Night-time is the right time. Or is it?

The night-time economy is an integral part of modern life, especially with the massive trend of urbanisation which has more and more people moving to cities, and a higher number of cities operating around the clock. What used to be considered after-hours is now becoming regular hours for more businesses, and a growing focus of leading places globally. Many destinations are actively working to grow and manage their evening economies.

Great examples of this are happening right now in Sydney and several other cities in Australia, which are seeking to boost their night-time economies to benefit residents, visitors, business and owners of commercial real estate.

In Sydney, the night-time economy goes well beyond its bustling collection of cool coffee shops, restaurants, pubs, clubs, cinemas and museums, driving the evening use of commercial space. There’s a hairdressing salon that becomes a theatre space at night, an office that’s transformed into an after-hours art gallery, late-night food trucks, markets, book stores, cultural events, and all kinds of pop-ups.

So, is there any benefit for South African shopping centres and retailers to stay open later in the evenings?

Leading lights in retail property believe that, in theory, there are some benefits to night trading, but its success and sustainability depends on many factors, especially location and customer markets.

“Globally, a night-time economy seems to work best in high-density areas. Apart from First Thursdays in Cape Town and Rosebank, there is very little in South Africa. Later trading is mostly limited to restaurants and entertainment in the larger centres,” notes Paul Gerard, MD of Flanagan & Gerard Property Development & Investment.

Canal Walk could be considered a top local example of successful late trading. It has been trading until 9pm since opening. “But, it is located within a bustling residential and corporate precinct,” points out Camilla Lor, Hyprop’s Western Cape Regional Marketing Executive.

Of course, late trading certainly isn’t a viable proposition in every shopping centre in South Africa, nor is it an option for every kind of retailer. But, there are opportunities for the open-minded and innovative.

“Shopping is not about the landlord, it’s about the shopper and what is convenient and works for them,” points out Itumeleng Mothibeli, Director: Asset Management at Vukile. “In townships, spaza shops are thriving because they understand the nuances of their shoppers’ daily schedule and align themselves to that. However, I don’t think that this model would work for all shopping centre types. It is unlikely to be popular in rural areas and value centres for instance, but may work in neighbourhood centres and those geared for entertainment.”

A win for customers, shopping centres and landlords

For late-night retail to work, it needs to be viable for retailers. Growthpoint Properties’ Head of Asset Management: Retail, Neil Schloss, comments: “For retailers to consider longer operating hours, they would have to benefit from meaningful increases in turnover, because trading for longer leads to increases in a number of the retailer’s operating costs.”

Food courts, dining piazzas, drive-throughs, cinemas, ice rinks and the occasional use of a tenants’ shop for book launches and talks seem to be the general sum of late-night trading in most of South Africa’s malls. But this may be set to change.

Lor notes: “With the increase in consumer desire for unique experiences, there is a growing trend in enticing people back into city centres and locations such as galleries, as seen with First Thursdays in Cape Town. Retail can leverage off surrounding entertainment offerings. Where shopping centres start incorporating more experiential and destination retail, there is merit in then extending trading hours for surrounding retailers to take advantage of this night-time foot count. This may be more successful seasonally, such as in Cape Town’s longer summer daylight hours. This could entice evening trade as seen in the US, UK and Europe, where locals and tourists who are busy during daylight hours shop at night.”

Challenges can outweigh the benefits

However, even if a mall owner injects vibrancy into their centre after dark to make it a busier place to be, it doesn’t necessarily follow that retailers will extend their hours in tandem. There needs to be a value proposition for both consumers and retailers.

For retailers, Schloss points out that it boils down to retailers being able to generate sufficiently increased turnover.

