Advice and Opinion

Steady growth for rural retail in South Africa

Spire Property Management recently secured the management contracts for several retail centres in outlying areas of Durban and Johannesburg.

Tshepiso is a small convenience centre situated in the heart of the Tshepiso township near Vereeniging; the Gamalake Centre is situated in Shelley Beach and caters to the Gamalake Township; Boxer Ngqeleni is a stand-alone Boxer superstore which serves Umtata, West Pondoland and the Coffee Bay areas; Umlazi J Section is another stand-alone store that services the greater Umlazi region and which houses a Punch superstore; and the Clermont Centre which services New Germany, Pinelands and Westville.

Sean Paul, Executive Director of Spire Property Management says that retail in South Africa’s rural areas or ‘emerging economic areas’ is growing and this success is evident in the retail sales and trading densities in these centres.

“Townships and rural areas in SA have emerged as a new market for retailers – both boutique and national. This progressive movement has resulted in an increase in shopping mall development in these previously untapped areas,” says Paul.

“Through Spire’s growing rural retail portfolio we have seen many national retail tenants going into rural areas and experiencing unprecedented success with considerably higher trading densities than in urban areas.”

“However, a move such as this does need to be well researched and implemented,” recommends Gregg Huntingford, CEO of Spire Property Management, who notes that the first step is to partner with experts in the field and says that it is essential for all parties to adopt a collaborative approach to ensure that the needs of the community, the retailers and the property owners are met.

Huntingford advises that it is crucial for retail centres operating in rural areas to stay close to the community and ensure that the centre is valued. “Landlords must also guarantee that security is in place and effective, and that public transport is accessible for shoppers – making the centre the convenience hub for the area. Tenants must be prepared for a different shopping experience and to tailor their store to the consumers’ preferences.”

Huntingford goes on to say that it is difficult to generalise about what works best in malls in ‘emerging economy’ areas. Tenants need to carefully research what the needs of the community are and ensure that they meet these needs. But it is evident that what works in one area does not necessarily work in another – tenant mix, product offering and size have to be very site-specific.

“From our first-hand experience we have seen that there are growth opportunities for retailers in rural areas as opposed to saturated and over-populated urban ones. Rural areas offer a real cash economy and well marketed tenants who have done their homework will be successful,”concurs Paul and Huntingford.