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The Mall Of The Future

Traditional malls are under threat. But the threat isn’t coming from online retailers. Instead, it’s a new kind of mall that’s causing an upset.

GG van Rooyen




Is the era of the mall over? In the United States, the country responsible for making shopping malls so ubiquitous, these megastructures are increasingly coming under pressure.

A 2015 report by Green Street Advisors, a real estate and real estate investments trust analytics firm in the US, stated that about 25 malls had closed in the last four years. It also said that 60 malls were on the verge of closing.

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What’s causing this? A big problem is the fact that once-dominant stores such as Sears, Macy’s and JC Penney are closing down. These anchor stores are disappearing, and malls are struggling to find replacements that can drive traffic and occupy gigantic retail spaces.

The birth of the outlet mall

Another concern is the rise of the outlet mall. What is an outlet mall, you ask? Two things define an outlet mall. Firstly, these malls tend to look very different from traditional malls.

Instead of large and expensive structures situated in the heart of cities, outlet malls are more basic open-air centres that can be found in the outskirts of cities. This means, quite obviously, that rent is much lower, which is what attracts retailers.

And what attracts shoppers? Cheap products. Outlet malls deal exclusively in affordably-priced fare. Importantly, though, we’re not talking about cheap knockoffs of big brands. No, outlet malls sell cheaper versions of goods from established and respected brands. Gucci, Prada, Hilfiger — these are the kinds of brands you can find at an outlet mall.

These shops might sometimes sell end-of-range or rejected goods, but this isn’t what they focus on.

They sell products that have been made cheaper specifically to be sold in an outlet mall — not massively cheaper, just slightly less ornate. A shirt, for example, might not boast as much embroidering as one found in a regular store.

The state of the economy


It isn’t difficult to understand why outlet malls are becoming so popular: Both companies and consumers are under economic pressure, so cheaper ways of buying and selling goods seem increasingly attractive.

Since the global economy in general (and the US economy in particular) took a nosedive in 2008, outlet malls have been springing up like mushrooms. While traditional malls are struggling, the number of outlet malls is growing, and not only in the United States, but in other countries as well.

China in particular has embraced outlet malls. Up until a few years ago, luxury brands were enjoying tremendous sales growth (about 20% to 30% year on year) in the country.

That growth has now plateaued completely, at least as far as traditional channels are concerned. Luxury brands are seeing great success in outlet malls, though. The majority of brands are reporting same-store sales increases of 30% – 40%.

Since it’s unlikely that the economy will return to pre-2008 levels anytime soon, the popularity of outlet malls is sure to grow.

Speaking at the FNB Franchising Leadership Summit towards the end of 2015, Pareto Limited CEO Marius Muller stated that he believed outlet malls will make their way to South African shores as well. In fact, we’re already seeing small-scale outlet malls being established locally.

Food, friends and fun

As people spend less time at shopping malls, restaurants are becoming crucial to increasing the time shoppers spend hanging around. More than ever, people love spending time at trendy restaurants, eating delicious food.

One need only examine the popularity of a restaurant franchise such as Tasha’s and a casual-dining operation such as RocoMama’s.

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In order to capitalise on this, malls are being forced to rethink their food courts. Cheap and quick food is no longer good enough. While fast-food businesses remain important within the mall context, sit-down restaurants that offer a relaxing environment are equally important. Shoppers no longer simply want to eat on the run – they want a place where they can meet up with friends, have fun and eat good food.

Redesigning the shopping mall


And what about traditional shopping malls? Muller, whose Pareto Limited is responsible for large and successful local malls such as Cresta, Sandton City, Menlyn Park and The Pavilion, sees the food court as crucial to the long-term survival of the traditional mall.

“People aren’t really spending less money at malls,” said Muller at the summit. “But they are spending less time there, and they are visiting less frequently.

“In order to ensure that people spend more time in malls, we need to focus on the food areas. Food has become a huge focus for many people. People socialise by eating out at restaurants. Malls need to position themselves as great places to meet up with friends and enjoy a good meal.”

With this in mind, Pareto is currently busy upgrading the food courts of both Menlyn Park and Cresta.

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Muller also believes that the overall design of malls need to be simplified and toned down. For a while, just about every new mall was themed by giving it a Tuscan or other similar design. Now malls are being built (or refurbished) to look clean, open and very minimalist in nature.

“The design of the mall should not take attention away from the stores. The aim, ultimately, is to allow stores to attract customers, which is why malls should be simple in look and feel. The focus should always be on the stores and what they’re selling,” said Muller.

