A Place for retail in small towns in South Africa

Source: Sheny Medani - Market Decisions

Shopping centres in South Africa have evolved in the metropolitan areas and larger cities.  From 1994 onwards, following the transition of the country into a democracy, it became necessary to re-look at the way the country functioned.  The outcome of critically assessing the country’s operations resulted in the division of the country from four to nine provinces, and a further consolidation of the country’s racially divided municipalities and local authorities into 256 municipalities.

In 2011 there was a boundary reform and there became eight metropolitan areas in South Africa. The most recent two metropolitan areas that were introduced were Buffalo City municipality in the Eastern Cape that grew to include East London, and Mangaung metropolitan Municipality in the Free State which now includes Bloemfontein. Retail expanded successfully into towns within the eight municipalities as the retail developers started to seek alternative markets in the semi-urban areas and small towns.

In the past, retail within the small towns have not evolved sufficiently to meet the needs of the communities they serve therefore resulting in a retail outflow.  The developments over the last ten years have now strived to meet the needs of the small town communities which is evident in the growing number of retail developments opening in small towns. Lydenburg, situated in the Mpumalanga province, is an example of a small town in which retail was concentrated in the city centre. Over time, the retail drifted towards the boundaries of the suburbs within the municipalities. 

In essence, the small towns remain an important conduit for social, economic and civic activity. In this regard, local authorities have to ensure that small towns remain operative for future growth and expansion. When municipalities neglect their buildings, the town becomes degenerated to the extent that there is litter, poor road maintenance, poor infrastructure and hardly any community services or residential development to reposition the central core. 

Currently, Small Town CBD’s offer the following:

  • A growing population
  • Relatively good infrastructure
  • Retail that offers convenience and comparison shopping
  • A market that is sustainable for retail development

Distribution of retail centres over 2500m in small towns across the eight provinces (excluding Gauteng, which is largely metropolitan) are as follows:

The Table above shows that 1,6 million square metres of retail centres exist in these small towns. More importantly, 70% or more of these centres were built after 1990.  Successful centres in the small towns are mostly to be found in the highly populated provinces.  For example, the Free State has many small towns with a traditional central business area.  Conversely, the Northern Cape has developed from mining towns which resulted in a different type of retail offering. The sparsely populated areas and long distances makes the latter a better candidate for sustainable town centres.

The Limpopo and Mpumalanga Provinces have different characteristics because of their closeness to Gauteng and the fact that most small towns emerged as a result of mining activity.  Many residents in these provinces have household heads who work in the Gauteng and commute, not only during the peak holiday period, but also at month end to their respective rural residence. This dual residency results in additional retail spend, because these shoppers are purchasing items for two homes.

The local authorities responsible for all small towns have an important role to play in planning and executing long term strategies for the town futures. Many towns are currently developing in an ad-hoc way with unruly infrastructure. There also seems to be a lack of understanding about the type of retail that has been on offer in the past compared to what is currently available. If the retail is to be a catalyst for economic development, it follows that the council should be a facilitator for economic growth.

Town Centre Example:  Mpumalanga and Limpopo Province

Mpumalanga is a province located in the eastern part of the South Africa. It is bordered by Mozambique, Gauteng Limpopo and Kwa-Zulu Natal. Mpumalanga plays an important role in that it is a major transport route between Gauteng and Mozambique, as well as producing a large variety of agricultural contributions to the country.

Twenty years ago, the Mpumalanga Economic Growth Agency was formed to provide support for small business, agricultural transformation and assistance for first time property owners that also contributed to facilitating retail which was much needed in the area. This agency was not as successful as it was intended to be and private developers paved the way for future success.

It is a similar story for the Limpopo Province, with the exception that there are two functioning Universities and efforts to re-position some of the economic activity. In Limpopo, there are equal pockets of success and failure.

Many new businesses have sprung up into the small towns and include Chinese and Ethiopian-owned stores. However there are very few local entrepreneur driven retail initiatives.

It is important that National Government take the following initiatives:

  • Co-partner the provinces and identify the small towns that will most likely drive all growth in general.
  • Use the highly advanced technology functions available at national level to drive the flow within the towns.
  • Create education entities such as agriculturally oriented universities that complement the broad economic development in the area.
  • Encourage the creation of small and medium size enterprises to function within the city.
  • Use mobile technology to engage with the users in the town.
  • Create and maintain recreational facilities that work to benefit business and the community.
  • Allow for greater tax breaks until the towns are no longer polarised and function as proper entities.
  • Create improvement districts so that smaller sections can be well managed. This is also a great employment provider.
  • Create and sustain industries that fit with the overall economic development of the area.
  • Both Mpumalanga and Limpopo can be deployed as sustainable mining areas.

