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Property: JHI Property Tips Series: Surviving in retail

 





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Retail is a tough sector to be in at the moment. The harder pill to swallow is the fact that the prevailing market conditions look set to stay that way until at very least the second quarter of 2009.

With reports of a global retail slump combined with rising interest rates and inflationary pressures, South African consumers have had to cut back. The result: retailers are feeling the pinch; shopping centres are therefore not showing growth. Investors and/or owners will therefore have to tighten their belts or look at strategic changes to maintain their position.


JHI have highlighted opportunities that should be considered:

1) Look at the under-serviced market

Opportunities exist in areas previously known as 'townships', as well as the remaining rural South Africa. Many of these areas now have fast-growing residential populations, which are highly aspirational and want the same kind of shopping experience that they would get in a mall in a more affluent area. Although timing is an important factor in the success of such shopping centres, these developments are very real opportunities to explore.

2) Look at mixed-use developments

The growing trend in South Africa is 'mixed-use developments', which was made popular overseas e.g. Europe. The reasoning behind this is due to the move to 'densify' urban areas, and the need to cope with ever increasing traffic congestion on the roads.

Case in point is the mixed-use development at Greenstone Hill near Modderfontein, where a cross section of the population is being established around the node. The result: Greenstone Shopping Centre offers a full range of stores - from PEP to more exclusive boutique shops to cater for the broad LSM group. By implementing this strategy, Greenstone Shopping Centre is currently in the rare position to achieve real growth.

3) Know your market

The truism that knowing the market is critical has never been more important than now. Shopping centres only have a short space of time to succeed, and achieving a balance between attracting new customers, and keeping existing customers coming back -- which is critical. One simply needs to spend more time on marketing in shopping centres, and the marketing done must inform the relevant parties about their customer and give an idea of how their needs change.

As a property services company to over 225 shopping centres, JHI run campaigns that allow them to gain insights into the market and make recommendations to the property owner based on those findings. This has become a critically important service in a market which has become hugely competitive.

4) Plan for the up turn

Times may be tough now, but the inevitable swing of markets will see the country in an upturn in time. Today it takes 9 to 18 months to plan a new shopping centre, and a very real opportunity is to start planning now for when the market does turn. Specialist consulting services like JHI have solutions to enable development to happen on a scaled basis rather than a full blown development -- and opportunities like this are often seen and realised by nimble independent developers.

The trends today point to the fact that South Africa is still a growing consumer market and that opportunities do still exist. With continually changing and growing lifestyle demands, there will always be new and exciting opportunities for the country -- potential developers/ investors just have to keep a look out for them.


 
 
 
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