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MarketPlace

Renovations linked to rise in spending by consumers

 

Thika Road Mall (TRM) is revamping its exterior appearance by applying a new coat of paint and replacing old signage in a rebranding exercise that could win it new tenants.

Evidence shows that renovations have an indirect positive impact on consumer spending habits.

TRM is refreshing its signature light brown and white colours. The move comes as the mall announced last week that fast food restaurant Burger King was its new tenant and has even included its signage on its walls. The Kenyan retail market is competitive and shopping centres have to adopt marketing strategies that attract new tenants, making it worthwhile for consumers to visit.

Last year, Two Rivers Mall adopted an experiential marketing model when it launched — to much fanfare — a children’s play area which attracted many consumers hence higher foot traffic to the mall situated along Limuru Road.

A 2018 research by international company Grit Real Estate Income Group shows that some malls in the country are expected to cut their rent price to attract new tenants because the market faces an oversupply of retail space.

Plus, the demise of Nakumatt Supermarket last year greatly impacted malls in the country. TRM was among the malls affected as it was its anchor store but it managed to replace it with French retailer Carrefour in November.

This enabled the mall to carter for the shoppers who live in its surrounding residential areas and frequent it for shopping.

However, it faces competition from Garden City Mall which is also situated along Thika Road.

On the other hand, TRM — in improving its appearance — is creating a new image and awareness giving it competitive advantage and value.

Increased revenues from refurbished malls is derived from higher shopper traffic and enhanced spending.

“Revamping a brand is like giving it a jolt so that it can either return to its previous state or give it a new look that consumers will appreciate and want to be associated with it. In the case of a mall, a new refreshed look is likely to increase time spent in the mall as customers explore it, which is good for tenants and sales,” said Kevin Munyao, an entrepreneur.

Indeed, according to a 2014 research on effects of mall rebranding on consumers’ shopping habits, satisfaction and purchasing behaviour published in the Journal of Retailing and Consumer Services, a mall should be rebranded when its marginal cost of renovating is proportional to the marginal loss of rental income.

Also, malls are renovated in order to compete with new entrants in the market who might have negatively affected their foot traffic.

The researchers found that rebranding a mall has no direct effects on consumer spending but the new atmosphere and perception influences their shopping habits leading to spending more time in the mall thereby increasing their spending.

“Renovation is one of the important marketing strategies that mall managers adopt in order to bring new life in the mall by re-doing some cosmetic work, refreshing various amenities, reshuffling stores and recruiting new tenants.

“By attracting new tenants it will, in turn, contribute to the rejuvenation of the mall. The effects of renovation on consumer spending are real but fully mediated by utilitarian shopping value.

“Renovation affects sales through the mediation of the utilitarian shopping value,” reported the researchers.

They collected data from a mall in North America which registers about seven million visits per year. The mall was renovated with the architecture of the building repainted, exterior and interior signage were replaced with new ones, parking space was increased and wall decorations were refreshed.

This led to a significant tenant increase, attracting new fashion and cheap chic international chains.

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