Maponya Mall in Soweto

A retail footprint is being created in previously under-serviced areas, especially townships - a trend which is clearly prompted by the burgeoning township economies. The proliferation of retail outlets in townships in the vicinity of South Africa’s major towns and cities is proof of this.

This despite the fact that consumer spending is being dampened by a combination of factors including the stringent provisions of the National Credit Act on credit extension, the successive interest rates hikes and escalating fuel and food prices, which have obviously eroded consumers’ disposable income.

Frank Viruly, a prominent property economist and head of Viruly Consulting, points out that despite the likely adverse impact of higher and rising interest rates; “The people at the low end of the market are probably not that sensitive to interest rates because the do not borrow that excessively.”

He identifies an opportunity for the establishment of neighbourhood shopping centres because “after the success of regional malls, the next step would be to move down the retail hierarchy and introduce neighbourhood shopping centres.”

In the townships adjacent to Cape Town there is the Nyanga Junction mall, Westgate Mall, Towncentre, Vantage Mall and Khayelitsha Mall. On the other hand the Durban in KwaZulu-Natal province boasts the Umlazi and Dube Village malls respectively. Areas such as Port Elizabeth’s Motherwell Township (Motherwell Mall) and Polokwane’s Seshego Township (Zone 4 Plaza Mall) are also catching up with the trend of mushrooming township malls.

Townships in the vicinity of provincial capitals offer numerous possibilities for retail investments as the potential of these local economies is being unlocked by their municipalities’ local economic development interventions which focus on sustainable small business development, job creation and the promotion of cultural and township tourism. It is also possible that the fact that cities such as Nelspruit and Polokwane have been selected as host cities for the 2010 World Cup will add impetus to the economic prospects of adjacent township economies in these provinces.

However, it is Soweto, SA’s biggest township with a population estimated at more than a million, which has become a veritable trailblazer in this regard. With firsts such as the R500 million Maponya Mall (see Richard Maponya) and Holiday Inn Soweto (first in a SA township) situated on the historic Walter Sisulu Square of Dedication in Kliptown, it has led the process in terms of the next level of development in township economies. Other shopping centres in Soweto include the Dobsonville Mall, Protea Gardens, Jabulani Mall and Bara Mall.

Three years ago, the Johannesburg Tourism Company commissioned the University of Johannesburg to conduct a study probing the economic potential and profile of Soweto, especially opportunities in the retail sector as well as prospects for the tourism industry. The results were made public last year and the findings included the fact that Sowetans spend 25% of their estimated R4,2 billion purchasing power on retail goods in the area.

This fact has not gone unnoticed as the country’s major retailers invade the townships by taking space in the malls. These include Pick ’n Pay, Edgars, Woolworths, Shoprite, Pep Stores and Mr Price. The banking fraternity are also exploiting the proliferation of malls to make their mission of “taking banking to the people” a reality, which is why SA’s top 4 banks - Absa, Standard Bank, First National Bank and Nedbank - are found in almost every township mall.

The economic benefits are not only in the form of an expansion of the retail sector and the promotion of style and fashion for the previously under-serviced areas, but there are real opportunities for the development of the small township entrepreneur to cash in on the boom. Budding entrepreneurs and potential investors can exploit business opportunities that come with commercial property developments of this scale by partnering established construction companies involved in these projects.

Moreover, branded franchises such as News Café, Debonairs, Steers, Nando’s and Primi Piatti are keen to make a foray into township malls. Their appetite for the township market offers small business people an opportunity to acquire these franchises.

Says Forte Mthimkulu, deputy-president of the Tshwane Chamber of Commerce, regarding this specific business opportunity: “Those major retailers that provide franchise opportunities should seize the opportunity to empower black business people, not just pounce on black consumers to plug the gap in the diminishing white consumer spend.”

And this is where a platform for sustainable empowerment that allows for the development of hands-on entrepreneurial flair and skill as opposed to equity stakes in mega business corporations or senior affirmative action appointments exists.

The story of Richard Maponya, the owner of the celebrated Maponya Mall in Soweto, is a case in point. Having started as a survivalist trader hawking clothes to domestic workers in Johannesburg’s northern surburbs, Maponya became the jewel in the crown of township business development and was also part of the first wave of BEE when he invested in the Kilimanjaro Holdings consortium to buy a stake in Suncrush, a soft drink and bottling business. Undeterred, this octogenarian persevered and held tenaciously on to his lifelong dream of opening SA’s first township mega-regional upmarket mall. This has come to pass.