The humble convenience centre nestled in burgeoning suburbia has delivered double-digit growth for most retailers and it has emerged as the most resilient format in the modern retail industry.
In addition to boasting major anchor tenants, convenience centres appeal to many consumers with their simple in-and-out navigation, direct access to stores and open-air environments.
According to Nashil Chotoki, National Asset Manager for Retail at Redefine Properties, consumers did not shun retail, they simply opted for convenience centres for the safety they offer.
Covid-19 spurred convenience centres to innovate and during the lockdown, Kyalami Corner was one of the spots for Woolworths and Checkers to try the ‘click and collect’ concept where consumers ordered and paid for their groceries online and driving to the centre to collect which kept consumers safe while saving on expensive delivery fees for retailers. “In fact, Woolworths and Checkers at Redefine’s Kyalami Corner posted double-digit growth” he says.
“This has given Redefine the confidence to raise the bar at Centurion Mall, our largest retail property where plans are underway to reconfigure the upper level as a convenience offering. We are also considering a ‘click and collect’ technology platform based on the data and patterns analysed at Kyalami Corner. The portal will allow customers to shop at all the stores in the mall, pay one combined bill and have all their purchased delivered to the car” he adds.
This hybrid model works for the local environment where delivery is complex and costly. Unlike the US and Europe, packages cannot be left outside consumers’ doors in South Africa which forces retailers to work around the availability of the customer to fulfil deliveries.
The work-from-home trend is also contributing to the move towards convenience centres but not all convenience centres are built equal; centres in office nodes are likely to show subdued activity at least in the short term as people continue to work from home and prefer to shop in their neighbourhoods. “We have also noted that convenience centres in the townships and rural areas outperformed the centres in the developed metropolitan areas”.
That said, the retail sector is resilient even if the format wars are being won by convenience centres. As the hard national lockdown ended, it bolstered consumer confidence to step out and this is reflected in the recovery of retail sales. Restaurants in Redefine’s portfolio have bounced back from being down 50% in July 2020 to post major gains of 1% growth in October 2020.
“Apparel which occupies the largest area in large format shopping centres is one of the other sectors that has returned to pre Covid-19 trading. We are seeing strong growth coming from value retailers as consumers buy down amidst continued pressure on disposable income,” says Chotoki.
“We are in fact fielding a number of enquires by large clothing retailers for space in convenience centres. Before Covid-19, they would have been on the bucket list but not in the actual tenant mix. Clothing retailers have been proactive in the face of evolving risks and the changing preferences of the consumer.”
A dual strategy, online presence to allow customers to identify products they want and a physical store for trial and transaction, will be a key driver for the success of fashion retailers. Going forward, consumers are likely to make fewer stops making it imperative for fashion retailers to have a strong online presence as well as optimal stock availability at stores.
Technology and appliance retailers such as Samsung, will continue to use its physical presence to showcase products, afford consumers the luxury of touch and feel and encourage consumers to make purchase decisions in store. Consumers then compare prices online and buy the product.
It is not all headwinds for the physical format as ‘buy online, pick in store’ is gaining traction and developing into a fast-growing part of retail. For that reason, pure play online retailers like Takealot are experimenting with physical presence in malls so people can order online, and pick-up products earlier and at a reduced delivery cost.
“Looking ahead, we expect to see convenience centres trend favourably. They have been consistent performers both in terms of offering value to retailers and encouraging footfalls as customers pick out safe shopping venues. We can safely say they will continue to show resiliency to market changes from e-commerce and short-term volatility”.
“As the country ramps up its vaccination programme, we expect to see a decent recovery in all retail formats as confidence levels lift” he concludes.