Trouble for South Africa’s biggest shopping malls
Many of South Africa’s biggest malls, like Fourways, are struggling from empty storefronts and a declining customer base as retailers struggle to remain competitive in South Africa’s fierce middle market.
This is according to Bronwyn Williams, Partner at Flux Trends, who explained on The Money Show with Stephen Grootes that even though some bigger malls like Sandton and Rosebank are looking fuller than ever, other suburban malls have been struggling.
These include malls like Northgate, Eastgate and Fourways.
Fourways Mall has particularly faced criticism due to numerous store vacancies, which have caused customers to shop elsewhere.
Due to the mall’s difficulties, its owners have had to sell other assets to keep Fourways afloat.
According to Williams, the difference in popularity between some of these malls is very indicative of what is currently happening in South Africa’s market.
She explained that retailers who cater to the middle market are the “soft underbelly” of the industry. “That messy middle is struggling quite a lot.”
Part of the reason for this is that customers are being encouraged to shift their mid-market purchases to online platforms rather than physical stores.
Williams said the online marketplace is still relatively small, only making up about a single-digit percentage of the country’s overall retail marketplace. In other words, there is still plenty of room for this market to grow.
Conversely, retailers that cater to the low- and high-end of the market are seeing real increases in foot traffic.
Customers looking for affordable items and discounts may be more inclined to go in-store to take advantage of Black Friday deals, for example.
Shopping in-store also has the added benefit of ensuring that you do not fall victim to many of the new digital scammers taking advantage of the e-commerce space.

On the higher end of the market, there is a certain level of social status that goes along with being seen in retail spaces, Williams explained.
“You can get that taste of the luxury lifestyle, even if you are cutting your budget back at home.”
While the luxury, aspirational market and affordable markets are growing, “that middle market is and probably will be struggling for some time to come”.
The middle market cannot compete on price or luxury, and as a result, clients are choosing more convenient and efficient online shopping options instead.
Another challenge to this market is simply the high amount of retail competitors and malls that exist in South Africa.
“We have too much retail space in South Africa,” Williams said.
Prior to the COVID-19 pandemic, South Africa had the sixth-most shopping centre space in the world, according to a study by MSCI on behalf of the South African Council of Shopping Centres (SACSC).
“We certainly do not have the 6th biggest economy in the world, so we are quite spoiled for choice,” Williams added.
“But the question is, do we have the right retail space that is meeting not the market that marketers think we have, but the market that we really have – which is a very fractured marketplace?”
South Africa still ranks among the top countries for retail space per capita today.
In spite of this, the Financial Mail reported last year that there are at least 100 new shopping centres in the pipeline over the next three years.

“We have a tiny percentage of people at the top end of the income stream looking for a special elite experience, and we have a lot of really not very affluent people in this country that are still wanting to buy things,” Williams said.
“We don’t have retail stores in the right locations to serve people where they are at.”
“We have too much retail space trying to compete for that middle of the market, which quite frankly – from a marketing and economic perspective – barely exists in our economy.”
This does not mean that retailers should cut their physical presence altogether, Williams explained.
Physical stores still serve a valuable function, adding credibility to the business and allowing customers to browse products in person.
These storefronts can also serve the added function of making online deliveries more convenient.
“Instead, what we’re going to see is the big winners are going to embrace both the physical world and of course, the online world and find that happy balance there.”
Some retailers may even benefit from focusing entirely on their physical presence in the future.
In particular, luxury brands are likely to decrease their online presence going forward.
This is because much of the value that comes from purchasing a luxury product actually comes from the shopping experience itself, which is lost when the sale is made online.
While the democratisation that comes from the e-commerce market may benefit some sellers, it devalues expensive luxury goods.
For that reason, Williams explained that luxury brands will keep pushing customers to their storefronts, possibly even pulling online presence altogether.
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