Redefine Properties, which owns many of South Africa’s top shopping malls, has announced changes related to Pick n Pay, Game, Ster Kinekor, and Edgars.
Redefine Properties owns Centurion Mall, Blue Route Mall, Benmore Centre, Centurion Lifestyle Centre, Cradlestone Mall, and East Rand Mall.
Other retail properties in its portfolio include Kyalami Corner, Goldfields Mall, Golden Walk, Kenilworth Centre, and Horizon Shopping Centre.
In its Capital Markets Day presentation to investors this month, Redefine Properties said it would reduce the space rented to four big retailers.
- Pick n Pay’s space across its shopping centres will be reduced by 10,000 square meters.
- Edgars’ space has been reduced by 4,500 square meters and will be reduced by another 3,000 square meters.
- Game has closed one store, and the space has been reduced by 9,000 square meters.
- Ster Kinekor’s cinemas will be reduced from six to two in the next financial year.
Redefine Properties said the 10,000 square meters it is taking back from Pick n Pay will optimise space in its shopping malls and increase trading density.
Pick n Pay has been a drag on many shopping malls where it is the anchor tenant as it does not drive as much foot traffic as Checkers.
It also aligns with Pick n Pay’s strategy to reduce its retail footprint and modernise its stores requiring less space.
The company added that the space taken back from Edgers has already been relet at a higher gross market rent (GMR).
The same happened with Game, where the 9,900 square meters taken back from the retailer has been relet at a better rate.
It highlighted Mall of the South, where it used space taken from Game and let it to Shoprite and other value-focussed retailers.
This helped the company to improve its trading margin from 81% to 85% and trading density from R29,900 per square metre to R34,800 per square metre.
It explained that closing Ster Kinekor cinemas is mitigating rental income risk as the additional space has already been relet.
Online shopping affecting shopping malls and retail behaviour
Redefine Properties highlighted in its Capital Markets Day presentation that online retail presents opportunities and risks to shopping centres.
It said online apparel sales account for 4.5% of the South African retail market and that 60% of the sales are through omnichannel retailers.
Many online sales, including footwear, are much lower in South Africa than in developed markets like the United States and the United Kingdom.
“Pure online sales, at 1.9%, is still a small percentage of the total market,” Redefine Properties said. However, it is set to grow significantly.
The company believes omnichannel offerings will dominate online sales in South Africa, where people search online and buy in-store.
“Online essential services will continue to grow due to new stores by grocers and pharmacies,” the property owner said.
To adjust to the changing market conditions, Redefine Properties said it is important to ensure stores are the right size and that the right merchandise is offered.
It is focused on attracting omnichannel retailers to its shopping centres to capitalise on the growth in online shopping.
It is also improving its tenant mix by attracting “experienced-based retailers” to its properties.
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