China Daily Global Edition (USA)
Malls, shopping centers change with the times
Retail venues betting on idea that some experiences are best experienced outside of homes
As COVID-19 wanes nationwide, many consumers returning to their favorite shopping centers often find their must-visit stores either updated or replaced.
During the past several months, when fears of the virus kept shoppers at home, many retailers and caterers have used the downtime to renovate their brick-and-mortar stores to make them more appealing. Commercial real estate operators have also made adjustments to tenants’ layouts to enhance shopping experiences.
In Taikoo Li Sanlitun, an energetic and vibrant shopping destination in Beijing, more than 20 store venues have been altered.
Among them are newcomer Shake Shack, the New York-style burger restaurant, which opened shop on Aug 10. The chain made its China debut in Shanghai last year.
The new store in Beijing draws inspiration from the capital’s traditional courtyard houses, or hutong, with contemporary updated touches. One of the Beijing restaurant’s signature items on offer is the Hutong Hawthorn, inspired both by the capital’s architecture and the popular fruit.
Meanwhile, at the main entry to Taikoo Li Sanlitun, Starbucks renovated its first flagship outlet on the Chinese mainland and earlier this month launched Bar Mixato, which integrates the modern cafe and bar experience to appeal to young consumers.
Wu Xiaolei, general manager of the north region for Starbucks, said: “Beijing is the first place that Starbucks met Chinese consumers. The newly renovated store is expected to become the company’s next coffee landmark and destination for urban culture.”
Starbucks opened its first store on the Chinese mainland in Beijing in 1999.
In July, Apple opened an entirely novel store adjacent to its previous location in the Sanlitun shopping and entertainment district. The new store is twice the size of its original and introduces several firsts for Apple such as its latest designs and first integrated solar array in a retail store in China.
Shoppers are beginning to return in numbers to retail destinations such as Taikoo Li. According to first half results of Swire Properties Ltd — which operates Taikoo Li — COVID-19 adversely affected retail investment properties on the Chinese mainland in the first half, yet footfall and retail sales on the Chinese mainland have recovered strongly since March.
Swire’s gross rental income from Chinese mainland retail properties in the first half was HK$1.1 billion ($141.8 million), 8 percent lower than in the same period in 2019.
Gross rental income at Taikoo Li Sanlitun in Beijing decreased in the first half of 2020 and retail sales decreased by 38 percent. The occupancy rate was 96 percent as of June 30. Improvement work carried out reinforced the property’s position as a fashionable retail destination in Beijing. The refurbishment of Taikoo Li Sanlitun West as an extension to Taikoo Li Sanlitun is expected to be completed by 2021.
A report by RET Real Estate Consultancy said that since June, 188 new stores opened in Beijing, while the number was 173 in Shanghai, 192 in Shenzhen and 128 in Guangzhou. Of the newly opened stores that were either eateries or cafes, in Beijing there were 96, Shanghai 69, Shenzhen 60 and Guangzhou 84. This indicates that an increasing number of caterers continue to expand in Beijing. The report said long-term demand is expected to continue to grow and the prevalence and preference for online shopping during COVID-19 will likely plateau and taper off, laying a solid foundation for quality brands and shopping destinations.
Shanghai Xintiandi, in the heart of the city, is noted for its upscale restaurants, bars, cafes and boutiques, and recently saw an increase in the ratio of the retailers of cosmetics, lifestyle products and fashionable brands in order to diversify shopping options.
For example, Xintiandi invited more world-leading cosmetic names such as NARS and YSL to open flagship stores. Lifestyle brand Tom Dixon’s largest and first Asia-Pacific flagship store is also in the pipeline.
Integrated shopping mall Xintiandi Style I, housing cutting-edge trendy brands, will be launched in November this year to further appeal to high-end consumers.
Meanwhile, Xintiandi has been adding more restaurants such as
Foodie Social — a 3,000 square meters venue combining the catering and retail experiences.
Clarence Lee, commercial director of the Taipingqiao and Panlong projects of China Xintiandi, said: “With strong support from the government to boost domestic consumption, we have adopted multiple approaches to improve the cultural and social experience in Shanghai Xintiandi since the breakout of the epidemic this year.”
There are now more than 50 restaurants and cafes at Shanghai Xintiandi offering delivery services to nearby offices and residential buildings through online ordering channels.
Lee said they have spruced up shopping festival themes, including developing live performances and art activities, and joined hands with tenants in launching promotions and exploring digital tools such as livestreaming to gain more access to consumers.
The RET report added that despite uncertainties along the road to recovery, leading developers and mall operators have never been so firm in developing their online platforms — including online shopping websites and livestreaming promotions — to further expand customer outreach, extend services and boost sales.
A recent China Chain Store & Franchise Association (CCFA) report on Chinese shopping centers suggested mall and shopping center operators improve their daily operational capacities and embrace a transition to digitalization.
The report also found that earlier this year, the COVID-19 pandemic had a severe impact on shopping centers and commercial real estate sectors. The survey collected data from 2,014 retail venues from 44 first-to-third-tier cities. Survey respondents were aged between 18 and 55, and the survey was carried out between October 2019 and March this year.
About six out of 10 shopping centers said the numbers of customers fell more than 50 percent in the beginning of the year compared to October of last year. About 40 percent of shopping malls surveyed said their first quarter revenue was down 30-50 percent during the sixmonth period.
Developing destinations that have their own unique characteristics in various cites and areas is what shopping mall operators have prioritized in recent years in order to offer must-visit experiences.
“Now, an increasing number of consumers make purchases online instead of visiting traditional retail venues,” said Huang Shaomei, executive director of New World Development Co Ltd and chief executive officer of New World China.
“Such changes in shopping behavior have inspired renovations of an art-oriented business model for K11 Art Mall,” Huang said.
K11 Art Mall, founded in 2008 by Adrian Cheng — executive chairman of New World China Land Ltd — has now sprung up in eight cities across the Chinese mainland.
It is designed to become a destination offering an environment that integrates art, culture, nature and kid-friendly elements to set a consumption trend among a new generation and avoid homogenization. “Such cultural and lifestyle experiences could only be enjoyed if one ventures out of one’s home. That is why K11 succeeds,” Huang added.
Beijing is the first place that Starbucks met Chinese consumers. The newly renovated store is expected to become the company’s next coffee landmark and destination for urban culture.”
Wu Xiaolei, general manager of the north region for Starbucks