which is expanding by 50 000m² to almost 170 000m² by November.
The Menlyn expansion was not expected to dilute the Mall of Africa’s visitor count or spending, said De Wit.
Menlyn has visitors of between 15 million and 16 million a year, compared with the 15 million annual visitors that the Mall of Africa is aiming for.
“The Mall of Africa is geographically located outside of the primary catchment area to Menlyn Park Shopping Centre … We have no plans to launch specific shopping programmes in response to the opening of the Mall of Africa,” she added.
Nomzama Radebe, the CEO JHI Retail, which manages Sandton City and Mandeal Square, said that there had been no discerniable drop in customers at Sandton City, which has 24.5 million visitors a year, since the opening of the Mall of Africa.
Marijke Coetzee, marketing director of Redefine, which owns the Centurion Mall, was not available to comment.
Evan Robins, an Old Mutual property analyst, said he expected the Mall of Africa to be successful as it was well positioned and there were a lot of people situated close to the shopping centre. “The Mall of Africa catchment area is a growing and wealthy area.” The new mall would definitely take some market share from the other major malls, and the area between Sandton City, Fourways Mall and the Mall of Africa would be particularly contested, Robins said.
The advent of the Mall of Africa wouldn’t destroy the competing malls, but it would take customers and spend from them, he predicted.
The Fourways Mall, which is expanding from 80 000m² of retail space to 170 000m² by 2018, was likely to face the most impact from the launch of the Mall of Africa, Prinsloo said.
A Fourways Mall spokesperson declined to directly answer any of the questions City Press asked regarding the impact of the Mall of Africa.
“Super-regional malls are differentiated by their extensive entertainment, retail and catering offering, and research has shown that consumers are increasingly more discerning when it comes to travel time and ease of access when deciding where to shop,” said the Fourways Mall spokesperson.
Consumers in parts of Fourways, Sandton, the northern section of Bryanston, Sunninghill and Rivonia would be attracted to shop at the Mall of Africa, which has a retail area of 130 000m², Prinsloo said.
“Sandton City was not likely to face much of an impact. Sandton City is a world of its own, with a strong localised market, lots of people working there and a tourist attraction,” Prinsloo said. The biggest reasons for consumers choosing a mall were convenience and variety of stores, he added. “The smaller shopping centres are going to take the biggest knock.” The loss of spending and customers to the Mall of Africa would result in the major rival shopping centres losing yield on rental leases that they could charge their store owners, he added.
However, the economy in Gauteng and the population of the province were growing, so the entry of the Mall of Africa would be balanced by these factors. The impact on rival malls could take six months to be felt, Prinsloo said. Another trend is that Mall of Africa stores will cannibalise spending from the same shops at other malls.
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