Mothibeli notes that if added vibrancy in a shopping centre brings sustained critical mass, more retailers may well consider trading later, but it is a long journey. “In reality, critical mass builds over time. Thus, retailers need to take a risk as this will require injecting a certain level of risky working capital that may not yield immediate returns for retailers as shopper behaviour takes time to change. Kicking this off would require boldness from all stakeholders involved, and some short-term pain for increased overall gain over time. In a market where retail sales are under extreme pressure, I doubt that this would be a strategic focus point for retailers at this stage. Retailers seldom do anything that will not be profitable.”

Matthew McCormick, Head of Marketing at Exemplar REITail Limited, adds that the problem with extended shopping hours is that retailers have to employ split shifts for staff. They also have the headache of trying to arrange special transport once public transport has shut down.

Moreover, for smaller businesses and retail staff, later trading can become a big stress because it eats into their family time. “Turnover generated in the evenings often doesn’t justify the costs,” says Gerard.

McCormick also points out that offering evening activities doesn’t necessarily translate into retail sales. “At Alex Mall (in Joburg), we have action soccer courts and we haven’t seen a rise in spending in correlation to the league nights that are played. It seems the soccer courts are used by tenants’ staff knocking-off after work or people coming to purely play soccer.”

He adds: “There is, however, space for entertainment activities that could support later trading hours. Entertainment activities in smaller centres can include pop-up (or rather blow-up) projector screens for a monthly movie night, which would help push trade to the fast-food and restaurant retailers.”

He also raises the big challenge of safety, which is a genuine issue. “Dark time is danger time in South Africa, and in the emerging market this is certainly no time to be purchasing valuables or drawing cash,” stresses McCormick.

Furthermore, as a lot of night-time entertainment involves wining and dining, there’s the downside of people embracing this as an excuse for excessive drinking, antisocial behaviour and drunk driving.

The transport of shoppers and staff is another consideration for late-night trading, with most South Africans relying on taxis to get around. Transport is a product of demand. Most taxis will run until there is no demand. If retail staff are expected to work beyond this demand window, transportation becomes a challenge for night-time retailing.

Culture also poses a hurdle, as South Africans don’t have firmly established evening shopping habits.

A bigger-scale initiative

However, all the retail property leaders questioned by ShoppingSA expressed an enthusiastic consensus that night-time trading could really benefit foot traffic and revenue at centres, if the city district around it gets involved in encouraging and supporting a night-time economy on a bigger scale.

“The regeneration of areas or districts, either privately, by city councils, or in public-private partnerships, has been proven to effectively revive night-time economies by providing access to safe, vibrant, relevant experiences. In these instances, the areas must have enough critical mass to be destinations in their own right. Shopping centres which are part of these districts add to the critical mass and the experience, and ultimately benefit from being a part of the area,” explains Schloss.

Mothibeli agrees. “Urban regeneration and gentrification happen best when neighbours and the node partake in it.”

Places in South Africa with an appetite to embrace open-minded thinking about the evening use of commercial space listed by the commentators include Cape Town, Rosebank, and Umhlanga, as well as urban redevelopment zones and mixed-use precincts, which are naturally open to evening trade with restaurant and entertainment offerings.

“There are places that have tried to embrace the night-time economy such as Maboneng and Melrose Arch in Johannesburg to some degree, and the V&A Waterfront in Cape Town has also achieved some success. These examples have largely been driven by private stakeholders, with limited support from the public sector. There are certainly places with an appetite to embrace this open-minded thinking, but these projects need to be driven by open-minded people at both public and private institutions,” notes Schloss.

Fun, flexible spaces

To tap into the night-time economy, an emerging trend is spaces that change and adapt to different uses in the daytime and at night. It is something that several local shopping centres are starting to look at more closely.

“The current oversupply of shopping centres in certain areas, coupled with the weak retail trading environment, is forcing shopping centre owners to look at alternative uses for certain spaces in some of their shopping centres. The idea that a shopping centre is only relevant to its community for shopping from 9am to 5pm on weekdays and on Saturdays and half of Sundays is an outdated approach,” says Schloss.

