Internet access facilitating bricks and mortar retail development

Leading national developers, Abacus Asset Management states that in the fiercely competitive South African retail sector mall developers are upping the ante to include a high-tech, interactive shopping environment in a bid to lure shoppers to their centres for longer.

This is one of the strongest indications that technology – specifically Internet access – is in fact facilitating bricks and mortar retail development, rather than hampering it through the rise of online shopping platforms.

The company says that although the days of building new mega malls are numbered, there is a rise in demand for ‘mixed-use destination retail developments, ranging from 15 - 25 000 m² that cater to high living standards measure (LSM) shoppers.

Digital drive

“With online shopping in South Africa accounting for just 1% of total retail spend, landlords are incorporating a greater digital experience than ever before into new retail developments,” says Abacus md, Gavin Blows.

“At first free Wi-Fi was the limit developers were willing to spend on digital platforms in their centres but now multiple platforms are emerging in new developments. This includes high-tech features, such as a central digital management system that governs a mall’s website, mobile app, Wi-Fi offering and links to Bluetooth location beacons throughout the centre.

“This allows the mall’s management and marketing team to have a coordinated, meaningful engagement with their shoppers. The enhanced experience also has a positive effect on shoppers’ dwell times, which in turn increases turnover for the mall.”

Baywest Mall case study

The company introduced a full fibre optic backbone and unique Bluetooth beacon location technology to Baywest Mall in Port Elizabeth, when it opened in June 2015. This has enabled shoppers to interact directly with brands and stores at the mall via a multi-platform Baywest Mall smartphone application.

The move was made possible thanks to a partnership between Abacus and Skybird Technologies, which is tasked with driving the ‘digital vision’ of new Abacus developments.

“In addition, we have entered into a national partnership with Vodacom, which will light the fibre and provide FTTB [fibre to the business] services for tenants in our new developments,” said Blows.

“More landlords were becoming savvy by implementing Bluetooth technology and Wi-Fi capabilities into developments. The digital platform is the new tenant in the mall. We do not expect online shopping to impact massively on retail developments. Online shopping will be used more as a reference point, with the majority of shoppers preferring to enter the physical retail environment.”

Retail development future

“The future for retail development in South Africa lies in high-quality offerings in high LSM areas, malls just larger than convenience centres, ranging from 15-25,000m² in size. Such developments were not just retail-orientated, but also offered health and lifestyle components, mixed with high-end office space. The tenant uptake is good because the trading densities are high. These are niche centres that are trading very well now.”

Trends show a rise in demand for centres offering a mix of office, health and lifestyle facilities, especially in Johannesburg and Cape Town, where traffic congestion means residents want to work, exercise, shop and eat out – all within easy reach.

Market research conducted by Abacus, ahead of the development of Dainfern, showed that the Fourways area was one of the highest growth areas in the country. The company is opening its next high-end mixed use retail development in October at The Sanctuary in Somerset West – not far from its other boutique centre, Waterstone Village.

Days numbered for mega malls

Jaco Odendaal – one of the country’s leading development visionaries and Abacus chairman – said there were very few opportunities left for the construction of new mega malls unless the industry accepts a high level of cannibalism. The company’s last mega mall was the 90,000m² Baywest Mall.

“There are very few opportunities left to develop large malls. The market has reached maturity in that respect. You’ll see a lot of expansion on large malls and a redevelopment of their offerings, but in terms of demographics, they are basically fixed for the time being. Despite this, super regional malls remained the best performing assets over the long term.

“The company expects the current economic climate to improve gradually. The property sector is a long-term investment and we believe that interest rates have reached their peak. The economy has had slow or no growth for an extended period and in time retail spending will once again increase as the economy expands and households have more disposable income,” concludes Odendaal.

In addition to acclaim for several malls in its portfolio, Abacus recently scooped the top honours for its mixed-use retail development in Johannesburg, Dainfern Square, at the SA Council of Shopping Centres’ (SACSC) annual Retail Design and Development Awards.