TFG PROPERTY DIVISION
STORE OPENINGS
The group achieved its desired space acquisition during the year by adding 6,3% to its trading space in spite of the slow-down in the development of new retail shopping centres which has occurred after the global economic crisis. The strategy of accelerating store growth over the past few years has placed the group in a position to benefit from the improvement in the retail cycle which is beginning to materialise.
Major new shopping malls which opened and in which stores were opened by the group were:
| No. of stores |
Area (m2) | |
| Brits Mall | 8 | 2 222 |
| Chris Hani Mall | 7 | 1 960 |
| I'langa Mall (Mbombela) | 12 | 4 864 |
| Goldfields Mall (Welkom) | 11 | 3 869 |
| Randridge Mall | 6 | 1 724 |
| Mamelodi Crossing | 5 | 1 701 |
| Tembisa Mall | 5 | 1 409 |
| Manda Hill (Zambia) | 4 | 1 174 |
In total 114 new stores were opened across the group’s 14 different trading chains and 14 stores were closed. The net trading area occupied by stores in the group grew by approximately 31 800 square metres or 6,3%. The number of stores broke through the 1 700 mark for the first time and at the year-end the 1 727 stores occupied a total space of approximately 538 000 square metres.
The Foschini division, at
approximately 12 400 extra square
metres, added the greatest amount
of new space, allocated between
the Foschini, Donna-Claire, Fashion
Express and Luella chains.
The Sports division increased its space by 33 stores and approximately 9 400 square metres. In all, 21 new stores were opened by Totalsports, 11 by Sportscene and two by Duesouth, whilst one store was closed.
The Jewellery division opened seven new American Swiss stores, nine Sterns and two Matrix.
The Markham and Exact! chains opened 13 and seven new stores respectively.
The @home division added five new @home stores and one @homelivingspace in I'langa Mall, Mbombela. In total approximately 3 400 square metres were added.
In addition to the new stores, a total of 21 existing stores in key locations were enlarged in order to maximise trading opportunities. A good example of the enlargement strategy is the Promenade Mall in Mitchells Plain where approximately 1 200 square metres were added to the group’s existing stores.
A total of 32 stores were relocated to superior retail locations during the year whilst three were reduced in size and 14 were closed as a result of under-performance.
PROGRAMME FOR 2012 YEAR
The group plans to open stores in the following new malls, amongst others:| Mall of the North (Polokwane) | |
| Newcastle Mall | |
| Middelburg Mall | |
| Gaberone (two malls) | |
| Protea Gardens (Soweto) | |
| Edendale Mall | |
| Levy Junction (Zambia) | |
| Carnival City (expansion) | |
| Pioneer Mall (Maseru) |
The first TFG stores in Zambia opened in Manda Hill Mall in Lusaka and two more will be added in this mall in the early months of the next year. Trade in these stores has been satisfactory in spite of some teething problems with logistics. This initiative has proven to be a valuable learning experience which will assist the group in its expansion plans in Africa. A new mall in downtown Lusaka is scheduled to open towards the end of 2011 and this will allow the group to expand the Zambian store base by a further six locations.
The enlargement of the Sandton City shopping centre will provide the group with the opportunity to gain significant additional space for a number of its chains and to reveal its latest store designs.
DIVISIONAL STRUCTURE
The restructuring of the TFG Property division which had been envisaged for some time was concluded during the course of the year. It brings together within the Property division the teams responsible for space acquisition, rentals, utilities and lease administration. This has resulted in better communication and operational efficiencies across the property portfolio, and whilst savings have already been made the greatest benefits will be realised when a new real estate IT system is implemented. The system requirements are currently being assessed.
CONTRIBUTION TO TFG’S COMPETITIVENESS AND COMPETENCY
The strategic role of the division is to ensure optimal space utilisation by balancing the choice of micro locations with the size of the premises and the cost of occupation. Superior locations clearly provide a competitive advantage in terms of retail turnover, but the task of weighing the benefits of location against the cost of the premises is often a subtle matter with no easy answer, particularly when the differing requirements of the various brands in the group are taken into account.
In order to strike the right balance consistently it is necessary to have an intimate understanding of each brand’s requirements and of the buying patterns of its customers and equally to apply a full understanding of both the macro (city/town) and the micro (street/mall) retail landscape. This process is best achieved by a team with substantial experience of retail operations within the group, who constantly interact with the executives of the trading divisions. The processes undertaken before final sign-off of a lease of new retail premises ensure that every factor underlying the decision has been thoroughly scrutinised.
PROPERTY DEVELOPMENT
Property development is the activity which indirectly makes the group’s greatest environmental impact. Knowing this, the group concludes lease agreements with developers only when the required environmental impact assessments have been undertaken and have led to a positive result.
In line with international norms, there is an emerging trend in South Africa towards the design and construction of eco-friendly shopping malls. However, because of the uncertain economic climate prevailing in recent years, progress has been slow and most landlords are yet to embark on any significant "greening" initiatives to new and existing buildings. Model design features would include eco-friendly building materials, natural lighting, solar power and heating, and rain water capture.
Whilst the concept of green
leases is still in its infancy there
is an increasingly active dialogue
between the group and landlords.
The group is pressing to insert
green clauses in its standard leases
and there is no doubt that this will
be a growing trend over the next
few years.
Various committees have been appointed to develop TFG’s approach to green issues and particularly the minimisation of electricity consumption. A number of initiatives in this connection are under way.