Johannesburg - On its second birthday, the Mall of Africa is upbeat about the future of bricks and mortar stores, despite growing competition from online shopping.
The Midrand-based mall saw 11% growth in turnover in December 2017 from the same period in 2016, with a total revenue generated between R3.6bn and R3.8bn.
The mall’s developers predict that these figures will improve, as the economy continues to recover.
“Last year, the political environment definitely had an impact on us. Many retailers were struggling to sign a 5- or 10-year lease,” Mike Clampett, head of asset and property management at Attacq Ltd, told Fin24 on Tuesday.
The year 2017 was difficult for many established brands such as department store Stuttafords, which folded, and Edcon - the parent company for Edgars, CNA and Jet - which came under pressure.
Clampett said Edcon closed River Island and Mango shops nationally and in the mall, but has just concluded a transaction to keep Edgars inside Mall of Africa.
Attacq is developing and managing Waterfall, which it labels Gauteng's new lifestyle city, and the Mall of Africa is the JSE-listed property company’s largest investment inside the area.
Clampett attributes some of the mall’s resilience to the completion of the nearby PricewaterhouseCoopers Tower, which has become a landmark along the Midrand skyline. The company also predicts that the move of a second auditing firm, Deloitte, to Waterfall in 2020 will boost foot traffic.
Online sales growth poses threat
South African consumers famously love malls and according to Dion Chang’s Flux Trends report, 1 950 of the 2 082 shopping centres in Africa are in the country.
However, online competition is growing as evidenced by the high number of online shoppers accessing websites on #BlackFriday, which led to several of them crashing in 2016 and 2017 because of the high demand.
Globally 11% of consumers shop online, according to the Centre for Retail Research, Emarketer and Internetretailer. In South Africa, however, the figure is around 5%, according to PwC's 2016 retail survey.
Clampett says that in order to counter this, “you have to offer more than a building” and Mall of Africa is trying to lure customers to bricks and mortar shops with extra clean toilets and ticketless parking.
With regard to whether South African retailers are keeping up with international chains such as Zara and H&M, Clampett said there is a “very good balance, close to equilibrium, there is space for everyone”.