Think Again: Expanding networks, industry inclusivity and the future of SA retail

Written by Vuso Majija, Executive Director of Fortress Real Estate Investments Limited and President of the South African Council of Shopping Centres (SACSC).

As the President of the South African Council of Shopping Centres (SACSC), I opened the recent 2024 Congress with a keynote address. The theme – “Think Again” - reminded me of the old TV advert which had the tagline “Think again, think McCain” – my kids love their chips! The brussels sprouts… not so much! As the story goes, the company’s success wasn’t because they were great financial engineers, or because they had the very best factories, or because they built a sophisticated strategic plan. It was mostly because they built a team of truly great people who cared. People who didn’t focus on power, titles and money. They just wanted to get things done quickly, and they wanted to make a difference. These people shared a dream, they worked hard and were dedicated to success and achieving their goals. This is how I would describe the people in the South African retail industry.

In my speech, I asked the delegates to:

Think Again: Are you truly understanding your customers' needs?

To Think Again: Are your operations sustainable and eco-friendly?

To Think Again: Are you leveraging the latest technology to enhance customer experience?

To Think Again: Are you ensuring a safe environment for your customers?

To Think Again: Are you actively engaging with and supporting your community?

About SACSC and the work it does

The SACSC was established in 1991 and remains steadfast in its mission to foster unity, connectivity, and communication among members. I often hear people say (with pride) that, since the establishment of SACSC, they have only missed one or two congresses. This is a huge compliment to SACSC because it means that people value the work that the congress does, and it keeps attracting them to come back.

Personally, I have always found these networking opportunities beneficial because you get to interact with industry colleagues and build professional and rewarding friendships. The personal relationships that I have made through SACSC has made communication with colleagues easier and resulted in many deals being made.

The relationships we form at the SACSC congresses help us find common ground that enables us to move the industry forward together. Something that stuck with me during the peak of COVID-19 was the tag line used by members of the group - “We are all in this together.”

This reminded me of one of my favourite quotes from Dr. Martin Luther King Jr., "I cannot be what I ought to be until you are what you ought to be, and you cannot be what you ought to be until I am what I ought to be." This sentiment highlights the connected nature of the retail industry - from retailers and developers to the professional teams and property managers, to marketers, we are all reliant and dependent on each other to deliver on the needs of shoppers.

We must expand on existing connections, forge new connections, exchange ideas, and explore potential opportunities. Every interaction promises to create jobs, open new stores and shopping centres.

The retail industry has a rule of thumb – for every 30m2 of the gross lettable area in a shopping centre, one job is created. In a 20,000m2 shopping centre, up to 600 people might be employed. Mall of Africa (131?000m2) employs more than 6?000 people for example. The people who work at Sandton City (137?000m2) daily exceeds 7?000 people. “Think Again” about the impact that this industry has on communities and how many people would have benefited from a deal that you have done.

I always look forward to reading the financial statements of retailers - the Shoprite report, which was released in March, stated that for the six-month reporting period, the group opened 197 new stores and created 2,617 new jobs, Mr Price released a trading statement recently which stated that 35 new stores were opened in the last 3 months. TFG, Truworths and all other retailers who report publicly will give similar stats. All of these store openings come with the delivery of jobs. That is why it’s important that people here today maximize the opportunity to strengthen their relationship with each other so that we can create shared growth.

By embracing this year's theme, "Think Again," let us challenge ourselves to embrace diversity and inclusivity.

In line with our commitment to inclusivity, SACSC has embarked on several initiatives:

• There are 6 retailer representatives on the SACSC board at present, we have previously struggled to attract retailers to sit on the board. This is a positive step as we continue to diversify representation on the board.
• We have extended invitations to over 30 independent retailers who are not yet affiliated with SACSC. We hope that they find this Congress insightful and useful to their business and that they will become members in the future.
• SACSC has recently announced a mentoring and mentee initiative. The purpose is to facilitate the personal and professional growth of individuals in the industry by providing guidance, support, and the transfer of knowledge from those experienced in the industry to those who want to develop themselves further.
• We also extended invitations to institutions of higher learning, and we were joined by a number of students from UCT at this year’s Congress. The reason is to showcase our industry to future potential members.

