Real Estate Investor Magazine South Africa May 2018 | Page 10

COVER STORY
COVER STORY
cidedly points to the fact that we still prefer physical stores.
It’s important to keep in mind, however, that this is bound
to change with added accessibility and ease-of-use of online
retailers.
A trend that’s been seen locally and internationally, is the
shift away from large malls in favour of convenience centers
and local retailers. It may very well become more common
for South African customers to purchase their monthly sta-
ples online, while visiting physical stores for daily essentials
or top-ups.
Shopping malls are increasingly feeling the pinch, opting
to fill untenanted space with concept stores or exhibitions.
This adds to the oft-discussed experiential shopping experi-
ence. One where shoppers aren’t necessarily looking to buy a
product, but rather to see and experiment with new offerings.
Tech
Titan
Opportunity
As more and more locals become familiar and comfort-
able with online retail, the need for distribution hubs and
warehousing will continue to increase. According to Broll’s
Anthon van Weers, they are seeing a severe shortage of in-
dustrial space: “The scarcity of industrial land within a tight
radius of the CBD means that rentals for new A- Grade pur-
pose-built facilities, with 13m eaves heights and high yard
ratios have now reached R70 per square meter triple net.”
While Amazon is yet to establish a local distribution hub,
local e-retailers like Takealot have shown the rapid growth
in need for warehousing space. While it’s difficult to predict
a precise time frame, it seems the appetite for this type of
property won’t die off anytime soon.
The bottom line
With a young and mobile population, South Africa is primed
for innovation and new ways of doing business. While now
may not be the time to panic, we’d do well to keep the future
in our sights when making investment decisions today.
Amazon’s hold
on real estate
AMAZON KEY
Grant access to the people you trust with the
Amazon Key App and monitor who enters your
house when you’re not home. Schedule permanent
access for your family members or give temporary
access to recurring visitors like dog walkers, house
cleaners, or out-of-town guests. You’ll be notified
any time your guest locks or unlocks your door or
watch motion clips as they enter and exit.
BY MONIQUE DU TOIT
I
t’s been hailed “The Amazon Effect” - a doomsday-esque
description of the role online retail is playing in the even-
tual downfall of commercial property.
The predictions
Online shopping has been described as a game changer. It
seems we can’t turn our heads without being confronted by
an opinion on how retail will look in 10 years’ time. And it’s
true. Retail is shifting. With the advances in technology, we’re
a more connected society than ever before.
Along with the ability to communicate with virtual strang-
ers, this has also enabled us to dabble in the world of online
retail. As our lives get busier and more stressful, with an ev-
er-increasing amount of hours being spent in traffic or answer-
ing emails, we’re always on the hunt for a more convenient
solution to everyday problems.
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MAY/JUNE 2018 SA Real Estate Investor Magazine
But how real is the threat to commercial
property, really?
The fear is that consumers will eventually abandon physical
stores altogether. Insteady, they’ll order their food, toiletries,
and furniture online. Before you know it, we’ll be a bunch of
isolated hermits, interacting only with the delivery man. Or,
better yet, with no one at all, if Amazon Key takes off.
The reality
Last year, Amazon reignited these fears with its purchase of
Whole Foods. Traditional retailers’ stocks dropped and we all
gathered around to speculate about the next big fall. The irony,
however, is that the move signified exactly the opposite.
While it’s impossible to predict the future (try as we may),
the move to a purely online shopping world is nowhere near
being a reality today. Amazon knows this - which is precisely
why they decided to invest in a brick and mortar store. Having
launched its own food delivery offering (AmazonFresh) back
in 2008, the company was in need of a physical footprint. It’s
estimated that the food distribution market is worth $800b,
making it a definite focus for the online giant.
In a similar fashion, Amazon opened its first physical
store, Amazon Go. Setting it apart from competitors is the
ability for shoppers to walk out the store without having to
wait in a queue. Each item is automatically added to the sub-
scriber’s Amazon account. The first store was opened earlier
this year, with Amazon planning on introducing 2 000 more.
Over on local soil, there are a few key factors to look out
for.
The South African perspective
According to a 2017 report published by Visa, online retail
accounted for only 1% of the overall retail share. This de-
Prime members in select cities and surrounding
areas can opt-in to in-home delivery. To start using
in-home delivery, enable it in the Amazon Key
App, shop on Amazon using the address that you
installed the Amazon Key Home Kit, and select
“free in-home delivery” at checkout.
On delivery day, you’ll be notified in the morning
and just before the delivery for you to block or
watch in-home delivery. Amazon will authorize the
delivery and unlock your door. No keypad code is
shared with a driver. You can watch the delivery
live in the Amazon Key App or see a video clip of it
later. You’re notified once the delivery is complete
and your door is relocked.
SA Real Estate Investor Magazine MAY/JUNE 2018
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