Retail property trends need to build on current growth trends by better understanding the connection between humans and our environment.
“In essence, the time has come for the enlightened shopping centre”, says Belinda Clur, Managing Director of Clur International. The company’s Clur Report, an asset management and benchmarking platform for both listed and unlisted investments, spans more than 3.6 million square metres of prime retail space and 15 000 tenancies.
“Despite the harsh economic and social climate, the longer-term trend in trading densities (sales per square metre) in more than 100 shopping centres in South Africa and Namibia shows a clear improvement since the 2020 / 2021 Covid-induced downturn in performance”, she says.
“As measured by the Clur Report, an improvement in trading densities has been evident since March 2021, one year after the hard lockdown, and relative to the pre-Covid-19 base. Moreover, there is an overall converging trend to the consumer price index”.
The Clur Benchmark for All Centres for all of 2021 saw an annualised trading density level of R34 542 per square metre, a 7.2% increase year-on-year, she said. In March 2022, a year after the improvement was first noted, trading density had increased to R35 582, 5.1% better than the March 2019 figure and 10.4% up year-on-year. The March 2022 performance followed a 10.6% lift year-on-year for the 2021 festive season where annualised trading density was recorded at R47 586, 5.7% better than the 2019 festive season figure.
“Super-regional and regional centres, which fell the furthest during the 2020 / 2021 downturn, are now seeing the strongest recovery”, she says. “The March 2022 Clur Benchmark for super regional and regional centres combined shows a trading density level of R37 138, a 13.1% increase year-on- year and a 3.3% lift against 2019, with super regionals at the highest level of R39 855 and a 15.9% increase year-on-year“.
“The March 2022 Clur Benchmark for small regional and smaller centres shows a trading density level of R32 579, a 4.7% lift year-on-year and 10.5% increase against 2019. These smaller centres showed a trend of stronger growth over the downturn, largely due to being able to trade at close to full floorspace capacity during the hard lockdown, with an essentially focused tenant mix, unlike their larger counterparts which were forced to trade at a lower floorspace to size ratio. This performance underlines the value of having a diversified portfolio when considering all seasons”.
In looking at this revival, current times can be likened to a renaissance, she says.
“The Renaissance was a fervent period of cultural, artistic, economic, and political rebirth and innovation. It is also a time that celebrates humanity and life. Today, we note Covid-19 sped up many trends and made people reconsider their lives, world, and values, and inspires extensive innovative thought”.
“Against this backdrop, from our market interpretation of strategic positions, we have seen a move from a chameleon to a hybrid and now to an enlightened shopping centre concept. The chameleon shopping centre represented a move to fluid rather than fixed formats, comprising an ever changing, quickly adaptable, high impact, connected and interactive experiential environment. The hybrid shopping centre concept emerged during the Covid lockdown, embracing the need for a new mixed use format including retail, storage warehousing and showrooms. Agile design as times change allowed vacant retail space to generate income, albeit at a different rate, shortening the supply chain, limiting stock issues, driving efficiencies and ring-fencing lost turnover rental to online sales”.
Clur says the enlightened shopping centre takes the best from both models, operating at a higher emotional level.
“Most importantly, it celebrates humanity and holds a higher intelligence with sensitive interpretations. It provides a safe and accepting space for personal expression and evokes a sense of ease and belonging. It has resonance, spanning several dimensions and generations. It honours the old and embraces the new, being both traditional and cutting-edge, global, and local”.
“At its heart, it understands people, holds a rich sense of life, and respects the world. It is a creative artwork, a gracious and supportive mindful hub for community to engage, be entertained, learn, and thrive. It has a rejuvenating, renaissance quality, a clear, honest voice, and focus on signal over noise. It is an ongoing anthem of change for the moment”.
“Sensitivity to the surrounding environment is a key element of the enlightened shopping centre. In response to the downturn dynamics, a shift in leasing activity has emerged, favouring a blend of value, trendy, and luxury themes, reflecting the way people are now shopping and presenting themselves as a personal brand”.
“Further, as people re-integrate, a trend of fewer, but longer mall visits is evident, with outings being maximised, resulting often in a higher spend per head. Globally, a trend of shorter-term leases and a higher emphasis on turnover-based agreements is also evident. There is also a trend towards more specialty, a position usually held by line tenants and now being adopted by national retailers. Agility in response to these trends and tailored tenant mixes are helping drive the improvements in trading densities and rewarding astute asset managers”.
According to The Clur Report, the best performers in trading density relative to 2019 are technology (32% growth), mini-discount department stores (up 19%) and accessories, jewellery, and watches (up 3%). The grocery/supermarket (8% better), food specialty and liquor stores (up 8%) and home furniture and interior (up 6%) categories are also performing well. Cosmetics and perfumery, sunglasses stores, and fast foods have done well, with apparel also having turned the corner, particularly in smaller size stores. This performance is in line with many of the consumer influences contributing to the shift to the enlightened shopping centre.
Clur describes some key global consumer influences, which need to be considered “as we navigate turbulence to profitability into the future”:
People who want to fall in love with life again
A desire for a life affair sees a holistic approach being embraced, spanning body, mind, and spirit. This encompasses wellness, diet, exercise, home and pets, self-improvement, mindfulness, kindness, and sensitivity. Underpinning this is a drive to work smarter and allow more time for life experiences on the back of a hybrid work model and a potential four-day work week in the UK and Europe.
