Keyword

Exclusivity clauses, retail leases, South Africa, multiple food grocer tenants

Abstract

Major food retail chain groups have historically insisted on exclusive trading rights. However, many developers who had conceded to exclusivity clauses in the 1980s and 1990s are reconsidering the implications of such clauses on their centres, and more specifically the potential effects of excluding a segment of the consumer market by virtue of tenant selection and consumer brand preferences. Legal inquiries ensued, including contract law and the rights of the tenant; common law and the potential effects of denying the consumer access to preferred brands; as well as potential anti-competitive practices by virtue of the exclusion of certain tenants from a shopping centre. The quantifiable impacts of dual or even multiple food grocer anchorage on shopping centre performance are investigated in the present study. Analyses based on comprehensive quantitative trading statistics of specific shopping centre size categories revealed identifiable and positive correlations between multiple food grocer anchorage, on the one hand, and aggregate shopping centre trading densities and foot counts, on the other hand. These findings suggest, first, that the average consumer supports more than one food grocer brand on a weekly basis, and therefore does draw benefit from a shopping centre with multiple food grocer options and prefers such offerings over single grocer centres. Secondly, the shopping centre anchored by a multiple food grocer offering has an enhanced power of attraction and risk mitigation attributes over its single grocer peers. The findings make a unique contribution to the debate about the relative merits of single grocery tenant in South African shopping centres as against the merits of having more than one food grocer anchor and provide shopping centre developers with a methodology for quantifying such effects.


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