Smaller shopping centres are often thought to be facing grave challenges in view of the current economic slowdown and competition from larger shopping centres.
But that is not always the case, as smaller shopping centres can be as resilient as their larger counterparts. If you were to look at Singapore, you would notice that smaller shopping centres have become magnets.
As in any development, what is essential to understand is that the economic cycle and the dynamics of popularity is constantly changing. When planning a new development or even managing an existing shopping centre, the constant sensitivity to the environment would be key.
Owners and managers must understand that an environmental scan using the SWOT (Strength, Weakness, Opportunities, Threats) analysis would broadly define the current snapshot for their business.
The other analytical tool which is important to do is the PESTLE (Political, Economic, Social, Technological, Legal and Environmental analysis.
Survivability in any situation stems from how prepared and sensitive you are in your business. In the case of shopping centres which are small, in such adversity comes opportunities.
Shopping centres are normally associated with the perception of being large. It is always perceived that big is always better. However, once you really look around you, what do shopping centres mean to you ?
They are created to be the focal point of socio-economic activity within a communal setting. The size of the shopping centre depends on the community it serves.
Regional shopping centres are normally one million sq ft or more in net leasable area (NLA). The mid-sized ones would normally be around 500,000 sq ft to 800,000 sq ft of NLA and would serve a township. Smaller ones tend to be from 300,000 sq ft and below and serve the immediate community.
A shopping centre’s location, connectivity, convenience and integration to its market are important to its success.
In the case of Singapore’s experience, the smaller shopping centres are locate near main residential communities and almost always near transport hubs. They are also at about 200,000 sq ft and serve the immediate catchment.
Convenience is an aspect which has helped with the needs for smaller shopping centres. In Malaysia, small shopping centres can also survive and thrive.
Housing and residential areas are now better planned and connectivity has improved tremendously. As the residential areas become dense, the patience for traffic will be shortened and demand for convenience increases.
Older housing area are now neighbours to newly-developed residential options, be it landed or high-rise. With this in mind, shopping centres would definitely have to differentiate themselves. The larger shopping centres would tout their variety and completeness of offerings under one roof.
They would tout a full socio-economic offering of FFES ( Fashion, Food, Entertainment and Services). The larger shopping centres would be able to remain resilient in whatever conditions as the pull of the generic aspects of FFES offerings and events would be enough to create flexibility.
The ideal small shopping centre is a neighbourhood shopping centre sized between 150,000 and 300,000 sq ft of NLA. Going forward, the average sizing would be at 200,000 sq ft.
Where it lacts in being a regional magnet, it does well in location close to the residential community. It covers the gap for intimacy and convenience. Its role is to provide for the immediate basic needs of the community it serves without the hassle of going far.
A neighbourhood shopping centre’s core strength is its potential ability to provide the basic offerings for residents. The key tenants for a neighbourhood shopping centre would be the supermarket, a cinema, a gym, bookstore, child enrichment or education centres, pharmacies and beauty services, banks and food outlets. Cafes and restaurants would form the portion for the food category.
An event area completes the requirement. If designed well, the neighbourhood centre would be able to feed the needs of the community for the whole 12 hours of the business day. Some may even opt to open longer hours.
The possibility of a neighbourhood centre in remodeling itself is indeed exciting as being personalized and intimate to the community it serves cannot be replicated in a larger regional shopping cenre.
To understand this opportunity, one needs to just use the example of going for the mass-produced burger joint to another which would be able to provide some personalization. Or perhaps another example would be going to your local hypermarket versus your local grocer.
The question of survivability in any economic situation or being under the shadows of the larger shopping centres is just a myth. Both formats complement each other instead.
One provides a gamut of offerings whilst the other provides a straight-forward convenience of basic needs. The neighbourhood shopping centre’s strategy revolves around convenience and personalization.
Just imagine a trip to your neighbourhood shopping centre is just 2-5km drive away and connected with public transport. You are able to be there within 15 minutes and those closer can even walk over.
You would be spared the hustle and bustle and there is no need to dress up. You would be able to meet your neighbours and have a casual chat over food and drinks.
You would be able to see children around; of all ages as some would enjoy the enrichment centres, library or participate in school events held there. You can get your shoes fixed, keys done and get in and out of the shopping centre easily without the maddening crowd.
It is also well-known fact that neighbourhood shopping centres, if planned and managed well, would be able to ensure the tenants have a constant flow of actual consumers compared to larger shopping centres.
In the latter, the repetition of offerings creates competition with a shopping centre. This is greatly reduced in a neighbourhood shopping centre. Selection of tenants thus becomes key.
Neighbourhood shopping centres are here to stay. It will evolve into a strong alternative and to others, a complementary option for the market.
Its core strategy of differentiation is the understanding of the gap of the market that it serves. It is no different from the larger shopping centres in terms of strategy. The understanding of who you serve, what you want to be, where you want to be and how you are going to do it will echo still.
Anthony Dylan is a member of The Malaysian Shopping Malls Association