More than 97% of South African retail sales in 2020 took place in the physical realm, where customer experience is the defining success factor. So notes Ulana van Biljon, COO of SA REIT Emira Property Fund (JSE: EMI), who believes that the key to success for retailers and mall owners in 2022 is engaging, enjoyable experiential retail.
E-commerce – which accounted for 2.8% of retail sales in South Africa in 2020 according to World Wide Worx – has grabbed more than its fair share of headlines in recent years. Yet, even with forced retail closures during the initial COVID-19 lockdowns, local customers voted almost unanimously for in-store shopping with their feet and wallets.
Despite its undisputed popularity, the tremendous success of physical retail in South Africa has also received less attention than the few failures in the market. In these cases, the pitfalls of outdated business models have proven to be more damaging to local retail than the impact of online shopping.
“The experience economy – being in a physical space and enjoying that space – is what South Africans crave and value the most. People go to malls and stores not just for shopping but for the experience. With South Africans almost exclusively shopping in-store, mall owners and retailers that continue to invest in the experiences they offer, as well as the technology that can help them achieve this, will inevitably be market leaders,” said van Biljon.
Emira invests in a balanced portfolio of retail, industrial, office, residential and international property assets. Its directly owned shopping centres include, Wonderpark Shopping Centre and Quagga Shopping Centre in Pretoria, Randridge Mall in Johannesburg, Market Square Shopping Centre in Plettenburg Bay and Granada Square in Umhlanga. Emira holds 49.9% of Enyuka Property Fund, a venture with One Property Holdings which owns 24 rural and lower LSM retail properties. Emira is also co-invested in 11 grocery-anchored, open-air retail centres in the USA with its in-country partner Rainier Group.
Van Biljon points out that when the arrival of the pandemic created a gap in the market for nimble players to accelerate e-commerce in South Africa, the most rapid responses came from the same retail tenants that have some of the biggest footprints in Emira’s malls. Shoprite, Pepkor, Pick n Pay, Woolworths, The Foschini Group, Massmart, Mr Price and Clicks, are all e-commerce success stories or are expected to introduce improved e-commerce solutions soon.
“Many of the newest online on-demand grocery shopping offerings, such as Checkers Sixty60, Pick n Pay asap, and Woolies Dash, involve shopping from the shelves of their physical shops, making brick-and-mortar stores even more relevant in today’s market,” says van Biljon.
“It is now widely accepted that a visit online is actually the first step in a customer’s journey to a physical store in many retail categories. So, when they step through those doors, it is vital that the experience that greets them lives up to, or exceeds, their expectations. In-store experience ultimately converts a potential shopper into a customer, and, in the best cases, a repeat customer.”
Even with the advances in online retail, many shopping centres and communities in South Africa are still hardly touched by e-commerce in 2022. These are places where people go to buy and browse but also to meet, socialise and be entertained.
“Certainly, in the South African context, enhancing in-mall and in-store retail experiences to meet the modern expectations of customers, and create great experiences for them, should be a key focus for retailers and retail landlords. We expect some exciting developments in this regard in the year ahead,” concludes van Biljon.