By Glinis Kigera
I live in a small town in Kenya and we have two, yes two malls. 85% of the shop space in the first mall is empty. The second mall is doing better – occupancy is at around 30%. Kenyans are catching on to the mall culture – there are malls being built everywhere.
The shopping mall concept offers convenience to the shopper, but the rule of demand and supply must work for the shopping mall concept to make economic sense. The structure of the mall will usually be centered around an anchor tenant (usually a supermarket), from whose traffic the other tenants will benefit.
A shopper will be willing to pay if the products on sale meet the shopper’s needs and are affordable. The mall concept should not be replicated but customized to fit the purchasing power of targeted clientele within its locality. It doesn’t make sense, for instance, to put up a big mall with designer outlets in a town where 90% of the traffic into the mall is spending not more than five dollars a visit.
It makes sense to set up a shopping mall within a residential housing estate, but then the products on sale should be products that those residents need and can afford.
The target client for a mall set up in a big city is wider, because the purchasing power of the population is higher. One can drive 30 minutes across the city just to enjoy a meal at a specialty food outlet in a city mall but the same would possibly not work in a rural town.
When the second mall was opened in my town, families came in droves just to look around and for the children to enjoy riding up and down the elevators. This would have been an opportunity for the mall owners to partner with small traders to benefit from the money that the families were willing to spend – a fast food kiosk, a candy kiosk, an arts and crafts booth for the kids, and a temporary bar for the parents.
What however happened over the mall-opening weekend is that the families would come in, walk around, maybe buy some soft drinks at the supermarket and then leave, possibly to have lunch at another location.
What we need in Kenya are innovative real estate investment products that make sense to the investor and the target market. The products that work in developed countries may not necessarily work at home.
