Rural retail still tops in Eastern Cape 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.
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