High rent, low sales force mall occupants out

In a little over a decade since the country began experiencing the ‘mall fever’, excitement surrounding the phenomenon seem to be dwindling.

Local, regional and global brands, from food to clothing, gambled on the belief that this was yet another area of business to excel in, but the script has not played out quite well.

Several factors may have accounted for the situation, including the macro-economic environment over the past half decade, low purchasing power of people who visit the malls, and high rental charges of occupants of these shopping malls.

The rather exorbitant rent charges of space in the malls, which could cost as much as over US$50 per square metre, coupled with low sales, is worsening the plight of shop owners and forcing them out of these fancy malls.

A walk through the malls in the capital over a period shows several shops closed and, in most cases, remain vacant for months or up to even a year.

Bata, a renowned shoe vendor, has had to close down its shop at the Oxford Street Mall in Osu due to poor sales, and the continuous payment of expensive rent.

“The rent is very high, and we do not pay in cedis too, but dollars. We had a shop in that mall, but it is closed down because the sales were too bad. The main reason behind shops moving out is the high rent. You are not making good sales, yet you have to pay the rent, and when it happens like that, the only option is to move out,” an attendant at the Accra Mall Bata shop told the B&FT in an interview.

Beginning of Ghana’s mall experience

As Ghana entered the 21st century, the nation’s economic performance soared, paving way for higher growth-inducing investments. Foreign capital flowed in abundantly, with telecoms, housing and modern retail services among the beneficiary sectors.

One of the first modern retail stores complexes to spring up in this period was the A&C Shopping Mall, which was built in 2005, located within the plush middle- to upper-class precincts of East Legon, Accra.

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Three years later, in 2008, Accra Mall was built. Reportedly costing US$36 million, the structure occupies a land area of about 25,000sqm off the Spintex Road and was the first large-scale shopping centre in the country. The five years later, another upscale albeit smaller shopping centre, Marina Mall, was built within a three to five-minutes’ drive from Accra Mall.

With a bulge in middle-class spending and the prospects of further economic acceleration on the back of newly-found oil resources, investors poured more money into shopping malls in Accra in a bid to grab a slice of the rising consumer spending. As a result, Oxford Street Mall, Osu; West Hills Mall, Weija; The Junction Mall, Nungua; Achimota Retail Centre, Achimota; and the most recent one in Kumasi have all been opened in the last few years.

Expectations versus Reality

For a very lively and busy town like Osu, which is famous for its classy restaurants, casinos, night clubs and artefacts peddlers, the Oxford Street Mall in Osu, which was initially considered to be the icing on the cake, is now suffering, as tenants complain about the low traffic and bad business.

“Business is very slow. The mall itself is slow because people do not come around. I think the mall concept is still exciting to certain people but not here in Osu,” an attendant in a clothing shop who pleaded anonymity, lamented.

She adds that: “The rent is very expensive most of the shops keep closing down, because if you are not making sakes, paying rent is obviously going to be difficult.”

Another attendant at an African clothing shop in the same mall had similar sentiments to share: “As you can see, the mall is so quiet, there are no activities going on to attract customers, and a lot of the shops too have moved from this place and that affects us. When the mall started, there were a lot of shops around, so people used to come in, but now that a lot of shops have moved out, people do not come as they used to, making sales slow,” she noted.

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Tenants at the West Hills Mall, in Weija, and Marina Mall, both of which cost millions of dollars to construct, are not faring any better.

Asked whether Ghanaians have understood and adapted the shopping mall concept, a shop owner who has been in business at the Accra Mall for years, had this to say: “I would say the excitement about malls is not like it used to be. Some years ago, patronage was good, but not now. Some shops have been closed for up to a year without new occupants taking over because the rent is too high.”

She further noted that for a shop like hers that deals in women’s fashion accessories including hand bags, cosmetics, and jewellery, the closing down of shops affect her as it reduces the traffic in her shop.

She explains that: “A lot of people who come and shop for clothing for instance, also visit shops like ours for some other accessories to match the clothes. But as at now, all the shops that deal in clothing have moved out, leaving just one, and this limits consumer choices.

We have another shop in a different mall which is also not doing well, and if care is not taken, I am sure that even those who are still holding on will also lose it which is not good enough for the country’s economy.”

Meanwhile, one thing that cuts across almost all the malls is the fact that Shoprite, a retailer that deals mainly in consumables and the various food courts in the malls are the only businesses thriving in this difficult phase of mall operations in Ghana.

In the face of these difficulties that shop owners are faced with, the one way to sustain their interest in the “mall business”, they say, is for facility owners to reduce rent charges, to at least compensate for the low sales recorded.

Tenants also want facility managers to intensify entertainment activities at the various malls to drive traffic, and hopefully, increase sales.

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