GG van Rooyen is the deputy editor for Entrepreneur Magazine South Africa. Follow him on Twitter.


Franchise News

Franchising Sector – The Year That Was

Morne Cronje, Head of Franchising at FNB Business agrees that even in what is said to be tough year, South Africa has managed to attract global franchise brands.





2017 Has been a year fraught with challenges for both consumers and business alike. South Africa has however remained an eye-catching destination for international brands looking to expand their businesses; none show this more than franchising in South Africa.

Morne Cronje, Head of Franchising at FNB Business agrees that even in what is said to be tough year, South Africa has managed to attract global franchise brands.

“A recent example of a global franchise brand coming into South Africa is Popeye’s, an American brand best known for its spicy Chicken. They launched here in July 2017. That is on the back of Krispy Kreme and Burger King having recently launched too – even with our challenges, we still offer growth opportunities to global entities.”

Related: Krispy Kreme Remains Triumphant Despite The Strain Of International Brands In The Local South African Market

Cronje shares key take outs from the year that was in franchising:

More clothing & fast-food brands

Retail franchising continued to grow in 2017. Over the past few years, we have seen more global brands like Burger King, Dunkin’ Donuts, Pizza Hut, Krispy Kreme, Dominos, Starbucks and clothing brand Cotton opening their stores in South Africa.

Growth in quick-service restaurant segment

People still value a restaurant experience. Consumers, though looking for convenience and reasonable options, still value the idea of sitting and enjoying a meal in the traditional sense. More businesses have now jumped on this bandwagon and we are starting to see more and more that fast food spaces are also playing in the “sit-and-serve” space.

Use of Online and digital channels

More franchises have embraced online and mobile methods technology to reach their customers faster, easier and relatively cheaper than the usual above the line approach. We are also seeing businesses receiving online orders from their own or third party apps which enable the consumer to order from wherever they are and whenever they want to.

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Value for money

In these tough economic times, consumers will continue to ask why they should spend money in your business. If businesses ignore this, consumers are likely to shift their attention to competitors.

“As we wrapped up 2017, it is important for the franchising sector to reflect on the trends that shaped the year that was. In my view, franchising remains one of the key sectors that will continue to grow steadily despite the slow growth environment. This is a trend that we have been monitoring without fail over the past years,” concludes Cronje.

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Franchise News

Nando’s Adopts Technology; Focuses On Food & Funny

Without a secure failover, erratic fixed line connectivity can cause havoc, especially in the high-demand, fast-paced fast food sector.





Without a secure failover, erratic fixed line connectivity can cause havoc, especially in the high-demand, fast-paced fast food sector. As the name suggests, the expectation is that both the food and service are delivered quickly, and at a standardised (high) level of quality. 

Modern customers require modern restaurants. As smart technology becomes the norm, diners expect reliable, high-speed networks and communications solutions, especially in the fast-food environment. These contemporary restaurants must, therefore, offer reliable POS systems and dependable back-office administrative support. In order to deliver on these requirements, a stable network is required.

“For Nando’s, downtime means an unreliable Point-of-Sale (POS), lost revenue and a frustrated customer base,” advises Sugan Ganasen, Cradlepoint Lead: Ingram Micro Southern Africa. The beloved fast-food franchise started in 1987, with the first restaurant opening in Rosettenville, Johannesburg.

“With a broad footprint of over 1 000 franchises across the globe, and 259 branches in South Africa alone, sending customers away because the POS isn’t working simply isn’t an option.”

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According to Stephen Brookstein, Nando’s Head of Technology: South Africa and EMEA; “Nando’s is 30 years young, and facing the same challenges as all business in the local market. Stability is the key to offering customers a better experience, and this requires an integration of technology.”

In South Africa, the pace of work is at an all-time high. In the food and beverage industry, this means that downtime results in exponential losses, and reputational damage that may hinder relationships with a fickle consumer base. Whenever connectivity is interrupted, credit/cheque card payments cannot be accepted, and off-line card payments are particularly susceptible to fraud. With no secondary line for a failover connection, the required constant connection cannot be achieved.

“Customers expect to be able to make a card payment on a secure POS system, and our franchisees expect a constant connection. In a digital age, everything relies on internet access, and constant uptime must be achieved to deliver both productivity and profitability,” says John Sikiotis, Chief Strategy Officer and CFO: India, Middle East and Africa at Nando’s.

“As such, our business needs include full failover capability, centrally managed software, improved response to communication issues experienced at restaurant level, enhanced security and PCI compliance – all delivered in a scalable manner across the continent.”

