Management company corroborates retail sales trends

Posted On Wednesday, 23 February 2011 02:00 Published by
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Most of South Africa’s major retailers have reported on their December 2010 sales and the news has been predominantly positive, with percentage increases mainly in double figures

Over the past 12 months and despite the constrained economic trading conditions, JHI property services group maintained high occupancy levels in retail properties managed, with vacancies below an average of four percent.

Johan Engelbrecht, director, retail management for JHI - which manages in excess of 170 shopping centres nationally, comprising a total area of close to two million square metres, comments: “Trading densities in centres managed by JHI are strategically driven by ensuring that the right tenants are placed in their preferred location, size, layout and design, and by also taking into account consumer behaviour and spend, we are able to pro-actively manage potential vacancies on an ongoing basis. While we have not yet seen an increase in enquiries for retail space we are confident this trend will change over the next six months,” he says.

“There is no doubt that we have seen some recovery in retail sales for the year ended December 2010. Most of South Africa’s major retailers have reported on their December 2010 sales and the news has been predominantly positive, with percentage increases mainly in double figures. The November 2010 retail sales figures nationally were 6.1 percent up year-on-year (according to the SA Council of Shopping Centres Economic Overview dated January 2011). Over the latter half of 2010 the increase in consumer spending, coupled with the increase in consumer confidence – mainly due to household borrowing gradually returning, with low interest rates and inflation – indicates that perhaps the worst is really over. In general, the major shopping centres under JHI management have achieved a positive growth year-on-year for the period ending December 2010.”

Engelbrecht says retail categories in essentials/durable goods and services still seem to outperform luxury items, although the gap is closing. Retailers ie hardware, paint and glass, specialising in supplying the building and construction sector remain under pressure and there has been an average performance from specialised food and beverages. Conversely, CFTA (clothing, textiles, footwear and accessories), pharmaceuticals, medical goods, toiletries and household goods have performed very well.

He adds: “Our outlook for the retail sector in 2011 remains positive. We will definitely see sustained growth in sales from retailers in established markets and nodes.  Factors impacting on the retail sector include changes in public transport systems, such as the introduction of the Gautrain and toll roads in Gauteng, which will have a significant effect on retail nodes in the future. Such factors have always had a substantial impact on retail nodes, as seen in previous years - with increased pedestrian and commuting nodes established by consumers residing in traditional townships. Accessibility to major retail nodes will primarily be driven by the consumers’ choice of what will be the most affordable way to reach his/her shopping destination, and ultimately this could impact on the current profile of shoppers frequenting shopping centres.”

Engelbrecht notes that South Africa is following overseas trends, such as that being experienced in the UK where the highest growth is being achieved in the convenience store format, where the key focus is on food and groceries. “We have acknowledged this change in general consumer behaviour – with time saving and convenience critical in today’s extremely busy way of life - and have developed a growth strategy around the urban neighbouring community shopping centre of the market. Value remains the focus of the South African consumer and the proposed Massmart and Wal-Mart deal could well provide the stimulus for positive change in the dynamics of our retail markets,” he says.

Publisher: eProp
Source: JHI

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