GROWTH potential in the up- market retail sector is limited, says Pepkor Holdings chairman Christo Wiese, but there are opportunities in the middle market.

Wiese told the ninth African Congress of Shopping Centres at the Sandton Convention Centre last week that SA did not have sufficient growth in the number of higherincome consumers to sustain many more of the up-market regional centres.

"I am fully aware there is a growing black middle class with considerable disposable income increasingly shopping at these centres. And developers are turning these centres into destination facilities offering an entertainment component," he said. "When the statement is made that there is an oversupply of retail space in SA and the market is overtraded, people primarily have in mind these large conventional formats."

Wiese said the strongest growth was in urban neighbourhood convenience stores, "where the store is taken to consumers".

These new-generation stores, which are smaller than conventional supermarkets, offer extended ranges of value-added products and serve a smaller consumer base.

Wiese said there was enormous potential in townships, where consumers had so far been largely dependent on spaza shops, and large retailers were developing formats suited to this market. Developers would support these trends through the development of small neighbourhood centres and shopping malls in township areas, he said.

He warned, though, that these new areas also had limited potential in the long term and that retailers would increasingly have to look elsewhere for growth if they did not want their margins eroded.

Africa was the logical answer, he said. According to an opinion poll conducted by Unisa's bureau for market research earlier this year, business leaders expressed the view that South African companies would be expanding strongly into Africa in the next few years. There were "great opportunities"

in many of the countries despite the risks.

The South African Council of Shopping Centres, which hosted the congress, presented Wiese with a Pioneer of the 20th Century Award.

Wiese was appointed executive director of Pep Stores in 1967, and left the group later to practise at the Cape bar. He rejoined Pepkor in 1981 as executive chairman, and has been chairman of Pepkor Holdings, Shoprite Holdings, Tradehold and Brown & Jackson.

Oct 13 2004 08:39:13:000AM Nick Wilson Business Day 1st Edition