SA consumers, many of whom are no doubt desperate to escape the confines of their homes following more than two months of lockdown, are flocking back to shopping centres.
Morné Wilken, CEO of JSE-listed mall owner Hyprop Investments, says so far in June the foot count (number of visitors) at some of its shopping centres is only about 2% below that recorded for the same period last year.
"So some of our malls are nearly back at pre-Covid levels," he says.
Hyprop owns several of SA’s largest retail centres, including Rosebank Mall in Joburg, Clearwater Mall in Roodepoort and Canal Walk in Cape Town.
Shoppers are returning to the malls after the government eased of lockdown restrictions to level 3, which allowed most retailers to reopen from June 1.
Wilken says close to 90% of tenants in most of Hyprop’s malls are trading again.
Foot count at Hyprop’s portfolio as a whole is still down 24% for the first seven days of June (year on year), though it showed a marked improvement on April and May, when visitor numbers dropped by 71% and 39% respectively.
Wilken believes life under lockdown has amplified the need for social engagement, which malls provide the ideal platform for.
He says a visit to the mall is no longer about buying things but rather an opportunity for people to be entertained and connect with others in a safe environment.
"Our malls play an important role in their communities and we believe they will continue to do so post-lockdown."
Wilken adds: "A number of our tenants are reviewing their business models in light of the pandemic and we are working closely with them to design and recalibrate our collective offering."
Other mall owners are also seeing a steady return of shoppers.
Fortress Reit owns 60 malls across SA. Many of these serve rural and lower-income communities. Vuso Majija, head of retail property at Fortress, says the foot count in its portfolio for the first week of June is roughly 20% below that recorded in the same period last year.
Early-June numbers are up markedly from May, which in itself recorded a 43% increase from April, he says.
Majija says landlords have been hard at work to ensure their malls meet health and hygiene requirements.
"We expect that as consumers regain confidence in the safety of our malls this trend will continue and we will finish the year strongly," he says.
Estienne de Klerk, SA CEO of Growthpoint Properties, the country’s largest landlord, confirms that malls in rural and nonmetropolitan areas have recorded particularly strong foot count and trade in the past few weeks.
He ascribes that to many South Africans, including recipients of social grants, still getting paid despite the shutdown of nonessential businesses from March 27.
"In fact, some people have more spending money now given savings made on transport costs during the April and May lockdowns," says De Klerk.
While malls are seeing a relatively fast recovery in visitor numbers, that doesn’t mean that spending will necessarily bounce back equally fast.
FNB property strategist and economist John Loos argues it could take at least three years for retail sales to recover to pre-Covid levels.
He says fear of crowded public spaces may well be less of a threat to SA mall owners than their US and European counterparts due to what is still the relatively low rate of deaths linked to Covid-19.
Even so, "virus-related consumer caution" is likely to postpone the purchasing of nonessential and luxury goods as well as lifestyle spending (dining at restaurants and visiting pubs, cinemas, ice rinks, bowling alleys and gyms) for as long as the virus lingers.
There is also the fear factor regarding the potential deterioration of household finances on the back of more job losses and business failures, which Loos believes could prompt a significant portion of South Africans to spend more cautiously over the coming months and save more instead.
It’s difficult to accurately predict the extent of the virus’s impact on consumer confidence and sentiment. But Loos says it is probably unrealistic to expect spending to return to pre-Covid levels as soon as the lockdown is fully phased out — presumably before year-end.
He forecasts retail sales to dip by roughly 7% this year, followed by a 3.2% and 0.5% post-lockdown rebound for 2021 and 2022 respectively.
"So while the retail economy will indeed improve significantly from low lockdown levels next year, by 2022 the level of real household consumption expenditure will still be 3.54% below the level seen in 2019," says Loos.
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