The 2024 festive season was a bumper period for rural, township and regional shopping malls.
Vukile Property Fund, property developer Exemplar and Flanagan & Gerard all saw a jump in trading density and footfall in December.
Flanagan & Gerard Group, whose portfolio includes Morningside Shopping Centre and Mall of the North in Limpopo, Ballito Junction in KwaZulu-Natal and Boardwalk Mall in the Eastern Cape, said trading activity grew on average by 6% compared to the same period in 2023.
MD Paul Gerard said this outpaced inflation in 2024, signalling a recovery in consumer sentiment and spending.
“The success of the season becomes more robust when looking at the individual performance of Flanagan & Gerard’s shopping malls, specifically Johannesburg-based The Neighbourhood Square, which pencilled in a pleasing 17.7% growth in trading activity. Larger shopping malls in coastal areas also outperformed, with Ballito Junction up almost 7%, Boardwalk Mall growing by 9% and the Mall of Mthatha was up almost 10%.”
Gerard said a large chunk of the sales generated by the malls during the festive season came from supermarkets, indicating that consumers prioritised spending on grocery items. However, categories including clothing, fast food and liquor recorded positive growth.
“Underscoring this, Flanagan & Gerard’s top-performing tenant across its portfolio (in terms of retail sales) was the Checkers FreshX concept store at Ballito Junction.”
Gerard said foot traffic increased by 1.1% compared to 2023, with shoppers’ spending and basket sizes increasing at higher rates than foot traffic. He said a contributing factor was the popularity of convenient delivery services such as Checkers Sixty60, Woolies Dash, and Pick n Pay ASAP.
Vukile Property Fund’s retail portfolio achieved 6.1% growth in trading density during November and December, compared to the same months in 2023. Vukile owns rural and township malls including Daveyton Shopping Centre, Dobsonville Mall and East Rand Mall in Gauteng.
The fund said that during the two-month period, township shopping centres were the best performing segment, with a growth in trading density of 9.6%. Rural and urban centres delivered trading density growth of 5.9% and 4.6%.
“Retail categories with the most significant turnover growth were unisex wear, groceries, fast food and home furnishing, which all recorded substantial, sustained growth,” said Laurence Rapp, CEO of Vukile Property Fund.
For township and rural mall owners Exemplar, trade exceeded expectations
For township and rural mall owners Exemplar, trade exceeded expectations during this period.
CEO Jason McCormick said the portfolio’s anchor tenants, including Shoprite, jumped 21% to set a record of R1.22bn turnover in December.
“Footfall growth mirrored the turnover growth with footfall across the portfolio increasing 24%. Phola Mall in KwaMhlanga was the top performer, exceeding over a million feet for the period, with Edendale Mall, KwaBhaca Mall, Mall of Thembisa and Theku Mall all hovering close to the million mark in December,” said McCormick.
Despite shopping malls recording high footfall, festive trading updates from JSE-listed food and clothing retailers were a mixed bag. Mr Price, Pepkor, Shopite, Pick n Pay, Boxer, TFG, Truworths and Woolworths have all recently published their performance over the past few months. Stephan Erasmus, investment analyst at Anchor Capital, said food retailers were performing well, but some clothing and discretionary retailers were struggling with weak demand and promotional pressures.
He said the recent 25 bps interest rate cut would likely enhance consumer confidence by lowering financing costs, which could boost demand, especially in segments more sensitive to credit changes.
Paul Steegers, senior research analyst, at Nedbank Corporate & Investment Banking, said the trading updates appear to have been mixed. “I think there were expectations in the market that Christmas and Black Friday would be good. We saw improving retail sales in October and November, but December was weaker than expected for some.”
He said on balance the food retailers had seen decent updates while clothing retailers were more mixed, with Mr Price and Pepkor showing the best growth. Truworths and TFG weakened, especially in December.
Steegers said the value players continued to do well, thanks to consumers looking for value for money as household budgets are still constrained, even though interest rates have come down. “Margins have held up; in fact, we have seen better gross margins coming through, which is commendable,” he said.
Analysts are cautiously optimistic about the outlook for the sector. Steegers said this is driven by expectations of accelerating GDP growth, lower interest rates and low inflation, especially food inflation, though that could start to pick up again.
For Erasmus the outlook for food retail is positive, with volume gains and strategic pricing driving sales growth. “However, margins may come under pressure if cost inflation outpaces the minimal price increases.”
For clothing retailers the interest rate cut is expected to lower financing costs, which could support a gradual recovery in discretionary spending.
With additional reporting by Thabiso Mochiko
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