Uptake of 5G in doubt in a retail apocalypse
SA has had a love affair with the prospects of 5G mobile technology and what it could bring to the country in terms of economic growth and advancement for years.
The government has even staked its relationship with the US, having declared Huawei, China’s largest tech company, as its preferred partner on 5G.
Now that it’s a reality, how have, or will, customers actually take this up?
Data-only operator Rain takes credit for being the first to introduce 5G to the market with its launch of fixed wireless products in September last year.
One could argue that 5G will become a mainstream feature in the country only when the large operators — MTN, Telkom, Cell C and Vodacom — start offering the service. Vodacom became the first, having launched the service in Johannesburg, Pretoria and Cape Town at the start of May. MTN is expected to roll out its offering this month.
The launches come under less than ideal circumstances as consumer incomes are under pressure, making it harder to justify a switch to what may be perceived as an expensive means to access the internet.
Businesses that are best geared towards 5G with applications such as automated manufacturing or the internet of things are doing everything they can to conserve cash.
The picture will become clearer when operators report next-quarter and half-year financial results.
The promise of 5G is immense. SA has a chance to join the trend much sooner than it did on 4G. But how many early adopters will there be in the initial phase to make the technology commercially viable in this time of crisis?
RETAILERS
In creepy YouTube videos, amateur videographer Dan Bell walks through abandoned US malls filming empty food halls, cracked shop windows, dripping ceilings and moss growing where shoppers once spent money.
Shopping centres across America were abandoned after the 2008 financial crisis and in the following years as online retail took off. In SA a group of about 50 midsized retailers, including Cape Union Mart and Exclusive Books, and smaller stores such as Carrol Boyes, Bargain Books and Signature Cosmetics are warning of a similar phenomenon. They make up about 20% of SA mall space.
Their consultant, Jonathan Kingsley-Hall, warns a “retail apocalypse” is coming.
The retailers asked a group representing 100 landlords for turnover-based rent from June as they predict trading will be down until December. The property industry refuses to deal with them as a group. It is playing hardball, refusing to amend its April and May rental discount offers. In one e-mail a landlord calls the turnover-rent proposals “ridiculous”.
Retailers warn that it is easier to close shop than to keep paying high rents when operating at a loss. And if listed companies from Capitec to Old Mutual and Tiger Brands all foresee major declines in profits, retailers selling books, cosmetics or expensive camping equipment are unlikely to be wrong when predicting low turnover this year.
Landlords’ unflinching attitude will lead to far more vacancies than will trying to find middle ground with ailing retailers.
Prepare for much emptier malls. Dan Bell could soon find new YouTube material here.