Gavin Tagg, CEO Retail Network Services.
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.
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 on Tuesday, 17 November 2015.
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 Mpumalanga. He however, stressed the 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 cannibalization 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.
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 expectations 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 technologies, 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 – it’s about entertainment, education, emotion, engagement and enlightenment”.
“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 that they serve,” said Tagg.
Retail Network Services has a track record of almost 25 years. It has facilitated the development of 52 shopping centres and let over 1.25-million square metres of retail space during this time.