We currently face a societal behavioural change in that online shopping is rocketing alongside a global trend towards ‘cocooning’. Combined, these factors threaten long term return on investment (ROI) in the retail property sector. Retail remains the largest GDP sector in SA, so who will take the spoils over the next 20 or 40 years?
Online shopping is being driven by the availability of ever decreasing cheap data connectivity, ease of online purchasing, product research and price comparison. Added to this is that we all value our time in an extremely competitive global marketplace where we’re pressurised to constantly increase productivity. And then there’s marketing pushing the instant gratification factor and 'cutting out the middle man' – a major industry disruptor.
Factors leading to an increase in 'cocooning' are security, connectivity, social media etc. – gone are the days when you had to drop by a friend’s house in order to arrange a social function if you couldn’t get hold of him on the landline. There’s no need to leave the safety of home and children are hardly ever seen riding bicycles to friends, sport or to the mall – the roads are just too dangerous – whether in South Africa, Australia or America. Asian countries still tend to buck this trend – but that’s a topic for another day.
A mind shift in terms of measurement of ROI on the part of retailers and landlords/investors is required in order to ensure that malls remain relevant in today’s society – with the ultimate objective being to protect their investments.
ROI is normally measured purely in financial terms and investors largely look at the numbers in assessing the value of a property in their portfolio. In the South African context we believe that our 22 000 plus retail centres need to start delivering on an intangible ROI by engaging and investing intensely within their catchment areas, thus ensuring their long term relevance. This requires visionary leadership on a large scale, and could even be a game changer in assisting communities to throttle crime.
Relevance could or can be obtained by ensuring that retail centres are safe destinations which serve additional socialisation needs whilst delivering for retailers … beyond coffee shops and restaurants as part of the tenant mix.
Perhaps sections of a centre’s basement parking could be offered as free space for pop up churches during quiet Sunday morning trading times or night schools, thus attracting potential shoppers while serving a community need. The community must see the centre as being 'their centre' – a valuable community asset and a safe destination for their children.
Small Crimewatch/CPF office accommodation could be provided along with space in the security office server room for community/local councillor, ward allocation funded licence plate recognition cameras – thus entrenching the centre with local crime fighting initiatives. A community liaison officer could oversee driving/leading these initiatives – linking in with broader initiatives by the City Metro, SAPS etc.
A safe community will be far more likely to support a safe centre which is seen to be a major sponsor of the crimewatch in the area and is seen to be giving back. The knock-on effect is that the footfall should grow or at least be maintained.
Working models of this are Constantia Village and Blue Route Mall in Cape Town, where local crimewatch structures are strongly supported with great reciprocal benefits and results. As security becomes more tightly controlled at a mall, the surrounding community in turn benefits. Criminals are deterred from the area in general and will have to ply their 'trade' elsewhere.
Health services or sports facilities could further attract footfall – secure parking areas can be offered after hours to cycling/running clubs as congregation points, with users tipping car guards, thus no cost to the mall (maybe parking revenue forfeited to members). Perhaps the centre’s sports retailers can engage with these clubs/groups as local sponsors etc., thus driving a local marketing catchment approach.
Imagine the knock on effect if 20 000 of our retail centres are safe zones, along with the suburbs/towns in their immediate catchments.
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