Many emerging economies throughout the world realise that some decentralisation is necessary because the major metropoles cannot sustain the geographic shift from rural to urban areas.


The impact of Retail on the Economic Upliftment for small towns.

The key question is whether or not the retail has been a catalyst for retail and development in the small towns.  The map below shows the spread of the centres across the small towns of Limpopo and Mpumalanga.

On closer inspection, the areas comprise many large and small villages as well as small towns. Polokwane is the main city in Limpopo, and Nelspruit-Mbombela is the main city in Mpumalanga.

The population density across the Limpopo province indicates that the main cities, for which the retail centres are not shown, have extremely high population concentrations. The remainder of the areas have villages and towns that are abutting the urban nodes or situated at a distance.  The density of people in the area is shown below:

Demonstrated in the figure below, most of the population in Limpopo is in the lower income category.  However, the retail facilities that have developed play an important role in the delivery of goods and services. In the past people in the community would have had to travel long distances to access a wider range of goods. The creation of these new settlements has resulted in developers feeling comfortable enough to invest within these small towns.

Below are two examples of villages expanding into small towns. The first image below shows the Zebediela area in Limpopo, which is currently sustained by agricultural development and the mining activity in the area.  There are many new housing developments in the area and retail has developed along the main road.

The figure below shows Lydenburg, with the retail in the core area.  However there is a centre that has developed out of the central area. In the future, more retail will be developed to the west, in the Mashishing area.

The town centres in South Africa function largely as a service orientated offering, and while retail serves its purpose, balancing it is necessary for a wider range of functions. Some of these could be:

  • Entrepreneurship and creating employment, something that is vital to the growth of small town economies. For example: we do not know how much employment these small towns provide at present or how much can be created in future. This is vital for sustainable towns.
  • A focus not only on tertiary qualification from academic institutions but skills training and development provided by FET colleges.
  • Re-aligning the disused space in the small towns.
  • Land ownership in small towns is fragmented and in order to create complementary land use, partnerships between private and public stakeholders is vital.
  • Development of healthcare facilities adjacent to the retail, which will function symbiotically to sustain the retail mode.
  • Family orientated entertainment nodes that provide activities over weekends and holidays, promoting education and community development.
  • Community involvement projects that encourages the creation of clean, neat and vibrant small towns.
  • Identifying the present and future demographic of the area.
  • A transport system that works for the town centres, including the proper management of bus depots and taxi ranks.  In many of these centres, taxis do not adhere to traffic laws and do not understand the need for a combined public-private partnership.
  • Cross border shopping, i.e. between provinces, is extremely important because shops have a bigger network of customers and stock a wider range of goods. This is evident in towns such as Standerton, Kwaggafontein, Acornhoek, Bushbuckridge, etc.

The following are recommendations that remain crucial in the development and sustainability of small towns:

Sustainability of a small town is dependent on deploying resources that harness the energy of citizens.  For example, creating solar electrical units, creating micro enterprises such as agricultural factories, organic fruit and vegetables, developing water-friendly solutions in areas where rain remains erratic. 

Small towns have an ageing population.  These older citizens have a wealth of experience and an understanding of the environment which can be used to contribute economically and transfer skills to the younger generation. Small towns will slowly grow larger and become satellites that are economically independent of the metropoles and in doing this, we may also reduce the exodus of young people to the cities in search of “greener pastures”.

Urban dwellers prefer to unwind in the rural areas, closer to nature. Small towns can do more to attract families and create additional revenue for both the communities and retailers operating in the area. Towns can host festivals as well as advertise the potential for people to purchase holiday homes in these areas. Small towns can also assist in the creation of new skills in a changing technology orientated society.

Similarly, towns can adapt to the needs of the community like, upgrading infrastructure and amenities, introducing more public spaces and tourist attractions.

The future of small towns in South Africa depends on foresight and planning. Redefining the purpose of South Africa’s small towns requires the co-operation of Provincial Government across all provinces, upskilling of the population in the areas, and halting the outflow from small towns to metropolitan areas. Local leadership has to be strong enough to facilitate development, control and oversee any new development that works to re-position their towns. South Africa should have strong municipal planning measures in place that will work to the advantage of local authorities, provided it is implemented properly. The future of retail in small towns depends on it.