Shopping malls must adjust to lifestyles changes to survive

Two Rivers Mall

Emerging lifestyle trends and demands of modern living are steadily transforming the way people live, shop, work, eat, enjoy leisure and entertainment and interact.

One sector of the economy that must adjust and respond to this change is real estate, especially investment in shopping malls. Indeed, the fall of Nakumatt and scaling down of Uchumi Supermarket’s outlets demonstrates that over reliance on the so-called anchor tenants for mall developers may not be tenable in future.

Developers must now reinvent by redefining the traditional malls as we know them so as to adapt to modern lifestyles.

Kenya has witnessed an exponential growth in mall development within the last five years. With close to six million square feet of formal retail space now available, malls are increasingly hard pressed to come up with ways and means of driving traffic into them by reducing the over-reliance on shoppers attracted to the anchor tenants.

Traditionally, malls have relied on major retail chains as anchor tenants to drive traffic to the mall. This was based on the assumption that the supermarkets were a must go for most households. It was hoped that the traffic to the supermarkets would provide the rest of the tenants with browsers who would eventually convert to customers.

In a bid to attract these anchor tenants, mall owners have been forced to offer discounted rates, among other incentives to attract the major tenants. As a result, supermarkets pay on average as low as 35 per cent of the rate other tenants pay, while popular restaurants who are also considered anchors pay as low as half of what other tenants pay.

However, the assumption that anchor tenants in the form of supermarkets can attract shoppers beyond the immediate vicinity of the mall over a long period of time is gradually being disproved.

In fact, statistics indicate that the four biggest supermarkets only control 30 per cent of the domestic retail business with 70 per cent of the business going to smaller local supermarkets. After all, why would a resident of Ongata Rongai drive all the way to the Thika Road Mall to shop at Carrefour? Probably as a one off, just to see what the hype about the mall is all about.

Despite the downfall of Nakumatt, malls like the Galleria and Sarit Centre seem not to have suffered much, judging by their parking lots. Smaller malls like the Karen Cross Roads, on the other hand, are recording less numbers.

This is why mall owners are taking a different direction. Recently, we have seen a number of malls host music concerts and other entertainment events to bring in the requisite shopping footfall.

The need to keep fit has also emerged as an opportunity for mall owners to drive traffic to their property. It’s no secret that Kenyans, and in particular the middle-class, have taken up fitness as a way of life, and locations like Karura and the Arboretum are a sea of activity.

For instance, in a bid to improve on its competitive edge, The WaterFront Karen has built a 1.2 kilometres walking and running track. The mall, which is set on 50 acres of land, is taking advantage of the wide space it occupies to provide space for would-be shoppers to exercise. The Waterfront’s management expects that the running track, just like the one at Jefferys in Lavington, will provide the mall with much needed footfall on daily basis.

“Other than being the most eco-friendly mall, The Waterfront is designed to provide a town centre feel for our visitors, offering outdoor green recreational facilities around our 3 acre Lake and a 1.2 kilometres jogging track,” according to Freda Rutere Mbugua, General Manager at The Waterfront Karen.

High-end developments

The Waterfront Karen, which will be second biggest mall after the Two Rivers Mall, will offer 200,000 square feet of retail space.

Another point to put into consideration is the cost of real estate that mall developers have to deal with. The most suitable land for development of a mall would be in the high-density, high affluence neighbourhoods such as Kilimani and Westlands.

However, the cost per acre in such areas is normally very high. Mall developers therefore have to go for highly affluent but low-density areas like Karen and Runda for the development of malls with the hope that they will be able to drive traffic there.

It is noteworthy that low affluent areas with high density are generally not attractive for high-end developments. That is why, for example, the population around Runda and Kiambu area cannot sustain the Two Rivers Mall.

Given the size and investment for the new malls, it is necessary that malls are able to attract shoppers from a wider geographically area and sustain the same over time. Shopping malls have to work on attracting residents from far and wide and not just on weekends, but on a daily basis.

-The writer is Supplements Editor at The Standard Group.