Strategies to counteract digital disruption across the hierarchy of South African shopping centres

Abstract

The retail property industry in South Africa represents a trillion Rand in investment, employment, and urban development, all of which would be negatively impacted should it collapse. It, therefore, follows that knowledge about its adaptation to the 4IR and the threats and opportunities that the 4IR represents are vital to the industry's long-term success and South Africa's economy. A literature review has indicated five themes within which digital disruption is experienced in retail property. Within these themes, various challenges, impacts, and coping strategies interact. Just how these themes are experienced across the hierarchy of planned South African shopping centres is currently unknown. This study aimed to investigate how the counteractive strategies to the negative impacts of digital disruption are employed within and across the hierarchy of South African shopping centres. The research approach of this study consisted of an in-depth literature review substantiated by both qualitative and quantitative research, i.e., mixed methods research. The type of mixed methods research conducted was the exploratory sequential method, wherein qualitative research in the form of expert interviews was conducted to substantiate or validate the literature findings. The qualitative findings were then quantitatively tested by using a survey questionnaire developed from the said findings. The survey was administered online, and the results were interpreted by using the lens of qualitatively established facts and theories.

The research question sought to establish how digital disruption in retail property presents itself by establishing what the challenges, the impacts and the contradictory strategies of digital disruption are; and whether they are experienced uniformly or variably across the hierarchy of South African shopping centres. It was found that there are five main themes within which the challenges, impacts and coping strategies of digital disruption interact within the retail property industry. These themes and their corresponding challenges, impacts and strategies present themselves variably across the hierarchy of South African shopping centres. The level of perceived disruption is observable by considering the degree to which survey respondents chose the responses related to either fundamental property-management issues or digital disruption (e-commerce and omnichannel retail) as being of greater importance/impact on their particular shopping centres. The degree of disruption appears to be related to the size and function of the shopping centres, with small format centres experiencing less digital disruption than larger format centres. The COVID-19 pandemic has accelerated digital disruption. This acceleration in digital disruption is likely to have a short-term negative impact on South African shopping centres due to the income inequality that exists in the country. This income inequality leads to a digital divide based on the cost hurdle regarding internet access, which has a limiting impact on the growth of online shopping. The digital divide, coupled with an enduring mall culture and the desire to touch and feel goods exhibited by South African shoppers, means that COVID-19 that has accelerated digital disruption in retail is likely to be short-lived, and a return to slower-paced growth in digital disruption is likely to be post-pandemic.

The study was limited to South African planned shopping centres listed in the South African Shopping Centre Directory of 2019. The qualitative phase research informants were limited to South African retail property experts (Asset Managers and Portfolio Executives) from a leading South African REIT, while the quantitative phase research informants were limited to the property managers of the said planned shopping centres. The findings of this study are of value to the retail property industry stakeholders in that they provide a body of knowledge for the present survival of shopping centres in South Africa, the futureproofing of existing centres and the fit-for-purpose development of future centres. This is important in ensuring the continued success of the trillion-Rand retail industry and its entire value chain, whose end products and services are delivered from shopping centres. Furthermore, the study provides a new theoretical framework for understanding digital disruption in retail property. And it establishes the need for digital transformation within retail property management. It also establishes how to counteract digital disruption in South African shopping centres in general, and specifically for each class of the shopping centres.