Thu, 25 Jul 2024
22.7 C

Latest lockdown’s heavy toll on small businesses

Home Business Management Facilities Management Latest lockdown’s heavy toll on small businesses

IF there’s a silver lining to the recent adjusted Level 4 lockdown for Broll Property Group, it’s that a lot more private investors are seeking or enquiring about the professional management services it offers.

That’s according to Nkuli Bogopa, Chief Operating Officer of the property management at commercial property services company, who cautioned, however, that the lockdown put many small businesses – restaurants and gyms in particular – under severe strain, with many closing down.

And this was before the week-long rioting and looting spree which caused an estimated R50 billion damage to the economy. Broll, which manages over 400 shopping centres, was still adding up the toll to its clients at the time of publishing.

But the impact of the pandemic had already resulted in a lot more properties up for sale, including in the industrial sector, which has performed better than most in recent times.

“Numerous office buildings are up for sale, but that has been going on for a while. The fact that a number of retail centres are also on the market is evidence that listed funds are under pressure and offloading assets as a result,” said Bogopa.

She stressed that this is part of a larger cyclical process. “What it has done is create a new wave of investors in a buyer’s market. Combined with favourable interest rates, it is generating quite some movement in the sector, which means we are getting some new players in the game.”

From a retail perspective, retailers are under tremendous pressure due to the latest lockdown, Bogopa said. “We are seeing all over again the closure of smaller businesses from restaurants to gyms. It is definitely going to impact our rental collections and the investor landscape in terms of income.”

From a retail perspective, while people are keeping the time they spend in malls to a minimum, the spend per visitor has increased.

“Both our super-regional and strip malls rely heavily on anchor tenants and the restaurant trade, which has now been shuttered again by the lockdown. Retailers will opt to remain open if not compelled to do otherwise. We are noticing a higher rate of Covid-19 infections among retail staff.

“Restauranteurs are reporting that takeaway or home delivery is not a viable option in terms of cost, so are rather opting to do with less staff. It is unsure how the current scenario will play out in the broader retail and clothing sector,” Bogopa said.

Foot traffic

Elaine Wilson, divisional director, property intel at Broll Property Group, said that June data points to an obvious decline in foot traffic in shopping malls since the move to an adjusted Level 4 lockdown.

“This can be expected with the closure of food and beverage outlets and gyms. Looking at year-on-year for June, only regional centres show an increase from last year.

Compared to the initial lockdown in April 2020, foot traffic increased in community centres by 51.2%, 68.2% in small regional centres and 111.7% in regional centres. “This can be expected, as only essential services were open during hard lockdown, Wilson said.

Buying behaviour has changed as a result of lockdown restrictions over the past year-and-a-half. “Basket spend has increased, but this can be attributed due to rising prices. Food prices continue to skyrocket.

“Sunflower cooking oil now costs customers 30.3% more than a year ago, while white sugar has increased by 11.5%. Global food prices have also recorded their fastest growth rate in more than a decade,” Wilson said.

The Food and Agricultural Organisation of the United Nations reported a 4.8% increase in May 2021, its highest value since September 2011. Impacted by the rise in fuel and electricity tariffs, these costs are set to continue to rise, impacting the entire economy and placing further downward pressure on consumer spending.

Online retail in South Africa has also surged – more than doubling over the last two years. It increased by 66% in 2020 at a value of R30.2 billion, compared to R14.1 billion in 2018. Currently, online retail represents 2.8% of total retail sales, up from 1.4% in 2018.

Overall, trading densities decreased by around -6.4% after the outbreak of the pandemic, Wilson noted. The highest drop in trading density is in entertainment (-56.1%), followed by services (-30.6%), with only homeware, furniture and interior showing positive growth (7%).

Looking at the secondary retail categories, pharmacies and personal care increased by 4.8% and groceries/supermarkets by 5.1%.

Hobby stores and tattoo parlours showed the biggest rise in trading density at 10% and 28.5% respectively. “It is interesting to note the rise in not only essential services, but also in ‘home entertainment’ and in drive-throughs (6%),” Wilson said.

Most Popular

Kouga Municipality acts against suspected illegal sale of electricity

THE Kouga Municipality says it has recently become aware of acts of fraud and corruption relating to the illegal sale of electricity and suspended...

President must announce incentives for electric vehicles

OPINION | ZERO Carbon Charge calls on President Ramaphosa to announce in his Opening of Parliament Address on Thursday that the new Government of...

Ngqura terminal to speed up with 50 new haulers

THE Ngqura Container Terminal (NCT) has taken delivery of 50 new haulers to increase citrus loading rates as mid-season approaches, Transnet’s Eastern Cape Terminals...

SIU authorised to probe Nelson Mandela Bay lights contract

THE Special Investigating Unit confirmed on Monday that President Cyril Ramaphosa has authorised the unit to investigate allegations of serious maladministration in the affairs...