“Centres need to be available at the times their shoppers require and should offer people more than just a strictly one-dimensional shopping experience,” he adds. Schloss goes on to say that for certain centres, flexible and dynamic spaces may also be a requirement from the community.

“If the offering of flexible spaces in shopping centres is led by consumer demand; is enticing to your market; and, successfully stimulates a night-time economy, it would certainly stimulate a sense of community, and thereby drive increased support and loyalty,” enthuses Lor.

“With the changing needs and desires of our consumers and the trend towards a more experience-based offering, there is no doubt that shopping centres should be considering new formats and uses of commercial space to drive increased usage in future,” she adds.

Gerard believes this also aligns with an improved emphasis on customer experience. “Shopping centres will need to evolve to be more experiential and customer-focused to continue to attract shoppers and thrive. Retail today is about more than transacting. If people need to buy something specific, almost everything can be easily found online.”

However, as tenure and strong covenants currently play the biggest role in shopping centre viability, Mothibeli is of the opinion that this is likely to occur on a more experimental basis and a small scale, and in the pop-shop facilities of those centres that have them.

Only at night?

The jury is still out about having a tenant in shopping centres that only trades at night.

“This is a difficult one because there are many operational and logistical issues impacted by this scenario. However, if there were community and shopper demand for this tenant and it made commercial sense to both the trader and the shopping centre, then yes,” says Schloss.

“By only being operational at night, some of the cross-shopping benefits are lost, and so the value-add to other retailers is low,” says Gerard. He notes, however, that in some centres, certain restaurants only really add value to the centre from their night trade.

Mothibeli asserts that Vukile would not consider evenings-only traders in the main areas of a centre as day trade will always be the priority and business time for shopping centres. However, perhaps quieter areas of the mall, which don’t work for day visitors, could be an option.

Lor echoes this sentiment. “You wouldn’t position a night-time trading tenant in the centre of the mall, for example. Rather, it would be strategically placed as a destination venue that could operate successfully as a night-time offering,” she explains.

While South Africa doesn’t have laws that limit the opening hours of retailers, there are strict laws that govern the sale of certain items, such as liquor sales. Also, we have labour laws that protect staff who work late, which add to store overheads and need to be taken into consideration when exploring the possibility of extending trading hours.

Even though many South Africans’ commitments to work, family and commuting leave them unable to shop between 6am and 6pm, or even longer, it seems that these shoppers are still well catered for and their valuable spend is not necessarily being lost.

“The increase in the number of convenience shopping centres has gone a long way in catering for these consumers’ supermarket and grocery shopping as well as access to services. Many centres and retailers trade all day on weekends and are open on public holidays, providing the consumer with access to retailers. This means that retailers are hopefully not losing out on valuable spend,” explains Schloss.

Creative ways to increase dwell times

Mothibeli concurs, saying: “I don’t think a huge portion of spend is being lost due to inflexible shopping hours. I do however think if we found creative ways to increase dwell times, we may steadily increase the overall spend, but not to a significant extent.”

Online shopping has also become an alternative for those who can’t, or don’t want to, visit the shops during regular trading hours.

And, Mothibeli elaborates that South Africa’s informal economy runs well into the night by design, particularly in townships. “The informal economy seems to generally run for an hour or two after business closes and as commuters make their way home, which is probably the busiest time. It tapers off after 8pm,” she says.

However, this doesn’t mean that every centre is in-sync with the time demands of its shoppers. Lor believes that there are properties that should be increasing their trading hours to be more convenient and accessible to it target market, especially when located near large residential communities.

Mothibeli concurs. “Trading hours are too narrow for the South African mass market consumer. We need to expand by an hour or two, and should not be shy to make this an SA Inc project. We need to get all stakeholders on board, from retailers to landlords and unions; not only because it is a socially progressive thing to do, but also because it has the potential to add a few basis points to the retail sector’s overall sales growth figures.”

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