Shopping space oversupply

Posted On Friday, 16 February 2001 03:01 Published by
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CAPETONIANS, already under a deluge of shopping centre space before the opening of the R1,6 billion Canal Walk shopping centre at Century City,

shopping space oversupply cbn 16 feb 2001.

CAPETONIANS, already under a deluge of shopping centre space before the opening of the R1,6 billion Canal Walk shopping centre at Century City, are now positively drowning in options with the opening of the 124 000 square meter centre alongside the N1 highway into and out of the city.
In one fell swoop, available space has rocketed almost 25%, from around 500 000 square metres to almost 630 000 square metres (see table). And that's not counting community centres, convenience centres, the CBD or any centre for that matter which measures less than 20 000 square metres.
Using Wesgro's estimates of economically active people in the Greater Cape Town, that means that the larger centres - excluding the CBD which itself is experiencing a Renaissance - are serving a total economically active population of just 3 million.
There is a case to be made that we have more shopping space than we can throw Rands at: add in all categories of centres and the CBD, and there is a conservative figure of 1,5 million square metres of shopping space available for that potential market.
Asked whether there is too much shopping space in the area, Canal Walk general manager Mickey Radowsky says it is 'possible', but adds that it is like all other commodities and uses as an analogy the contention that there may be too many cars, but no one stops making them.
He contends also that having generated a turnover of R260 million at Canal Walk in the two months since opening, the centre seems to be catching on, and provides proof that shoppers will gravitate to quality and variety, irrespective of the amount of space available.
On the face of it, Radowsky seems justified in his views as Canal Walk appears to have pulverised its competitors with claims that 5,7 million people visited the centre in its first 13 weeks. But the retail shopping centre wars are all but won, and may yet prove Radowsky wrong.
Monex spokesperson, Maggie Rowley has confirmed that the figures were arrived at by the use of a door counter that counts everyone going in and out, and then divides the total by 2. She contends that all centres use the same methodology.
The question is: will the new centre attract and retain shoppers in sufficient numbers to ensure it's own survival.
The hiatus when Canal Walk was being put on stream allowed many of its competitors to prepare for the battle and many added even more shopping space to the list.
As examples, Kenilworth Centre will have another 2 000 square metres at hand at the end of the first quarter of 2001 - it's second refurbishment in recent years; and each of the following has undergone major renovation and additions in the last two years - Tyger Valley, Victoria Wharf, Bayside, Cavendish Square and Gardens, among others.
Tyger Valley alone added another 3 000 parking bays to the centre, thus addressing what was for years an Achilles heel.
Early indications of the cut and thrust are perhaps most aptly described by Natalie De Freitas, the centre manager of the N1 City complex, often touted as the most likely heavy loser to Canal Walk: "We were affected by Canal Walk in the first month (December), when our traffic went down between 8% and 12% at times, but we're seeing a return of all our customers." De Freitas is confident about the future, and says that Canal Walk may inadvertently be the spur that ensures a better shopping experience at other centres. "As our tenants' leases come up for renewal, we are seeing them upgrade their shops and their service levels because of the competition down the road", she says.
Radowsky confirms that January trends suggest that Canal Walk traffic is down 60% on December, an assertion that may confirm what De Freitas contends, although it is early days yet, and certainly too early to suggest that the cause of shifts in numbers is purely related to an over abundance of shopping space available to shoppers.
The issue of convenience is now in sharp focus. Khalid Mohamed of property economists Rode and Associates states that "people will always go where it is most convenient", and points to the success of Cavendish Centre as a retail outlet that has huge popularity because of its access by car, train, taxi and even bus.
And Mohamed points out that there are other issues in the melting pot before any conclusions can be drawn: "For a start, most of the other centres were built around the notion of convenience. That is why they were built in residential areas.
"Secondly,' he says, "shopping implies looking at options and selecting the one most suitable for yourself. There is effort involved. This effort is perhaps taken to the extreme by the fact that Canal Walk is so big. However, personal shopper preference may make this view redundant. We shall have to wait and see".
More seriously, says Mohamed, is the centre's location. "It is set in the middle of a number of quite different communities, and the tenant/customer mix still has to be proven", he says.
"There will be visitors from all over the place, each with different perspectives, yet the centre seems tilted towards upper middle class shoppers.
"Will shoppers break old habits to bypass Cavendish Centre, Kenilworth Centre, and Somerset Mall to regularly visit Canal Walk", asks Mohamed. "Early indications are that it will not be done that easily. And are there enough shoppers in number to make the marketing worthwhile?"
If it emerges that there are not enough shoppers per square meterage, then implicitly, the centre's size may end up militating against its own vendors, unless the centre as a whole can attract people from other centres. Unless Canal Walk overcomes these challenges, the contention may well be made later that with the addition of Canal Walk to the roster, it is simply a case of too much shopping space, says Mohamed.
The Bayside Centre might take strain as it is within the target area, and generally does not offer much else other than convenience. The Waterfront remains untouched as a tourist destination offering a different fare to Canal Walk. Canal Walk is a strong contender in shopper-tainment, but one must be wary of its role in the overall success of the centre.
"We had an Egyptian theme at Sanlam Parow centre and just about every centre has, or has had some form of entertainment on offer," says Mohamed.
But the problem with the entertainment aspect of shopping is that it is easily copied or emulated, and it tends to hold the attention of shoppers for only so long.
De Freitas contends that it will take another six months for Canal Walk to settle down, and only then can the centre's success be accurately assessed. "They have to do what we've been doing for years now", she says, "and that is to get through the quiet months, while remaining profitable". Radowsky allows for 15 to 18 months before one can truly understand the real dynamic of the shopping centre situation


Publisher: Cape Business News
Source: Cape Business News

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