Not all roses…
While the big guys coin it, the small ones feel the pinch
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.