In my ongoing European conference tour, lots of good questions come up when I speak about the rise of the African mall, such as the sudden departure of the world-renowned, high-end department store Galeries Lafayette from the Morocco Mall, North Africa’s #1 shopping centre. What does this mean in the current context of a shopping mall proliferation all across the Continent?
As I am writing this, the website of Galeries Lafayette, a Paris France headquartered retail giant, still mentions “2011: Opening of a Galeries Lafayette store in Casablanca” and omits its March 2016 Moroccan exit. Understand: it was not a pretty affair.
The Casablanca store was their first-ever and sole presence in Africa and only their fourth overseas launch. It had around 320 brands, including ready-to-wear, cosmetics and accessories. Sitting on 10,000 sqm, the three-storey store was not only the mall’s largest anchor tenant, it was also its centrepiece, designed as a ‘building within a building’ with its own recognizable façade.
The departure of an anchor tenant is an extraordinary situation for a mall, let alone after only four years of operation like in the Galeries Lafayette case. In general, it is the direct consequence of huge financial losses. It has led to the agony, and ultimately the closing of numerous malls across the world. So Aksal, the company owning Morocco Mall, has speedily announced that Galeries Lafayette will be replaced by “a famous international brand, known for its low prices with its fashion, decoration, house and garden sections”.
What’s in it for consumers?
As part of my research in Casablanca last year, I interviewed a sizeable panel of affluent consumers about their shopping habits. They all reached a clear consensus: they had long divorced mass shopping. For various reasons, they look at a variety of alternatives – among which shopping tourism – to fulfil their great thirst for luxury and elitism. As a result, this consumer group may be looking at the Galeries Lafayette story with a mix of indifference and curiosity.
On the other end of the spectrum, middle class consumers, who form the vast majority of the mall’s clientele, are craving for cheap, low range, yet modern and foreign, brands. This is precisely the category to which around 70 percent of the Morocco Mall offering already belong to, notably in food, clothing and accessories.
During my several mall visits, I had noticed that the luxury stores including Galeries Lafayette, Dior, Louis Vuitton, Gucci and Prada (who exited the mall in 2015) were almost desert, whereas low-end ready-to-wear stores such as Orchestra, Okaidi and Next were relatively busy. It was also evident that, while average Moroccans were visiting the mall in massive numbers, particularly on weekends, they were relatively frugal in spending (the Morocco Mall does not provide information on its sales performances), preferring to splurge on fast- and casual food and children’s entertainment. Therefore, they will read the arrival of a mega clothing- and homeware discounter as an incentive to visit and spend more.
What’s next for Morocco Mall is an open question: with both a new positioning as a low budget mall and a greater embrace by the middle-class, will it make sense for the handful of remaining luxury stores to continue their presence?
In the broader context of the accelerated development of modern retail across Africa – in 2016 DR Congo and Côte d’Ivoire have seen the opening of their first malls, in 2017-18 Kenya, Angola and Mozambique will see the opening of their largest malls ever – the Galeries Lafayette case will likely be seen as an isolated episode by a number of African retail industry insiders. For one, Morocco is very different from Eastern and Southern Africa, particularly in terms of shopping culture. Rich Moroccans find it natural to catch a two-three-hour flight for shopping sprees in Barcelona or Paris. Affluent Eastern Africans do not have that habit and therefore will have different expectations vis-à-vis local retailers.
However, one of the most important factors for success in the mall industry, regardless of markets and cultures, is the tenant mix. The tenant mix must meet the customer demand which is driven by demographics, trade area, shopping behaviours and cultural influences. It is therefore expected that some of the future malls will focus on thoroughly understanding consumers as to perfectly align themselves with the needs and expectations of a specific consumer segment. If there were one lesson to be learned from the Galeries Lafayette debacle, is that trying to cater simultaneously to multiple consumer groups is a recipe for failure in today’s Africa. The successful malls will be those who will have clearly defined targets and uncompromising positioning.