Real Estate Investor Magazine South Africa May/June 2019 | Page 17

RETAIL
F
or years, retail landlords have nervously watched as an
indebted consumer is knocked about by the petrol price,
Eskom’s failures and low economic growth. Although
malls have held up to some extent, close calls like the Edcon
bankruptcy scare and the advent of online shopping have led
investors to tread lightly around retail REITs.
And then two things happened that made us feel a little
more positive about the sector: retail results showed a surprising
bit of growth for February, and Yuppiechef, a leading online
retailer did something very rebellious and opened a couple
of physical stores. From reports and interviews, it seems that
South Africans still love shopping at malls.
Retail sales from February were a little better than
expected, growing 1.1% year on year, according to Statistics
SA. However, seasonally adjusted retail sales decreased by
1.8% in the three months to end-February, compared with the
previous three months. December registered a surprise 5.2%
month-on-month decline (perhaps as consumers did much of
their Christmas shopping over Black Friday).
The retail property industry has been treading water for a
while, hanging in there as consumers take the brunt of another
petrol price hike. However, Yuppiechef, an online kitchen and
homeware store which has been around for 13 years, recently
opened four retail stores in the Western Cape. Bucking the
trend towards physical retail space letting.
“
It confirmed our hypothesis
that sometimes customers
want to shop online, sometimes
they want to shop in a store,
and sometimes it is a fluid
combination of both. Doggedly
sticking to pure ecommerce was
not the experience our customers
wanted from us.
“
‘For a number of years we had customers arriving at our
offices wanting to buy products, and not understanding why
we couldn’t sell to them! Eventually, we opened a small store
connected to our warehouse, and it did surprisingly well,’ says
Andrew Smith, co-founder of Yuppiechef.
‘Even though our online sales had been growing steadily
for a decade, we still felt like there was a huge portion of the
market that weren’t shopping with us. Less than 2% of retail
transactions are online and, despite the growth, that number is
not going to be 100%, or even 10%, in the foreseeable future.’
According to Smith, Yuppiechef opened its first store in a
mall to test the waters, and the reception was very good. ‘It
confirmed our hypothesis that sometimes customers want
to shop online, sometimes they want to shop in a store, and
sometimes it is a fluid combination of both. Doggedly sticking
to pure ecommerce was not the experience our customers
wanted from us.’
Smith caused much excitement at May’s South African
Shopping Centre Council’s conference in Sandton with a slide
showing how it took the group over two years from August
2006 to achieve R1 million I turnover online, versus a few days
at its V&A Waterfront store.
‘When you open an ecommerce store in 2006, with 32
SA Real Estate Investor Magazine MAY/JUNE 2019
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