After much market research and a comparison of the solutions available, Nando’s deployed Cradlepoint’s AER2100 and NetCloud Manager, supported by Infoprotect. This delivered reliable 99 percent uptime across all Nando’s restaurants in South Africa, guaranteeing that sales are never lost and customers are always satisfied.

“Nando’s selected a countrywide store advanced offering, which ensures that each store is fitted with a Cradlepoint AER2100,” confirms Ganasan. This solution is a new generation, cloud-managed 3G networking device that helps Nando’s to increase bandwidth and achieve four-nines reliability in a secure, flexible, and open-architecture platform. The AER2100 operates as the primary connection, with a cellular modem and dual sim capability.

Implemented by Infoprotect, offering managed IT solutions, data usage is centrally managed, monitored and controlled using the NetCloud Manager (Enterprise Cloud Manager). “This enables Nando’s to deploy and dynamically manage networks at geographically-distributed stores and branch locations, improving productivity, reducing costs and enhancing the intelligence of the network and business operations,” advises Brad Fraser, Infoprotect’s CEO.

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This monitors ADSL data usage and adds valuable business resiliency. According to Sikiotis; “The NetCloud Manager allows Infoprotect to perform remote diagnostics, upgrade firmware, and configure devices remotely. This means our restaurants enjoy better return on investment with optimised data usage, real-time monitoring, load-balancing and proactive usage alerts.”

The result is a scalable solution offering effective uptime, a primary and secondary network ensuring a constant connection, uninterrupted card transactions, constant uptime, data usage management, PCI compliance and security, automated support, configuration and monitoring, and sophisticated scalability. 

“These solutions were impeccably implemented within tight timelines, and have created a future upgrade path, ensuring minimal disruptions. The benefits offered speak for themselves,” concludes Sikiotis. “The cost-efficiencies realised include less downtime, more satisfied customers and less data breeches. Customers are satisfied and no sales losses are experienced due to offline POS systems. With this in mind, a reliable network and constant uptime offer a real cost saving solution.”

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Franchise News

Key Insights From The 2017 FNB Franchising Leadership Summit

South Africa’s exponential franchises took centre stage at the 6th edition of the annual FNB Franchising Leadership Summit held recently at Indaba Hotel in Fourways, Johannesburg.





South Africa’s exponential franchises took centre stage at the 6th edition of the annual FNB Franchising Leadership Summit held recently at Indaba Hotel in Fourways, Johannesburg.

Themed “exponential growth”, the Summit coincides with the world-wide commemoration of Global Entrepreneurship Week (GEW), which celebrates the remarkable contribution of entrepreneurs to the global economy. The 2017 Summit focused on unpacking four perspectives of exponential growth, namely: entrepreneurship, brand, employment and personal growth.

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Mike Vacy-Lyle, CEO of FNB Business, says, “The franchising sector has some great examples of businesses demonstrating exponential growth like the success story of unique local brands such as RocoMamas. The franchising sector is remarkably resilient and should be celebrated, hence we felt it was important to use Global Entrepreneurship Week to highlight the contribution of this sector to our economy.”

“As a bank which values the role of entrepreneurs, we are delighted to have provided a platform to the people leading some of South Africa’s world-class franchises to relay their first-hand account of what it takes to build a successful business,” adds Vacy Lyle.

Among the key insights that were shared at the Summit was the need for businesses to deeply understand customer needs and to consistently differentiate themselves. Brian Altriche, Founder of RocoMamas shed light on building honest brands.

“People know when something is a fake; you can push it to them for a while but in the end they catch on. In today’s world, brands need to be built on the premise that I am offering what you expect to receive when you read my communication and this is the main thing with digital. The consumer is the one that drives the conversation and people do not complain for the sake of it. Therefore, brands that meet the consumer’s expectations are the ones that will continue to win.”

Related: 3 Factors To Focus On When Opening Your First Franchise

Gerry Thomas, Managing Director for Krispy Kreme South Africa is of the view that franchises grow exponentially because they have a key market differentiator as a driving force. Furthermore, Thomas believes that winning business formulas create a “need” as opposed to a “want”.

“Exponential franchises are constantly looking for new concepts and innovative ways to make things faster, easier and better. These businesses are not scared to take risks and break with old traditional ways of doing things. Businesses that are embracing this way of thinking will always be miles ahead. We are excited with the incredible success of this year’s Summit and are looking forward to continued involvement by FNB Business in helping to grow this important sector,” concludes Vacy-Lyle.

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