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Botswana: Retail stores blame closures on lack of business

Posted On Thursday, 12 May 2005 02:00 Published by
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Small businesses are folding up - particularly in the retail sector - because of sluggish trading environment, high rentals and the streetwise consumers spoiled for choice by the mushrooming malls



Many retail stores in the food and clothing sector are folding up at an alarming rate and the small malls are finding it hard to get new tenants.

Most of the affected business owners have however refused to blame rentals for the collapse of their business saying the problem is that there is generally no business.

One business owner whose clothing business folded at Maruapula complex last month - less than a month after opening - said although he is thinking of moving to another place, he may not operate anymore.

“There is no business and I can’t pay my overheads,” he said without revealing his name.

Other business owners are attributing their fall to the coming of bigger and integrated malls.

They say people no longer want to buy from smaller malls.

Another said: “People don’t have money and every year it is getting worse than the previous one.”

The increasing price of petrol and the rising cost of living have been blamed while others say it is also because most products are from South Africa and the charges are too high.

“The VAT impact is still there, there are so many big and small malls. There is overtrading and customers are divided,” said another trader, who also blamed Chinese businesses, especially in the clothing business.

Head of sales and letting department at Knight Frank, Mpho Moremong said the city is oversupplied and there are too many malls coming in at a short time, which have impacted negatively on businesses.

She said because property rentals are dictates of demand and supply there has been an imbalance caused by the boom in the development of malls.

She said rentals are not a problem but argued that even if they were sustainable, this would not help because if there are no buyers, retailers cannot meet their overheads.

“People prefer to go to other malls and buying is so spread,” she added.

Her feeling is that the situations would level out when people stop building more malls and the demand begins to grow.

But she said: “At the end of the day, new malls are good for consumers because they get a variety and the prices become reasonable and competitive.

Managing director of Belshane Property Group, Olebeng Ngwakwena said: “The retail market is saturated, the trading has been poor and the tenants can’t pay rent.”

He also added that there is more competition and people are selling the same products and the tenant mix is also bad.

“There is no diversity,” he said and added that now customers have more choice and people shop around,” he said.

He also added that occupational costs are high because most people were excited when new and bigger malls opened and everyone wanted to be there.

He said at the time many people had money because of loans from CEDA and they did not even bargain for good prices yet their business models were not sustainable.

As it is, most are now moving out after failing to make it and this is also coming at a huge cost, he said.

“The fact that many of these are vacant shows that the demand is not strong,” he said and criticised landlords for overpricing their property.

“They should re-look at their rentals in order to retains tenants,” he said adding that it is also property estate agents who are failing their clients because they do not advise them about business prospects.

“I am sure we have all learnt something and we need to come up with good packages in order for people to prosper,” he said.

“They should look at good plans and commercial businesses should audit the business and give quality advice,” he added.

Last modified on Thursday, 17 April 2014 16:16
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