Mall of Africa jit­ters

CityPress - - Business - JUSTIN BROWN busi­ness@city­press.co.za

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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