Impact of Township Shopping Centres – July, 2010
CHAPTER FOUR: RETAIL SUPPLY TRENDS 4.1
INTRODUCTION
As evident from the previous chapters, second economy areas have experienced increased public and private sector investment over the past 10 to 15 years. The dominant type of private sector investment is in retail centre development. This chapter aims to provide sufficient background to the development trends pertaining to retail supply within the rural and township areas of South Africa – on a national as well as on a provincial basis. The chapter is structured in terms of the following headings:
Defining Retail Role of Retail Centres in Nodal Development National and Provincial Development Trends in Second Economy Retail Centres General Supply Trends and Centre Performance Initial Retail Centre Development Indicators and Risk Profile
4.2
DEFINING RETAIL
Retailing involves the sale of goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses48. In commerce, a "retailer" buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities to the enduser. Retail establishments are often called shops or stores. Retailers are at the end of the supply chain. Manufacturing marketers see the process of retailing as a necessary part of their overall distribution strategy. The term "retailer" is also applied where a service provider services the needs of a large number of individuals, such as a public utility, like electric power49. In short retailing is also defined as: “The sale of goods or www.freedictionary.com
commodities
in
small
quantities
directly
to
consumers”-
“Retail is the sale of goods to end users, not for resale, but for use and consumption by the purchaser. The retail transaction is at the end of the supply chain. Manufacturers sell large quantities of products to retailers, and retailers sell small quantities of those products to consumers” – http://retailingindustry.about.com “Market for private customers and clients in small and medium enterprises business” – www.group.abnamro.com Retail sales refer to the amount of money spent on a variety of consumer goods. This includes, for example, non-perishable products, footwear, jewellery and hardware. Retail sales serve as an indication of the expenditure in certain categories. Retail sales figures provide an indication of current demand for specific categories of consumer goods, which can be divided into three broad groupings.
48 49
Source: en.wikipedia.org Source: en.wikipedia.org 54
Impact of Township Shopping Centres – July, 2010
1. Durable goods
Durable goods include goods such as furniture, household appliances and personal transport equipment.
2. Semi-durable goods
Semi-durable goods include products such as footwear, clothing and household textiles.
3. Non-durable goods
Non-durable goods include food, beverages, and tobacco, and household consumer goods, medical and pharmaceutical products.
The demand and supply side of the retail market can be defined in terms of the following: Defining Demand Retail demand depends on a variety of customer-related aspects. It can be conceptualised as follows:
Dret = f {Po; P%; Q; Y; Re; Cp; Sf} Where: Po P% Q Y Re Cp Sf
= = = = = = =
Population size Population growth Existing quality of retail space Household income Household expenditure patterns Consumer preferences Seasonality factors
Defining Supply The supply of retail markets entails the following:
Sret = f {Dret; GLAret; R; Sc; Cc; Lu; Ia; Sp; Vret } Where: Dret GLAret R Sc Cc Lu Ia Sp Vret
= = = = = = = = =
Demand Current rentable/useable area Rent/m2 Competition Construction cost Surrounding land uses Infrastructure availability Speculative climate Vacancy
Over time the South African Council of Shopping Centres has developed a shopping centre hierarchy – detailing the different types of retail centres and the elements that define them. These range from small free standing centres to super regional centres, value centres, speciality centres, hyper centres and lifestyle centres – refer to Table 4.1. To a great extent this hierarchy has developed within the urban areas of South Africa.These areas are characterised by a generally mature consumer market able to absorb and carry a large amount of retail floor space, which can be structured in terms of more than one level of the general retail hierarchy.
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Impact of Township Shopping Centres – July, 2010
Table 4.1: SACSC Retail Centre Classification Type of Centre
1
Median Travel time (minutes)
