Construction World February 2016

CONSTRUCTION WORLD

FEBRUARY

2016

PROPERTY

This is the word from Gavin Tagg, managing director of Retail

Network Services, a leading full-service retail leasing and

development company. He was addressing more than 200

retail and shopping centre professionals as a guest speaker at

the South African Council of Shopping Centres’ (SACSC) Gauteng

Breakfast in November.

Delving into the state of South African retail, Tagg said that while

there was retail saturation, and even cannibalisation, in some markets,

the emerging black middle-class in South Africa and growing urbanisation

were driving retail demand in areas like Gauteng, Limpopo and Mpuma-

langa. He however, stressed the need for responsible shopping centre

development and retail expansion.

“Establishing the primary trading market of a shopping centre devel-

opment with market research is key to its success. This market research

dictates the size of the shopping centre and the level of sales it can

achieve. It reveals the spending habits of its market, so a centre can offer

stores in corresponding merchandise categories,” he explained.

Tagg believes that more retail cannibalisation is inevitable in the

highly competitive capitalist market. So, malls and retailers need to find

ways to be better in the face of greater competition and to serve the

consumer better.

“With more and more international retail brands entering the

country, SA’s retailers need to put their best foot forward to avoid losing

market share and to remain attractive in the retail mix of shopping malls,”

he said.

Tagg revealed that, on average, only one in 10 applicants for “mom

and pop” type stores at shopping centres were accepted. This is based on

criteria including having a sound and realistic business plan, wanting the

right size shop and a good design and shopfitting.

“Retail isn’t easy. It’s hard work. Plus, to be considered for a store in a

shopping centre you also have to add value to the centre and be unique

or different from other retailers. Each store plays an important role in

the shopping centre ecosystem, with mall owners and consumers alike

demanding nothing less than the best,” said Tagg.

And this goes for long-standing retailers as well as new retail

concepts. With this in mind, Tagg believes the role of mom-and-pop

stores as attractions and differentiators in a shopping centre shouldn’t be

underestimated. In fact, he told SACSC members that shopping centres

need to incentivise and support mom-and-pop retailers, even going as far

as encouraging subsidies for these unique concepts.

Retail’s dominant trends

Focusing on today’s retail landscape, Tagg listed eight dominant

trends. Foremost is urbanisation, with more and more people coming to

live in the country’s economic centres and driving a demand for more

retail infrastructure.

Globalisation is also a dominant force, which is fantastic news for

consumers, with more global brands like H&M, Zara, Hamleys and

Forever 21 entering the South Africa market.

Building retail brand trust and brand loyalty has become more

important than ever before. “Retailers are quickly realising they have to

be more than traders, but also have to stand for something,” said Tagg.

He added that another strong retail trend being witnessed was the

growing desire for health, beauty and fitness, so people are spending

more time and money themselves.

Social media has become a retailer influencer and opportunity for

retailers and shopping centres almost overnight, and the industry is

having to come to grips with it.

Consumer expectations were transforming retail. “Today, people are

exposed to a lot more, not only by travelling more but simply by being

able search the Internet to see anything and everything. Their expec-

tations of what retail can offer them are higher. We have to meet their

expectations,” said Tagg.

The days of only taking a mass market approach is a thing of the past,

cautioned Tagg. Personalisation is the new approach. “You have to talk to

your customers,” he stressed.

Entertainment has become a huge aspect of the customer experience

at shopping centres, and Tagg believes this area is set to develop more

and more in the future.

“Our shopping centres are the piazza’s and markets of old. Even in

our rapidly changing retail world, with the Internet and endless new tech-

nologies, they’re not going to disappear. People still want to experience,

see and touch the things they buy,” he explained.

“Everything we do at shopping centres has to relate to consumers.

We will have to reinvent shopping centres and continue to do things

better, serve consumers better and be responsible, to ensure shopping

centres remain relevant. Retailing is no longer just about the product –

Prospects still

PLENTIFUL

in South Africa

Even with the sixth highest number

of shopping centres of any country

in the world, there are still huge

opportunities for more retail centre

development in South Africa.

An artist’s aerial impression of the new 94 000 m

super-regional Rainbow

Mall development just 6 km north of the Pretoria CBD, which is set to anchor

the multi-billion rand Rainbow Junction mixed-use megaproject.

An artist’s impression Hebron Mall, located on the main between

Soshanguve and Ga-Rankuwa.