Belinda Clur, managing director of Clur Research International.
Space at prime South African retail properties was made to work harder throughout 2015 and delivered real growth on an inflation adjusted basis.
The improved use of lettable areas through 2015 emerges from research covering two million square metres of retail space where risk trends are monitored by the Clur Retail Risk Indicator, a new composite measure of shopping centre risk developed by Clur Research International. The indicator is based on the strategic interplay of key shopping centre performance variables. It is a key element of Clur’s Retail Live product, an interpretive early warning system for shopping centres.
The significant improvement in the Clur Retail Risk Indicator over the 2015 year was confirmed by December 2015 trading results, as measured by Retail Live. Preliminary January 2016 Retail Live results further support this trend of risk reduction, which has been driven by better use of space in 2015, and most notably by the impact of strategic tenant mix, sizing and product mix to correct underperforming space dynamics.
Amelia Beattie, head of STANLIB Direct Property Investments, says this shift indicates that shopping centre managers and retailers are taking an informed strategic approach to drive improved efficiencies.
“This risk reduction also shows the current adaptive capability of mall management and retailers to respond to fast changing consumer dynamics,” she says.
Supporting the risk reduction findings, annualized trading density year on year growth for December of 5.9% across the Retail Live mall universe outpaced the 2015 consumer price index (CPI) by 1.3%. Retail Live statistics also indicated that December 2015 spend per head grew by 6% year on year, outperforming December CPI by 0.8%.
“This growth in sales per square metre and spend per head is impressive given the current economic context and points to the resilience of the South African retail sector,” says Marius Muller, CEO of Pareto Limited.
Mall managers and retailers are dealing with a practical consumer, says Belinda Clur, managing director of Clur Research International who also chairs the Sub-Saharan Africa Research Group of the International Council of Shopping Centres, the global industry body, and sits on their international groups.
She says top Retail Live growth categories showing positive inflation adjusted growth at December 2015 were cell phones, accessories, electronics, home furnishings and décor, hardware stores, smaller department stores, fast foods, sporting goods, restaurants and coffee shops, and men’s wear.
“This points to a practical consumer currently focused on their immediate context of connectivity, communication, improved physical, personal and home appearance, an appetite to dine out, but with a focus on value for money, quality, differentiation and sustainability”.
“The Retail Live results as at December 2015 reinforce earlier system findings. They point to crucial trends with implications for flexibility, sizing, mix, design, rentals and retail classifications. In effect they indicate that the shopping centre model is turning on its head. Creative, niche, differentiated store types now seem preferred to replicated options and smaller, focused size formats seem favoured over large, cumbersome alternatives. All of these implications need careful consideration in order to drive market share and profitability, and ultimately manage risk.”