Gone are the days of padded, slow moving corporate existence. The new way cuts out unnecessary work steps, streamlines and gets straight to the point: shortening work, extending life. Lessening of lockdowns and restrictive measures has led to the emergence of ‘revenge travel’, an indulgent splurging vacation full of luxuries and experiences, to offset lost time.
Dignity is the new cultural attitude
Diversity, inclusivity, fluidity, neutrality, tolerance, and equality have set the foundation for a greater cultural shift embracing dignity. This is based on cornerstones of acceptance and belonging. Movements related to Black Lives Matter, LGBTQ2S+, Women’s Rights and the current abortion ruling protests all highlight this evolving social value, which is echoed in South Africa. Take note of Sofia Jirau, the first model with Down’s syndrome to pose for Victoria’s Secret, Lebohang Monyatsi, SA’s first wheelchair model, and Precious Lee, a plus-size model, who became the new face of Versace. Make up for men is becoming mainstream as evidenced by the success in the United Kingdom and the United States of the War Paint brand. An attitude of dignity must reflect as a key value in the way brands communicate and engage with their audience.
The Respect Economy sets a new framework for life
Stark recognition of the impact of daily life on the environment has led to a new value system driven by ethics, thoughtfulness, and innovation. Key to this is responding to climate change, emissions, animal rights and managing the protein supply chain. The global and South African retail industry is embracing this in multiple ways. Pioneering internationally competitive South African bio-tech start-ups are attracting significant interest and funding. Our very own Mzansi Meat Co. is bringing cultivated meat to Africa, reimagining food systems by growing affordable, sustainable, and healthy meat from cells, with no harm to animals. Inseco converts low-value organic by-products into nutritious insect ingredients, and Plato’s is making crisps from recycled beer grains.
Innovations in textile, leather, cellular agriculture, and insect solutions, will change apparel and food consumption patterns altering fashion, grocery store and restaurant offerings, along with veganism, upcycling, and re-appareling.
Omniverse is the new universe
People are increasingly living between two worlds, the physical and virtual. This has massive implications for many areas of life and retail. We have moved from physical to online to omnichannel retail to the metaverse. Shopping centres need to exist in all these realms and successfully manage this new multi-dimensional mix. Whilst some mind-blowing “phygital” stores have been created, the metaverse still needs to mature and is an important space to be watched. Ultimately, physical retail is at the heart of all of these formats, and is an established place where humanity connects, has a full sensory and authentically soulful social experience. “Respec-tech”, technology that respects life and sets the rules for engagement in our multi-dimensional society, is crucial.
Age convergence is driving a major shift in the basic infrastructure of society
A convergence of knowledge, communication and innovation across generations is eliminating traditional age distinctions, almost creating an ageless world. Youth are informed beyond their years via technology access, whilst their elders are ever-younger in looks, attitude, health, and tech-savvy. The generation gap is now less relevant. There is disruption of traditional age/ work/ living/ income structures, with funding concerns about affordable retirement, health care and living standards in an overpopulated world with limited resources. An interesting trend is emerging with younger generations viewing time as a currency worth more than money. This clearly shows a shift towards prioritising life.
Today we see multigenerational living development formats, and “refirement” with retirees launching and engaging in new ventures. Workplace synergy of older wisdom and experience and younger energy and impulsiveness could create a powerful force to be directed and funded.
The border between art and technology is blurring, creating new frontiers
We are living in highly creative times, with limitless intertwined possibilities influencing art, technology, and artificial intelligence. Physical, touchable art is complemented by digital purely visual art, which doesn’t really exist and is selling for a fortune such as Beeple’s non-fungible token fetching $69 million dollars at Christie’s.
Artificial intelligence sees robots increasingly assisting with inventory, crop spraying, security, cleaning and in some cases, art creation from oceanic plastic pollution such as at Selfridges in London. Digital, immersive, moving art and robotics offer novelty experiential and practical applications and installations to retailers and shopping centres across physical and other channels.
Design, a force to be harnessed for the good of the world
Design as a general theme is evolving rapidly, but of specific importance is the way it may influence how and where we live.
Latest advancements showcase innovative use of containers and homes and structures that unfold and build themselves in a matter of minutes, with potential upliftment and lifesaving use in various scenarios.
Further, we are now seeing the development of self-contained floating cities in areas threatened by climate change, as in the Maldives.
The first signs of a mobile way of life and mobile communities are starting to emerge. Do we need to start thinking about mobile and floating shopping centres?
The fundamental differential
As we return to a more interactive life, the fundamental differential has to be the experience that is offered within the bricks and mortar of the physical shopping centre. The values of an enlightened centre must be contained in the in-store, centre, and entertainment experiential aspects.
Clur says centres must therefore celebrate humanity, be emotionally intelligent, and hold a rich sense of life.
“In addition, personal touch, and an important relationship economy, underpinned by excellent service, customer knowledge, thoughtfulness and philanthropy are coming to the fore as people value these aspects highly after isolation and ongoing hard times”.
