Not all roses…

While the big guys coin it, the small ones feel the pinch

Finweek English Edition - - Cover -

SMALL MALLS and con­ve­nience cen­tres with na­tional re­tail­ers as an­chor ten­ants are spring­ing up across South African sub­ur­bia, much to the de­light of con­sumers.

There is, how­ever, a down­side to the break-neck speed of de­vel­op­ment, ac­cord­ing to Vic­tor Sny­ders, the MD of re­tail prop­erty con­sul­tancy Grey­hawke.

“Ev­ery time a new con­ve­nience cen­tre is built, it af­fects small traders in the catch­ment ar­eas sur­round­ing it. It’s ironic that with this re­lent­less growth, ‘mom and pops’ small traders are be­com­ing an en­dan­gered species and they’re not ca­su­al­ties of di­rect com­pe­ti­tion, but causal­i­ties of growth.”

When an­chor ten­ants part­ner with de­vel­op­ers to set up a con­ve­nience cen­tre, line shops – typ­i­cally the likes of sta­tion­ers, dry clean­ers, florists, phar­ma­cies and cell­phone out­lets – must be found to make the cen­tre vi­able.

With the pro­lif­er­a­tion of smaller malls, and larger num­bers of line shops in a cer­tain area, Sny­ders says, many of th­ese busi­nesses are strug­gling to stay afloat. “The mar­ket may be able to han­dle four su­per­mar­kets, but maybe not four video out­lets,” he says.

An­other el­e­ment against small re­tail­ers is rent. “Typ­i­cally, na­tional re­tail­ers pay rental as a per­cent­age of turnover. If a na­tional re­tailer opened an­other store down the road and there was an el­e­ment of can­ni­bal­i­sa­tion, he wouldn’t feel it as much as a small re­tailer who would have to pay 100% rent on a sec­ond store.”

The go­ing is par­tic­u­larly tough for peo­ple who have been in busi­ness for many years and now strug­gle to keep their heads above wa­ter, says Sny­ders.

For Ge­orge Skin­ner, ex­ec­u­tive chair­man of the SA Coun­cil of Shop­ping Cen­tres (SACSC), the rea­son why small busi­nesses are strug­gling is that re­tail de­vel­op­ment through the fran­chis­ing in­dus­try has not been able to keep up with the de­mand, and in­de­pen­dent store re­tail­ers are not be­ing prop­erly pre­pared for the tough re­tail­ing en­vi­ron­ment.

“With the ad­vent of em­ploy­ment eq­uity, a large per­cent­age of peo­ple are re­tir­ing pre­ma­turely or tak­ing pack­ages, and young white males and fe­males are es­tab­lish­ing their own busi­nesses. Gov­ern­ment is, in ef­fect, cre­at­ing a whole new gen­er­a­tion of white en­trepreneurs who are go­ing into fran­chis­ing and re­tail in gen­eral.”

The SACSC has de­vised a busi­ness skills and pro­fes­sional busi­ness sup­port pro­gramme which aims to as­sist and sup­port small busi­ness own­ers.

Launched in De­cem­ber, the SACSC is cur­rently run­ning a pilot pro­gramme in­volv­ing some 16 shop­ping cen­tres, which will be ex­tended to 13 pro­grammes in Jo­han­nes­burg, Cape Town and Dur­ban, which will run for the rest of 2007.

Part of this pro­gramme is to cre­ate “in­cu­ba­tor zones” at malls for new re­tail­ers, which have grad­u­ated from the Whole­sale and Re­tail sec­tor ed­u­ca­tion and train­ing author­ity’s learn­er­ship pro­gramme.

A team of busi­ness ad­vis­ers has been ap­pointed and trained by the SACSC, Red Dot Busi­ness Learn­ing, with the sup­port of the own­ers and man­age­ment of the par­tic­u­lar shop­ping cen­tres. Th­ese ad­vis­ers then men­tor re­tail­ers, af­ter di­ag­no­sis of their busi­nesses, in how to im­prove their per­for­mance.

Skin­ner says that af­ter eval­u­at­ing the pilot, in­cu­ba­tors will be rolled out at around 200 of the 1 500 shop­ping cen­tres in SA dur­ing 2008.

Ge­orge Skin­ner

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