Have any dynamics to retail development changed to spur the number of new shopping centres across South Africa? The consumer is slowly working through massive amounts of debt while battling through a contracted economy that offers little of new employment opportunities. Salaries are increasing, and for most, such as in government employ, are increasing at rates well above inflation arguably off low bases,  while private companies are rationing human resource numbers to increase profitability. The consumer has benefitted from a low interest rate environment and from improvements in social grant payments which in turn suited rural and township malls.

On the supply side international brands are seeking growth opportunities in South Africa and driving mall expansions in well established and dominant centres. National retailers in their quest to rebrand and create a friendly to shop image are taking up larger spaces than previous.

Perhaps we are loathe to say the catchment area which defined potential demand has been reduced to give in to supplier deamd to be visible and reach customers at their convenience. Competition amongst nationals such as Pick n Pay and Checkers has to some extent been driving new development in these markets. Profitability may be squeezed as these brands jostle for the consumer who is looking for discount purchases and has the time to compare the offerings as they are located closer within the typical 20 000 to 30 000sqm mall.

The mushrooming of malls in secondary markets could also be attributable to saturation in primary or metropolitan areas. Redevelopment programmes of existing malls over the last few years have taken away clear dominance. Funds may be seeing a diminishing growth outlook in metros and are thus seeking good growth in secondary markets.

Compiled by: Mduduzi Ngwenya