Merely adapting to a new environment
With no end in sight for what e- commerce might offer next, it begs the question, ‘Is there a place for malls in the future?’.
An overwhelming response to that question is an optimistic yes.
In an interview with Free Malaysia Today, the Malaysia Shopping Malls Association ( MSMA) advisor Chan Hoi Choy said that malls would just have to adapt to competition from online retailers and survive.
He explained that it was an opportunity for malls to capitalise on their ability to offer new experiences to their patrons by promoting socialisation and engaging their five senses.
“To face the onslaught of online retailers, malls need to ask themselves what are the trade categories that can conjure up experience and socialisation, among other pertinent questions.”
Ling reckons that our need to socialise in human nature is definitely a factor to consider in the future of malls and a key strategy to fulfil that need is to incorporate a more Food and Beverage (F& B) focused tenant-mix.
“Humans are sociable creatures, and although we may spend a lot more time on our smartphones and computers, it still does not mean that we want to be cut off from everyone in real life.
“Hence, many malls today are shifting or updating their tenant-mix plan as F& B and entertainment are the main crowd-pullers for malls now – and many of them are in- creasing their F& B mix to as much as 30 or 40 per cent of their entire tenant-mix.”
Previously, the standard for most malls was to only allow for only a maximum of 15 to 20 per cent of their tenant-mix to be made up of F& B tenants.
However, e- commerce once again seems to be cutting into this segment as food delivery applications such as Food Panda start to gain momentum in the Malaysian market.
Sim notes that in Peninsular Malaysia, online delivery is already starting to make its mark but opines that it will be a while before it starts affecting Sarawakian markets due to our ease of travelling and easy access to parking.
Nevertheless, he warns of the potential threat and suggests that malls should also definitely look beyond the F& B segment and into more emergent-proof businesses.
“I don’t think e- commerce can take out the function of malls altogether because there many things that cannot be traded online still such as services and entertainment.
“For example, you can’t trade a haircut online and you can’t trade an experience like singing karaoke online either. These are the sort businesses that are more emergent- proof to the rise of e- commerce.”
Sim went on to add that another strategy he has employed at Vivacity Megamall was to appropriately position itself among other malls. “We work quite independently for our mall and we do so by purely focusing on bringing in brands that locals will like. “Sure, we have some high- end brands but ultimately we know that the market is in the mass market and hence why we have made our mall our accessible by positioning ourselves as a medium to high end mall.” Both Vivacity Megamall and tHe Spring are positioned as medium to high end malls and have posted occupancy rates of 90 and 98 per cent respectively. An experiential experience Besides calling for a more modern and relevant tenant-mix, Chan is also lobbying for mall owners and managers to keep footfall up by focusing on providing their patrons an experiential experience. “A trip to the mall with take on a different dimension and meaning in years to come and it is a question of what you do with the space, and how you make it experiential,” he said.
Going off this, Ling notes that many malls are now employing more experiential marketing tactics based of their patrons wants and creating shopping experiences that are at often times unique.
“For example, they may build a Germanstyle Christmas market in their main events space, complete with very- detailed buildings and even fake snow.”
Chan’s advice has definitely not fallen on deaf ears as around the state, local malls have already begun deviating from the traditional product demonstration booths, experimenting heavily into more unique events such as flea markets, trunk sales, food festivals and even live music performances.
While analysts have been very fairly optimistic about the future of malls and retail space in an increasingly digital world, the retail segment is still set for a rough couple years due to oversaturation of current retail space and a market sentiment from a weak ringgit and high inflation rates.
It’s not all doom and gloom however, as Ling explains, “All industries and economies face it about every decade or so – it’s a cycle. We will recover eventually.”
To face the onslaught of online retailers, malls need to ask themselves what are the trade categories that can conjure up experience and socialisation, among other pertinent questions.