By Changwe Kabwe
It’s another quarter and so another shopping mall is expected to open in Lusaka.
In the second quarter of 2019, the elegant Novarre Pinnacle opened in Woodlands area at the corner of Chindo and Mutende roads.
This is a 10,000-square metre Mall that should accommodate 40 commercial retail outlets from supermarket, food court, entertainment zone, fashion shops to banking services and an expansive 400-bay car park.
In the third quarter of 2019, Woodlands Stadium Mall is expected to open with Shoprite as the anchor store, the US$72 million Longacres Mall, a project initiated by the Public Service Pensions Fund is also due to open before year end.
These openings follow another one along the Great North Road called Novarre Great North Road. In the last quarter of 2018, the new look Arcades was relaunched. And before that, there was Centro Mall and WaterFalls opening, joining existing centres such as Manda Hill, Levy Junction and EastPark.
In the South of Lusaka, Kafue road also has strong formal retaail presence with Makeni Mall, Cosmopolitan and Embassy Mall all situated within 150m of each other, separated only by the road.
According to KnightFrank, approximately 85% of Zambia’s modern shopping mall space is in Lusaka, with the remainder dotted around the Copperbelt and Solwezi.
Evidently, Zambia has seen an increase in the number of Malls over the last 20 years, largely driven by South African supermarkets. The likes of Game stores, Spar and Pick n Pay all followed on the back of Shoprite entering Zambia’s retail space between 2001 and 2010. More recently, Choppies from Botswana has also entered the market. By March, 2019, Choppies had over 20 stores in Zambia.
The oversupply of Grade ‘A’ retail spaces is not only unique to Zambia or indeed Lusaka.
There are over 1900 malls in South Africa that is almost 100 per province. In Cape Town alone, they have Canal Walk, V&A Waterfront, Blue Route, Tygervalley, Cavendish and more.
In an area equivalent to just over twenty football stadiums in Pretoria East, there are no less 30 shopping malls. In fact, there are more shops than clinics, schools and recreational parks in the area and to make it more clearly, there are only two police station stations in the area.
Of nearly 47,000 shopping centers in the United States, about 1,100 are categorized as enclosed malls.
But like with everything else, there is always a tipping point and it now appears that the phenomenal growth of Shopping Malls may be coming to a halt in several countries and that may include Zambia.
Malls are closing all over the US. A report by Credit Suisse estimates that 20% to 25% of malls would shutter over the next five years, largely because of store closures. In 2017, 6,400 stores closed in the US and a further 3,600 were expected to close in 2018.
This is what is often referred to as Mall Armageddon or Mall Apocalypse. The recent closures I have observed taking place at Levy Mall and Manda Hill in Lusaka point to the fact that Zambian retail space is closely following global trends.
So will Zambia be spared from this phenomenon? I do not think so and here is why.
High rental charges
Rent averages US$22.00-30.00 per m2 in prime Malls such as Cosmopolitan, Centro and EastPark. Manda Hill which is considered to be the best asset in the market averages US$35.00 per m2.
In Kwacha terms it means for an average size store at these premium retail locations, tenants have to pay in the region of K53, 000 per month for rentals. With reduced foot traffic, almost all the Malls in Lusaka are struggling to reach 100% occupancy.
The birth of e-tail stores
Over the last few years, there has been growth in e-commerce globally which is rapidly coming to Zambia. Most young entrepreneurs do not have the money to spend on rentals per month or the budget to pay staff to run their stores.
So they go to the internet and establish a connection with a customer cutting off the middleman (the Mall). Since some customers still need a sense of personal experience, some e-commerce stores will have a small location or a pop up store.
It is interesting to note that iStore, Apple’s Premium Reseller is the most profitable retailer in the world – yet their stores are the most simplified.
On the other hand, Amazon is getting rid of the human interaction altogether, if you have an Amazon account, you can now walk into selected Amazon stores and when you walk in, the store will register that you have arrived.
It will register when you pick up an item, replace the item and walk out with the item. Amazon will then bill you later. Amazon isn’t worried about theft because they have all of your details in their system.
In Zambia, we have seen the growth of online retailers such as Tigmo and delivery outfits such as AfriDelivery who are ultimately cutting out the middleman (the Mall) in the value chain.
Research has also shown that consumers are increasingly becoming more trustworthy of web-based payment systems. Technologies such as showrooming apps remove advantages of having a physical shop.
So it is unsurprising to see many stores at these malls closing. However, there are still plenty of people that just still love entering the old age brick-and-mortar store. The idea of shopping with a good friend, followed by a meal or a movie which is impossible to deliver online is still very intriguing to many people.
To follow this trend, some malls are now branding themselves as “experiential retail centers” rather than transactional.
Remember the strap line, “The Entertaining Way to Shop?” Yes, its Arcades Shopping Centre.
A less material world?
Conspicuous consumption is the term used to describe the spending of money on and the acquiring of luxury goods and services to publicly display economic power, this has been going for a very long time.
However, in today’s contemporary retail market, a new phenomenon called conspicuous production is emerging. This is when consumers are more concerned with the process by which an item is made and where it is from than they are with how the item looks.
With the availability of product information, most consumers are becoming conscious of reckless materialism and how it affects the planet. What we have seen now is a demand for a more meaningful retail experience and most consumers we are now demanding that their purchases must symbolize more than just acquisition of material things.
For close to a decade before 2015, the Zambian economy grew at impressive records of above 7%. What we saw was a commensurate growth of the middle class which helped boost consumer spending. Today, according to the World Bank, growth in Zambia is projected at 4.2% in 2019 and 4.3% in 2020.
The IMF in its July update of its World Economic Outlook, revised downward its projection for global growth to 3.2 percent in 2019 and 3.5 percent in 2020.The new Finance Minister Dr Bwalya Ng’andu has even cut the 2019 projection to 2.5%, the lowest in over 10 years.
With tightening liquidity conditions and uncertainties in the macroeconomic environment, there maybe not too plenty of cash to spend in these malls dotted around Lusaka which may lead to a lot more closures.
Family time is quality time
Last year, Poland imposed a law banning all trading on Sundays, the influential Catholic church, to which more than 90% of Poles belong welcomed the change. The move by Poland follows eight other EU countries that have some kind of regulatory legislations pertaining to Sunday shopping. Due to increased demographic and work-related pressures, many Europeans, and Poles in particular have welcomed Sunday trade bans as a way to improve quality of life.
Hungary, Germany, France, Spain, Italy and several other European countries implement some form of Sunday trade ban. Some people argue that Sunday ban helps generate more free time for families, which in conjunction may contribute to a greater emphasis on family. Further, from a Christian point of view, Sunday is as a day of rest, and in a country like Zambia where the population is majority Christian, this fails in line with the move towards attaining work-life balance.
I believe that the phenomenon happening to the shopping Malls is what Economists call ‘market correction’ and I also believe that in its current state, Zambia is “over-retailed.” But with the advancement of technology and online shopping and a slowing economy, the future of malls really looks gloomy.
According to Harvard Business Professor Leonard Schlesinger, Malls “were built for patterns of social interaction that increasingly don’t exist.” Changing social patterns and lifestyle are negatively impacting on Malls.
Interestingly, not all is gloomy, local retailers need to look to the future and plan ahead, as Zambia become part of a digital world, both e-tail and retail can survive even it means doing so with a number of abandoned Malls.
The writer is Communications and Media Executive based in Lusaka, Zambia.