Socio-Economic Impact of Shopping Centers in Townships of South Africa

South Africa has to over 530 townships with a complex and diverse history and whose development largely occurred under the apartheid regime. While townships face very real challenges such as poverty, crime, and violence they have significant potential for retail development and having a socio-economic impact. This presentation explores how the integration of geospatial information can contribute to effective decision-making and the development of shopping centres in townships.

Living Standards in South African Townships

Soweto is probably the most well-known townships in South Africa and has a population of over 1.7 million people with an average household size of 4.8. Around 91% of residents live in formal residential areas made up mainly of RDP style houses, but there are a fair proportion of middle-income and to a lesser degree luxury housing in Soweto. Only a small percentage of people still live in hostels with many having been demolished and others revamped into family units.

The size of the commercial and industrial areas in Soweto are not sufficient to support the needs of the population, which has impacted on their purchasing behaviour over decades. Additionally, there are no formal parks or recreational facilities, despite the large population. The dominant living standard in Soweto is LSM 6, with a small percentage falling into higher LSM categories. As a result of this, higher per capita income households have started moving out of Soweto to better off suburbs nearby. Despite this, 81% of the township residents have voiced their intent to remain in the townships for various reasons.

Shopping Malls contribution to Economic Development in Townships

Living standards in most townships have remained stable over recent decades with some slight declines being witnessed in selected areas. The 530 townships in South Africa predominantly have African/black residents but there are also Coloured townships spread across the country and Asian/Indian townships localized mainly in KwaZulu-Natal.

Economic development in townships can be stimulated through the establishment of shopping malls. However, there is a disparity between the number of shopping malls and the size of the economy in different provinces of South Africa. There is an oversupply of malls in the Western Cape and KwaZulu-Natal, but opportunities for development of new malls in provinces like the Eastern Cape and Gauteng. The development of shopping malls within townships has an impact on smaller retail trade, but there is still a vibrant retail sector within these areas with over 81 000 FMCG outlets in South Africa’s townships and major metropolitan areas.

Convenience centres make up the largest proportion of shopping centres, followed by neighbourhood centres and community centres. Only 10% of shopping centres in South Africa are located in townships, despite the high demand and need for economic development in these areas.

Township Consumer Shopping Habits

Historically, townships were built with limited commercial areas, forcing residents to travel long distances and face high travel costs to reach shopping centres. The scarcity of commercial areas in townships resulted in residents having to shop outside of the townships.

The introduction of mini buses has slightly reduced travel costs, but it remains inconvenient and expensive for township residents to travel to commercial areas. The proximity of shopping malls to consumers affects their shopping habits, with more accessible malls leading to more frequent purchases. Understanding township consumers’ travel patterns can help in developing marketing and product strategies for specific brands.

On weekdays, 34% of township residents travel to shops, compared to only 25% of non-township residents. Over the weekend, 42% of township residents shop, compared to 31% of non-township residents. Malls play a vital role in township shopping habits, particularly during weekends when residents have more time to consider their purchases. The Marketing All Products Survey (MAPS) data provides invaluable insights into the weekly and monthly visits to shopping malls by respondents and understand their shopping habits in different areas.

Shopping Centres key to Economic Development of South African Townships

Townships in South Africa represent a dichotomy of opportunity and struggle. There are high levels of unemployment in townships compared to non-township areas. Income levels in townships are generally lower, with most people earning below R500. However, townships present opportunities for economic development, especially as residents’ disposable income increases.

Shopping centres can play a critical role in driving economic development in townships. The primary and secondary trade areas of Liberty Promenade mall as an example, demonstrate how proximity to a mall can affect consumer behaviour. The MAPS data provides insight into the weekly and monthly visits to malls by respondents, helping to understand shopping habits in different areas. By leveraging the integration of geospatial information and the development of shopping centres, townships in South Africa can benefit from economic development and improved living standards.

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