These were two of the conclusions of the latest SA Property Owners’ Association (Sapoa) research report into retail trends.
The report said retail trading performance, as measured by the IPD Index, held its ground throughout last year despite the challenging retail trading environment. It said trading density, which was sales a square metre annualised, increased by 5.5 percent year-on-year in current price terms in the fourth quarter of last year from 5.4 percent in the previous quarter.
The 5.4 percent increase in trading density was a function of a 4.9 percent sales growth and a trading density area decline of 0.7 percent.
But the report said the 4.9 percent year-on-year sales growth was significantly lower than Statistics SA’s retail sales growth of 8.4 percent year-on-year last year.
It said this implied that mall-based retailers underperformed the larger retail market last year.
However, the report stressed the “average” mall was quite diversified in terms of its exposure to the different merchandise categories while the Stats SA number was heavily weighted towards general dealers and retailers of textiles, clothing, leather and footwear.
The report said annualised trading density growth on a segment level continued to diverge, adding that the super regional mall segment was the only segment last year to record a negative year-on-year growth rate at 1.2 percent.
It said the vacancy rate at super regional malls was now also at its highest level since the IPD report series commenced in 2003 and more than double its long term average of 1.6 percent.
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The report said community centre trading density growth continued to outperform the other segments while the regional, small regional and super regional segments were now “some way off” their three and five-year average year-on-year growth rates.
It said the trading density growth recorded by community centres was aided by a significant improvement in its occupancy rate over the past year.
Last year, neighbourhood centres were the second best performing segment after community centres and recorded a 7.6 percent year-on-year annualised trading density growth.
“The main driver of the community centre segment’s outperformance has been a significant decline in the segment’s vacancy rate - in turn driven by consumers preferring the convenience offered by this segment relative to larger retail formats,” it said.
The report said in addition to the improving occupancy rates, the outperformance was further helped by a structural shift in the underlying merchandise composition.
“Previously vacant space was taken up by categories with inherently higher trading densities with faster annual growth rates,” it said.