So how do we as an industry think about upskilling graduates and building a pool of skills for the industry? ?“Think Again”. I know that some of our colleagues at Vukile, Pepkor, Growthpoint, ourselves at Fortress have internship programmess. I’m sure there are other companies that have similar programmes. I would like to encourage companies who don’t have internship programs and have the capacity to also consider this approach. This will help to build skills and experience; benefitting us all.

All of these initiatives will help to make the “circle bigger” to ensure collective impact.

State of the shopping centre industry in SA

Turning to the current state of the shopping centre industry in South Africa, we acknowledge the challenges posed by economic uncertainty and external factors of the last few years, such as service delivery issues and energy and water constraints. We have had to respond to some of these challenges by investing in solar power, batteries, generators, backup water tanks and pumps etc. all with the aim of minimising the impact.

I thought this quote from a Deloitte report correctly summarised the state of the global retail industry

“After a prolonged period of suppressed consumer spending, macroeconomic and geopolitical uncertainty, and rapid changes in consumer behaviour (among other things), the global retail industry stands at a crossroads; forced to make decisions about long-term investments while at the same time managing the rising cost of doing business and a decline in the spending power of consumers”

Despite these obstacles, recent reports from listed retailers and listed property companies in South Africa indicate a resilient industry with positive turnover and stabilised rentals.

So, in my view, the shopping centre industry is in a very stable condition and ready to come out firing as and when the economy improves. There are quite a few things that make me optimistic about the direction of economy and by default the direction of the shopping centre industry.

1. The promise of political certainty that GNU represents.
2. The decrease in load shedding as Eskom starts to stabilise the grid, and
3. The collaborative efforts between government and the private sector, like Project Vulindlela.

JP Landman recently quoted the Bureau for Economic Research, which stated that if Project Vulindlela is implemented, the economy could grow by 3.5%. At 3.5%, the economy would be growing at twice the speed of our population growth rate, which last happened 20 years ago.

These all certainly pave the way for sustainable growth and improved trading conditions. I know that there remain short-term challenges that we will have to deal with, but I believe the worst is behind us, and the time has come to “Think Again” and focus on the long-term growth of our industry.

To quote the Deloitte report again, “Retailers can make decisions today that will likely stand them in good stead for the decade to come. The opportunities for growth mean that in 10, 20, or 30 years’ time, we could look back at 2024 as a transformational year for retail, but another year of stagnation and a short-term focus on the challenging economic environment could leave retailers behind the curve for years to come.”

Perhaps it’s time to start thinking again about those projects that may have been postponed or put on hold due to the state of the economy.

During June 2023, SACSC in collaboration with Phil Barttram released a research report on the shopping centre development pipeline in SA – they found that there were planned developments of 1.7 million m2 (101 shopping centres), 23 of those centres were anticipated to be complete by 2024, leaving 78 shopping centres still in the? proposed phase. With the improving economy and political certainty, some of these proposed 78 shopping centres could be realised.?

I believe we have a great industry full of good people who can make things happen. I have no doubt that in the next few years, we will be in a much stronger position.

The bright future of shopping centres in South Africa lies in their ability to evolve into dynamic community hubs that seamlessly integrate retail, entertainment, and social experiences.

?This means creating spaces that are not only aesthetically pleasing but also highly functional and adaptable to various events and activities. Incorporating digital advancements, such as augmented reality for enhanced shopping experiences, smart parking solutions, and robust online-offline integration, will be essential.

Furthermore, sustainability should be at the forefront, with green building practices, energy-efficient systems, and eco-friendly initiatives becoming standard to attract the environmentally conscious consumer.

To achieve this vision, we must act now. It is imperative for industry leaders, stakeholders, and policymakers to collaborate and invest in these transformative changes.

Together, we can create a future where South African shopping centres are not only places to shop but destinations that inspire, connect, and uplift our communities. Let's seize this opportunity and lead the way in redefining the retail landscape.