Keeping the tills ringing
How to get shoppers to stay longer and spend more
WHILE OWNERS of shopping centres have been coining it on the back of South Africa’s consumer spending boom, the expected slowdown in retail sales is forcing mall owners to become more innovative in centre design, tenant mix and product offerings.
The addition of more than one million square metres of new retail space – planned or currently under construction, according to latest statistics from the South African Council of Shopping Centres – will no doubt place further pressure on existing shopping centres to retain their slice of the retail spending pie.
Pieter Prinsloo, MD of retail-focused listed fund Hyprop Investments, says the biggest challenge currently facing property owners is how to get shoppers to stay longer and spend more. Shopping centre design and layout can play a major role. Prinsloo says centres that have a simple layout and are easily navigable tend to fare better than those where shoppers can get lost.
Hyprop’s best performing centre – its R6,7bn portfolio mega-mall Canal Walk at Century City in Cape Town – is a case in point. Prinsloo says the centre has two long, straight malls on each level, encouraging consumers to shop the length and breadth of the entire centre.
Another trend in retail design is a move away from enclosed malls towards natural, open-air shopping environments. Prinsloo says these so-called lifestyle centres – Design Quarter (Fourways, north of Johannesburg), Willowbridge (Tyger Valley, Cape Town), WorldWear (Fairlands, Johannesburg) and Hyprop’s own Stoneridge Shopping Centre (currently under construction at Modderfontein, east of Johannesburg – are leading the way in bringing new and unconventional shopping experiences to consumers.
The rush for lucrative retail assets among both listed and private property funds has pushed the prices of prime shopping centres sky-high, making it difficult for property owners to grow their portfolios. So property owners are increasingly going the expansion and refurbishment route to unlock value in their existing assets. Escalating building costs and a scarcity of well-located development land are also making it less viable to develop new centres.
Old Mutual Property Investments (OMPI), which has Gateway (Umhlanga), Menlyn Park (Pretoria) and Cavendish Square (Cape Town) in its shopping centre stable, has embarked on an extensive expansion drive to enhance the retail offering in its existing centres.
Brent Wiltshire, the group’s business development executive, says that over the past 12 months it has already earmarked almost R500m for expansions and redevelopments in KwaZulu-Natal alone. A big chunk of that will go towards extensions at Gateway, the second major expansion at the
Another trend in retail design is a move away from enclosed malls towards natural,
open-air shopping environments.
Umhlanga mega-mall within a year.
Meanwhile, Investec-managed Growthpoint Properties, the listed property sector’s biggest fund, is spending R27m to upgrade and reconfigure 6 000sq m of floor space at La Lucia Mall (north of Durban) to help maximise its offering to shoppers.
Others are focusing efforts on improving the tenant mix at their centres. Listed fund ApexHi Properties, whose retail portfolio has grown from 300 000sq m to more than 1m sq m over the past five years, recently appointed specialist retail consultant Mark Ruffley to try and boost turnover by finetuning the tenant mix in nine of its shopping centres.
Ruffley says that although the fund’s retail portfolio already has a low vacancy, the aim is to fill the space with the right tenant profile. Most of ApexHi’s shopping centres are smaller developments in secondary locations. Ruffley says his task involves identifying retail trends within each centre by analysing footfalls, turnovers and the area’s demographics.
Says Ruffley: “This information allows us to construct an ideal tenant mix that will appeal to the target market, which will build customer loyalty, increase footfalls, boost dwell time and ultimately improve turnovers to enhance the yields on the buildings.”
ApexHi is also providing retail training for struggling tenants and independent retailers to increase trading densities (turnover/sq m). Ruffley says that 96% of tenants who attended training sessions already show an increase in turnover, the average being 34%.
Simple layout works best.