Despite concerns about an oversupply of shopping centres in South Africa, new developments continue to emerge in response to demographic shifts as retailers push deeper into rural towns and townships. Store sizes are, however, likely to be smaller than before.
In the Western Cape, the R1bn Groot Phesantekraal View shopping centre opens in Durbanville, Cape Town, this month, and Winelands Square in Paarl is set to open later this year. In KwaZulu-Natal, the R1.3bn Westown Square in Shongweni, west of Durban, was recently launched as part of a R15bn mixed-use development.
In Joburg, Azrapart, the co-owner of the country’s largest shopping centre, Fourways Mall, has been placed in business rescue after a significant tenant drop due to the pandemic and the weak retail environment. However, with new property management in place, reported vacancies are declining.
South Africa has more retail space per capita than most emerging markets and even some developed ones. Pick n Pay CEO Sean Summers has cautioned that the continued proliferation of new stores at the current pace could result in unsustainable retail capacity. The country has more than 1,420 shopping centres that are 5,000m² or larger.
While Pick n Pay and Spar have slowed their expansion plans as part of broader turnaround strategies, value-focused retailers such as Boxer, Mr Price, TFG and Pep continue to grow their footprints. According to Summers, it’s not that store openings will decline. “We may see more stores overall, but they’ll be smaller,” he says.
In some cases, landlords have been reluctant to lease space to Pick n Pay, arguing that the brand doesn’t drive sufficient foot count. But Summers believes this perception is outdated, noting that landlords are increasingly approaching the group in search of greater tenant diversity. “Changing the narrative takes time.”
Some say Pick n Pay’s strategic downscaling marks a turning point for the local retail sector. “They’re not just downsizing for the sake of it,” says John Jack, CEO of Galetti Corporate Real Estate. He says the impact is going to be felt across the board. Malls with underperforming anchor tenants could take a hit, but savvy landlords and developers will see an opportunity.
“The shift mirrors what we’ve seen in the US and Europe, where retailers are downsizing their footprint to boost efficiency. It’s not about having the most stores, it’s about having the right stores,” says Jack. He says it’s a wake-up call for property owners to adapt to new formats, invest in flexibility and think beyond traditional leasing models.
Mr Price CEO Mark Blair offers a different view, arguing that the issue isn’t too much space, but rather too little quality space. He says the group screens heavily and rejects 60%-70% of sites offered by landlords. Mr Price Apparel plans to open 40 stores next year, while Power Fashion, part of the Mr Price Group, could triple in size. He also notes that retailers are shifting expansion from mega-malls to high streets, country towns and strip malls. The group is aiming to open between 180 and 200 new stores next year.
In deep rural areas, people still need to take two taxis and spend up to R50 to get a complete retail experience
— Itumeleng Mothibeli
According to Bloomberg, South Africa’s top five retailers opened more than 700 stores last year and have added 230 so far this year. But questions remain over returns. Charles Allen, a London-based analyst at Bloomberg Intelligence, says sales densities (a key retail metric that measures sales generated per unit of sales space) must be much lower than in the US due to weaker per capita spending. “It makes you wonder how people eventually are going to justify the return on the investment.”
Meanwhile, Shoprite continues to expand at pace, adding a net 248 new stores in the 26 weeks ended December 2024, growing existing trading space by 5.6%. More than 100 stores are planned for the rest of the financial year.
Some believe Checkers is intentionally cannibalising its own stores in the short term to accelerate pressure on competitors, accepting lower returns now for longer-term dominance. The group declined to comment on this. In December 2024, there were 2,485 stores in the group.
Townships and rural areas are a growth frontier. At Vukile Property Fund, which operates across sectors, its township and rural malls have outperformed over the past five years.
“In the urban space, we may have sufficient retail, with limited opportunity in convenience retail. But many areas are still significantly underserved,” says Itumeleng Mothibeli, MD for Southern Africa at Vukile. “In deep rural areas, people still need to take two taxis and spend up to R50 to get a complete retail experience.”
Over the past 18 years, Mothibeli says, he has seen township tenant mixes transform. Increasingly, brands previously absent from these areas are showing up. In Gauteng, for example, “township residents work in Sandton. If your Sandton store offers something different from Soweto, you lose brand equity. When you deliver the same quality in their community, they tend to support you.”
Apparel chains, including Mr Price’s Studio 88 and TFG’s Sportscene, are now commonplace in small towns and previously underserved areas. On the grocery front, Boxer is expanding rapidly, while Shoprite continues to grow through its core and Usave brands.
Mothibeli says the more participants in a category, the better it is for the shopper, “and we exist for the shopper”.
Robbie Proctor, investment analyst at Anchor Capital, says retail capacity has overshot in the middle to upper segments, but real opportunity lies at the base of the market. Boxer, Pepkor, Shoprite and Mr Price are formalising the market by entering township and rural malls.
He notes that Spar is performing well in rural and township areas, while Spar and Pick n Pay are under pressure in mid- to high-income segments, due in part to the performance of Checkers and Woolworths.
“The momentum of the Checkers brand over the past few years has emboldened management to capitalise on the problems experienced by Pick n Pay, through accelerating its urban store rollout despite the risk of cannibalisation of existing stores. Management might see it as a good opportunity to put their foot on Pick n Pay’s throat.”
Meanwhile, value fashion is booming. Mr Price Group’s store expansion is largely focused on Power Fashion and Studio 88.
According to the South African Property Owners Association, a significant portion of retail space is concentrated in metros — with Gauteng alone accounting for about 40%. Data shows that while shopping centre growth has slowed, trading density hit a record R42.37/m² by March — 22% above pre-pandemic levels. Retail turnover is outperforming broader economic indicators, even as growth moderates.
Still, there are signs of strain. Eileen Andrew, vice-president of client coverage at MSCI Real Estate, says rental growth is outpacing sales growth, threatening tenant sustainability. “There are pockets of resilience, but the overall picture is one of caution.”
Gavin Jones, head of retail asset management at Growthpoint, disagrees that the shopping centre market is oversaturated. He sees shortages in township and rural retail, and notes continued demand for convenience retail centres in metros.
“Malls that are struggling tend to be in declining areas and where changing demographics require redevelopment or realignment of tenant mix to customer needs. Retailers are chasing opportunities in growth nodes,” he says.
Jones notes a shift towards community-orientated retail, with centres adding gyms, entertainment, leisure and mixed-use offerings to draw customers back from online channels.
Jones says Shoprite Checkers has gained market share, with a shift away from Pick n Pay — though this has stabilised. Aside from Pick n Pay, other supermarkets have been trading at about 8% year-on-year growth in trading densities.
According to NielsenIQ, while Shoprite grew sales by 14.6% in its 2024 interim results, the rest of the South African grocery market grew only 7.6%. And though exact percentage figures weren’t provided, the group declared this period as showing “record market share growth”.
Shoprite Checkers and Pick n Pay together take up about a fifth of Growthpoint’s space and contribute 4%-5% of total sales in those centres. Jones says Checkers believes its on-demand delivery service is attracting new customers and increasing market share.
“They grow sales densities in new locations faster than in their mature ones — until saturation hits and shoppers won’t travel further.” Jones expects further development, though at a slower pace.
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