Malls may struggle as DionWired, Masscash close

Shopping centres’ exposure to Massmart’s 34 DionWired and Masscash stores, which are to close their doors, might be slight, but experts warn that more retailers could scale down this year.

“In light of the oversupply of retail space, an economy that is stagnant and changing trends, more retailers could reduce their floor space in centres and close down their underperforming stores,” said Keillen Ndlovu, head of Stanlib’s listed property fund.

DionWired is Massmart’s electronics and appliance affiliate; Masscash is its wholesale division. Massmart also owns Game, Makro, Builder’s Warehouse, Rhino and Jumbo stores. If more of the retailer’s shops were to close, there might be dark days ahead for malls.

Ndlovu said the exposure of listed property investment trusts to the total Massmart group amounted to 419 246m². That is 2.1% of the sectors’ total South African gross portfolio.

This could be a serious challenge for centres, which were already battling to fill empty space after Edcon group’s dramatic downscaling last year resulted in 150 shops being closed. On top of that, Edcon closed down its enormous Edgars store in the Rosebank Mall, Johannesburg, because of poor performance.

Morné Wilken, CEO of the shopping centre fund Hyprop, said it had DionWired shops in Canal Walk and Somerset Mall in Cape Town, as well as in Hyde Park Corner in Johannesburg.

“It’s not too big a problem for us to fill these spaces, because DionWired has good location in centres, which would easily attract a replacement retailer,” he said.

He was more concerned about the job losses associated with the closures.

Massmart said 1 440 people were in danger of losing their jobs as a result of the DionWired and Masscash closures.

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Estienne de Klerk, CEO of property giant Growthpoint, said its exposure included DionWired stores in the Kolonnade Shopping Centre in Pretoria and Woodmead Retail Park in Johannesburg, as well as one Masscash store in Klerksdorp.

“We already have potential clients for one of the shops, which all have good locations.”

Investment property company Attacq said it had a DionWired store in its flagship retail asset, the Mall of Africa in Midrand, which comprised less than 0.14% of its portfolio. Liberty Two Degrees’ exposure to DionWired amounted to one store in Sandton City, 0.1% of its retail space.

Ndlovu said the big question was how shopping centres would fill the empty stores. “International retailers with surplus space have already become creative by exploiting new uses for empty spaces.” This included converting shopping space to student housing, shared offices, storage units and even colleges.

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