Dominance of big players worrying.

Posted On Thursday, 24 October 2002 10:01 Published by
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The dominance of a few big retailers is a worrying factor for SA's shopping centre market.
The dominance of a few big retailers is a worrying factor for SA's shopping centre market.

This dominance makes shopping centres vulnerable to prospects of a few players on the market, meaning that a collapse of a single player can have widespread negative consequences.

This came out of a research conducted by Urban Studies and presented by its director, Dirk Prinsloo, during the seventh African Congress of Shopping Centres held at the Sandton Convention Centre in Johannesburg last week.

In his presentation Prinsloo says the most critical aspect of the retail environment is that more than 50% of the retail space in SA shopping centres is in the hands of a few retailers. These retailers include Woolworths, Shoprite, Pick 'n Pay, Foschini, Edgars, Truworths and Mr Price.

These seven names have about 4000 outlets among themselves and represent 40% or R70bn of the total national retail sales.

Prinsloo says losing a major retailer can have adverse effect on a shopping centre. As an example he says the CNA debacle was major cause for concern among many shopping centre owners.

This is because CNA occupies between 220000m² and 250000m² of retail space which represents the size of two large regional centres.

Prinsloo's research focuses on the relationship between retailers and tenants and says this relationship must be based on a partnership, and not the present 'us and them' type. 'There is an urgent need expressed by the retailers to become part of the decision making process at a shopping centre,' says Prinsloo.

He says there is a need for more trust and communication between the two parties.

Prinsloo says landlords and retailers share the same views when it comes to future economic prospects. In most cases it is anticipated that the next two years will be tough with a 2% growth in the economy.

'Interest rates are of major concern, and the feeling is that, should another two percentage point increase be implemented, the adverse effect on retail will become serious,' says Prinsloo.

Inflation is a concern, although not many retailers mentioned the inflation factor, which is probably good for their business at the moment, he says.

Prinsloo says the relationship between smaller tenants and landlords is generally good but there were concerns that the small retailer might disappear.

Business Day

Publisher: Business Day
Source: Business Day

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