This was part of an interview conducted with Dirk regarding township development
28 MARCH 2006
1. Why do you think there are so many ‘convenience malls’ being constructed?
The total retail market in South Africa is currently ±R450 billion. There are approximately 35 million m² of retail space available, of which 15 million m² form part of shopping centres. This represents ±43%. The importance of the shopping industry, however, makes out more than 53% of all money spent on retail. Graph 1 gives an indication of the supply of retail shopping centre space from 1969 to 2006. During this period remarks were made from time to time that the South African market is saturated. The first such comment was made in 1969 when the total floor area in shopping centres was only 200 000m². This has increased to 15 million m². It is also clear from the graph that since 2000 more than 1,4 million m² of new shopping space has been completed. Currently almost 900 000m² are in different planning stages.
Graph 2 clearly indicates the growth in shopping centre space for centres larger than 30 000m² during the period 1993 – 2005/6. The annual growth for these type centres was on average 7,7% increase per annum since 1993. The period 1999 to 2005 has seen an increase of 8,7% growth per annum.
According to Table 2 it is very important to note that the number of shopping centres smaller than 10 000m² has increased to a level of 701 centres out of 1 098 centres in total. The smaller centres thus represent 64% of the total number of centres.
It is not possible to compare the figures for 2002 with 2005/7 mainly because not all centres were included previously. The 2006 figure clearly indicates the role of the smaller neighbourhood convenience centres.
2. What’s driving the need for these centres?
There are a number of reasons for the increase in the number of convenience shopping centres. The most important is the very strong competition amongst the main grocery stores. The competition is primarily amongst Pick ‘n Pay, Spar, Checkers, Shoprite, Woolworths Food and Friendly Grocer, all competing for the convenience market.
Part of this competition is a result of changes in shopping behaviour. During 1993 the average grocery shopper (76% females) supported two different grocery stores per month. This would include the Hypermarket for bulk groceries and one of the other operators for basket and convenience shopping. In 2003 this has increased from 2 to 5 different stores, indicating a very different shopping behaviour as far as grocery shopping is concerned (only 60% female shoppers).
Convenience shopping nowadays is not only parking close to the main grocery store for a quick in and out trip. Convenience has become much more complex and wider because of time pressures, more working families, longer working hours, and changes in lifestyles.
Convenience centres therefore also includes longer trading hours (grocery stores open until 20:00 or 21:00), the available of prepared food, not only fast food take-aways but also cooked meals. There are grocery stores in central Johannesburg where more than 600 grilled chickens are sold per day. The role of business hours plays a very important role in the success of convenience stores. In the eastern suburbs of Pretoria some of the grocery stores and shopping centres close at 18:00 while some of the newer centres in the same area close at 20:00. These centres are busy and parking areas are packed throughout the evening until 20:00.
3. What type of clientele do they serve? What type of shopping experience do they offer?
The convenience centres range from spaza facilities in the township to community centres throughout our suburban areas. Convenience neighbourhood centres were initially established in the middle and more affluent suburbs, while currently shopping centres are being developed throughout the spectrum of rural towns, up to metropolitan areas. These centres, according to their specific locations, make provision for LSM 1 – 4, 5 – 7 and LSM 10+. There are a large number of new community and regional centres being built in the township areas. Those centres between 15 000m² and 30 000m² have already proved to be very successful in these communities. Very large centres in Soweto are still under construction. Woolworths Food initially concentrated on the higher LSM levels with their food products, but has also expanded into the middle LSM markets.
- For a convenience shopping centre to be successful there are three major aspects to be considered.
- The location plays a very important role.
- The availability of easy and sufficient parking.
- The role played by the grocery anchor tenant which usually determines the success of the centre.
It is also interesting to note that in many of the newer neighbourhood centres Woolworths Food will be represented in the same centre as a Pick ‘n Pay or Spar or Checkers. In this instance the drawing power and attractiveness of a particular centres becomes much stronger and wider.
With the changes in lifestyles many of these smaller convenience centres offer very attractive coffee shops and other eating places. All this is included to provide a more attractive shopping environment. The main drive, however, remains the convenience as far as grocery shopping is concerned.
4. Is the mini mall shopper different to the shopper who prefers a large mall e.g. Sandton City?
The same shopper supporting any regional centre will also support the smaller neighbourhood convenience centre closer to home or work. The smaller centres are convenience driven and on average the dwell time is between 20 and 30 minutes. The same shopper will support the regional mall for a different shopping experience and purpose. The trip to the regional centre is mainly destination driven, to conduct comparative shopping, to enjoy the entertainment on offer or to support the different types of eating places. For many shoppers supporting the regional malls it is more of an experience, while those that hate shopping find it a real burden. The smaller neighbourhood centre and the regional mall can co-exist because they operate on different levels on the shopping centre hierarchy.
5. Do the presence of mini malls threaten larger shopping centres? How has the emergence of convenience malls impacted on shopping trends?
The neighbourhood shopping centres attract shoppers for different reasons, with the emphasis on grocery shopping, while the regional mall attracts shoppers mainly for entertainment and comparative shopping. The impact on the regional centres is thus limited to mainly grocery shopping. The main question is whether regional centres still need to provide grocery shopping facilities. It is also a fact that the higher the LSM profile the lesser they buy bulk groceries and the more they buy convenience products. Some of the convenience centres are supported up to 80% – 90% on a weekly basis. The support for the regional shopping centres is much lower, between 45% and 55% weekly visits. The dwell time in the former is ±20 – 30 minutes while in the large super regional centres it is up to 3 hours on average.
6. Is this trend unique to Johannesburg, or is it happening elsewhere in South Africa?
This trend is happening in all metropolitan areas, large cities as well as in some of the larger towns. The mid-size and smaller towns currently also experience a boom in the establishment of smaller shopping centres for the town as a whole. These centres will be slightly different to the smaller centres in the cities mainly because of a wider offering, also including furniture, clothing and homeware products which are normally not included in the smaller centres in the suburban areas in cities.
7. Will we see the trend continue, or will the market become saturated?
The conveniences market is probably the one that will become saturated in more stable residential areas. Where new growth is taking place in our cities the emphasis will be on more new neighbourhood convenience centres. In township areas where convenience centres are still limited, major potential exists for more community size centres (between 15 000m² and 25 000m²), fulfilling the convenience and community role in one centre.
8. New trends and the impact on convenience shopping.
Grocery chain stores are continuously changing and improving their product categories. The latest is the major emphasis on organic food, Pick ‘n Pay providing music as part of their Pick ‘n Play concept, new deli type stores that are becoming major role-players as well as the emphasis on quality products and freshness at some of the new Fruit and Veg stores.
Because of this greater competition existing centres and retailers are forced to improve in terms of location, the merchandise on offer, customer service, and to provide customers with an experience.
9. Future development trends
For The first time ever cities are showing growth all around existing residential areas and not only in one or two directions compared to historical growth trends. It is, however, of utmost importance that there must be sufficient households and people living in a particular area to justify and warrant the development of especially smaller neighbourhood centres. A very strong philosophy of ‘follow the roofs’ should be followed to make sure that any centre development is sustainable. There will always be a place for convenience neighbourhood shopping centres. The major anchor and the availability of parking will to a certain extent determine the success and the future of this type of centre.
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