Rural retail still tops in Eastern Cape

BRAND ACTIVITY

Jul 17th, 08:27

Compiled by Elizabeth Senger, Mediaweb

21 June 2013: The Eastern Cape, a region mostly overlooked by commercial property investors when compared with other parts of South Africa, is experiencing a sustained retail and property boom.

According to Galetti Broker and Eastern Cape commercial property specialist, Peter Coetzee, the trick however is to ensure a clear understanding of this market’s specific needs and consumer behavior patterns. Trading densities in the Eastern Cape’s small towns are enormous, and unlike South Africa’s retail centres that are often used for entertainment, they exist for the sole purpose of supply.

Says Coetzee, “We’ve seen a few ‘western’ shopping centres popping up in more rural areas throughout the coastal belt of South Africa, only to trade badly. Many of these centres sprout up in the small towns, expecting to pull trade away from the main street shops and completely change spending patterns.”

According to Coetzee, the problem is that the success of these centres is dependent on a convenience market. While high-income groups rank convenience as a top priority, the same does not apply to lower-income groups. “Lower LSM trade is entirely about price point and if a consumer can buy an item at a more competitive price on the other end of town, they will walk there to save a few cents on the Rand,” Coetzee explains.

Many of these shoppers also tend to stockpile and sell the goods on from small trading set-ups of their own in the rural environment, so it is of paramount importance that the offering be a hybrid of supermarket and ‘cash and carry’ to encourage the wholesale purchaser. A perfect example is Massmart’s Rhino Brand.

Another point of differentiation from consumers living in more urban areas is the motivation behind a visit to a retail area. More urban consumers will commute merely for entertainment, while for consumers living in rural areas, a trip into town will be with purpose.

Coetzee believes the rural retail centres situated in these small Eastern Cape towns will continue to trade well for the forseeable future. “Provided they offer the correct tenants for the market – the likes of competitively priced supermarkets, hardware stores, funeral services, alcohol retailers, banks, clothing retailers and butcheries – and take advantage of the unique shopping environment, they’ll meet the needs of their customers.”