Johannesburg - Urbanisation is the top trend driving retail in South Africa at the moment, according to Gavin Tagg, managing director of Retail Network Services.
As more and more people come to live in the country’s economic centres, they drive a demand for more retail infrastructure, Tagg said at an event hosted by the South African Council of Shopping Centres’ (SACSC) in Gauteng this week.
Globalisation is another dominant force, with more global brands like H&M, Zara, Hamleys and Forever 21 entering the South African market.
Building retail brand trust and brand loyalty has become more important than ever before and retailers have to be more than traders and stand for something, Tagg pointed out.
Another strong retail trend is the growing desire for health, beauty and fitness.
At the same time social media has become a retailer influencer and an opportunity for retailers and shopping centres to relate to consumer expectations.
"The days of only taking a mass market approach is a thing of the past. Personalisation is the new approach. You have to talk to your customers,” he stressed.
Another trend, 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. This goes hand in hand with the use of technology to allow consumers to experience, see and touch the things they buy.
“The buzzwords in the industry at the moment are that shopping centres must either be the most convenient or dominant. While I believe this to be true, I think what’s more important is for shopping centres to remain relevant to the consumers they serve,” said Tagg.
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, according to Tagg.
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 Mpumalanga, he said He said
He stressed, however, that there is a need for responsible shopping centre development and retail expansion.
“Establishing the primary trading market of a shopping centre development 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.
On average, only one in 10 applicants for “mom-and-pop” type stores at shopping centres are accepted. This is based on criteria including having a sound and realistic business plan, wanting the right size shop and a good design and shop fitting.
“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.
He believes the role of mom-and-pop stores as attractions and differentiators in a shopping centre shouldn’t be underestimated and that shopping centres need to incentivise and support mom-and-pop retailers, even going as far as encouraging subsidies for these unique concepts.