What exit of ‘Game’ from Tanzania may mean for shopping mall developers

The news that giant South African retailer, ‘Game’, is poised to close shop in Tanzania, must have sent shock waves down the spines of not just the thousands of customers who are used to visit the supermarket looking for bargains, but also of investors, current and prospective, in shopping malls.

Large shopping malls made their debut in the United States in the late 1950s, riding on the shoulders of the love for suburban living, supported by investment in infrastructure especially highways; and the near universal car ownership. Investors poured millions of dollars creating hundreds of thousands of mall space over the years. Malls grew in size and complexity. By 1975, malls and shopping centres accounted for 33% of all retail sales in the United States.

Besides shopping, the Mall was aimed at providing a “third” place for communities. The first two places were the home, where one lived and the work place. The third places are where people go to exchange ideas, form relationships, and create communities. This could be a pub, a park, a place related to worship, the gym or the stadium. The Mall was supposed therefore to, also, bring people together.

By 1986, shopping malls were named as one of the 50 wonders that revolutionalised the lives of consumers. The American Mall reached it peak in 1992, with its final evolution into the mega-mall.

The basic mall layout has remained the same over the years. Two departmental stores at each end connected by smaller shops in between. These bookending departmental stores are known as anchor stores and serve as the main attractions for the rest of the mall.

Come the 2000s, however, consumer habits shifted away from the department store altogether, such that, today, when vacancies occur, the stores become difficult to fill. With newer and better malls coming to the market, the older ones, without their anchor tenants, are left to drift away and drown. As of today, hundreds of malls in the US have already been pronounced dead.

Turning to Tanzania, it is true that Game created a new shopping experience at Mlimani City in Dar es Salaam. Shoprite, also from South Africa, and Uchumi and Nakumatt from Kenya followed suit.

The latter three had, however, long exited Tanzania.

Game became the anchor tenant at the famous Mlimani City Mall, admittedly the most prestigious and popular mall in the Country. Among its advantages, is the ample car parking space, security, and elegance. Going to Mlimani City is, besides shopping, a family outing. Children have their own entertainment, cinema goers have their take, and there is a large conference centre. Game introduced certain lines of items which were not common in Tanzania such as those related to gardening, outdoor recreation and sports. Game attracted other retailers, banks and other financial institutions, making Mlimani City, a one stop centre for shopping, financial transactions and recreation. Among the marketing strategies used, was a weekly pull-out, placed in key news papers.

One of the reasons cited for exiting Tanzania and other African countries, is poor performance. This means that Game is not realising the profits it had envisaged, and indeed may be suffering from losses. The cost of doing business including importing goods, taxes and rents may be on the high side.

There have been signs over the years that Game was no doing well. Shelves were becoming empty. Items that got sold out were not being replenished with similar items. Moreover, one observed weakness was the marketing of brands, especially in electricity and electronics, which were new to Tanzania. Some of these were clearly not made for the local market.

It could also be argued that the bulk of Tanzanians are not used to buying from supermarkets. They are used more to the small shop where there is personal contact between the seller and the buyer. In most cases, any purchase is characterised by bargaining and haggling over the price. In large supermarkets the price is fixed and there is no discussion about it. This makes supermarkets only attractive to those who have been abroad and are happy pushing carts, selecting items and paying, with little or no discussion. The common man therefore will hardly be attracted to shopping from supermarkets.

With the exit of Game, investors in Mlimani City have to think hard on how to replace such a valuable anchor tenant.

Those who are thinking of investing in shopping malls may well want to consider the viability of this model, given the US experience, where many malls are dying. It has also been noted that there is an oversupply of shopping malls in Nairobi. The shopping behaviour of many of us should also inform the kind of shopping outlets that attract the majority of the population.