The domestic and global economic environment has led to an overall slow¬down in demand. This adversely impacted retail sales, not only in shopping malls but also the retail industry in general.
In the larger economic context, household debts are 89% of gross domestic product, impacting discretion¬ary spending ability, and thus weakening buying power.
Compounded with this, the shrinking ringgit has led to higher costs of imported merchandise, resulting in challenges in sales of fashion, luxury and big-ticket items.
Rising operational costs and greater regulatory compliance, in addition to strong pressure on rental rates, have also affected malls’ bottom line and yield to property owners.
In view of this, several medium-sized and large malls which were due to open this year have been put off to next year. Among them are Mammoth Empire Group’s Empire City and MyTown Mall, which is jointly developed and owned by Boustead Holdings Bhd and Ikano Pte Ltd.
Nevertheless, several suburban malls have opened or will open in the Klang Valley by year-end, which include Sunway Bhd’s Velocity Mall in Cheras, Kuala Lumpur and See Hoy Chan Sdn Bhd’s Starling Mall in Damansara Uptown, Petaling Jaya.
The scenario for malls remains very challenging and competitive, to say the least. Nevertheless, successful malls must stay relevant to shopping trends and target markets to remain competitive.
The key words for malls are transforma¬tion and evolution, which have given rise to new dimensions such as experiential shopping, malls in mixed developments, shopping hubs, outlet malls and a new breed of shoppers and retailers.
Malls are capitalising on grand deco¬rations and creative marketing campaigns to enhance shopping experience. This is stimulated by our multi-cultural heritage with its numerous and diverse elements which make shopping an exciting expe¬rience and bring it to a new dimension.
Popular malls create ambience with their merchandise mix and marketing programmes to gratify shoppers’ senses so that, in addition to “retail therapy”, shopping becomes a satisfying experience.
Shoppers are engaged, excited and entertained at the same time in all their five senses. They tend to flock to malls where they feel good, even for window shopping initially which can be converted into sales.
To stay above the fray, malls must create the impactful wow factor.
Unlike older malls, new ones are gen¬erally no longer standalone. Most, if not all, new mixed developments comprising hotels, offices, residences, transporta¬tion hubs and educational institutions, invariably have a mall or allocated floor space for retail offerings, which are now a critical component.
The synergy from these components in a mixed development is important, and it is up to the mall management to harness it. Merchandise mix has become more innovative and eclectic to cater to heterogeneous shoppers.
Shoppers are attracted to hubs or locations with numerous malls in the vicinity as they provide options for shoppers to go mall-hopping.
Malls in such locations must offer varied merchandise mix to cater to dif¬ferent types of consumers, particularly to attract their target crowds.
This is where experiential shopping comes strongly into play as a mall’s ambience and ongoing activities will appeal to discerning shoppers. Tour¬ism-related authorities and travel agents play key roles to promote these shopping hubs to tourists.
In recent years, there has been a swing towards suburban outlet malls. These new-dimension malls sell past season merchandise, including luxury items, which are sourced directly from manufac¬turers, often cheaper by at least 25-30%.
The first outlet mall opened in Johor five years ago and has since added new outlets in Sepang, Melaka and Penang. Another is due to open in Genting Highlands in Q1, with at least two more in the planning stage.
One key principle of outlet malls is to market to the masses branded goods which are usually priced much higher at traditional malls and affordable only to the well-heeled.
There is a growing trend among shoppers, particularly Gen-Yers, to shop online. Although online shopping has yet to contribute significantly to overall sales, successful retailers must harness this new trend to remain relevant. This is due to pressure from online platforms and also to attract this new generation of shoppers which will be the next boom.
Future retail trends in malls will reflect the growing affluence of the younger generation, and if we get out of the middle-income trap, we are likely to see growth prospects in the longer term.
Notwithstanding this trend, nothing compares to retail therapy. For example, shopping at brick-and-mortar malls provides instant gratification as shoppers receive their purchased merchandise on the spot instead of waiting for it to be delivered to them.
Besides, looking at and getting a feel of the merchandise to be purchased is very different from browsing online images, which may well fall below your expectations when you receive it.
Our malls have come a long way, evolving and revolving the past 40 years.
They will continue to strive and pros¬per as they forge forward with creativity, ingenuity and resourcefulness. They must transform and evolve to keep up with the times.
In the final analysis, in a dynamic world where change is the only constant, malls are here to stay.
Tan Sri Eddy Chen is president of the Malaysia Shopping Malls Association and group managing director of MKH Bhd