KUALA LUMPUR: Shopping mall operators must closely work with their tenants and comprehensively study the market segmentation of their consumers’ profile.
This is because shopping malls are under pressure due to technological advancement and changing shopping trend among consumers in terms of payment system.
ExaStrata Solutions Sdn Bhd chief executive officer Adzman Shah Mohd Ariffin said the retail sector has changed tremendously due to the advent of online shopping platform and the emergence of mobile shopping applications.
“Retail industry generally has progressed quite advance of transitioning into online shopping platform due to cheaper access to products and choices for consumers.
“This opens up a new avenue for shoppers to experience shopping at their own leisure,” he told NST Business recently.
The real estate consultant firm said consumers are experiencing problems of getting to the market place with regards to traffic congestion, parking space and time limitation as well as parking charges.
“Consumers want things fast. They prefer not to go for shopping at the marketplace. All this has become part of our lifestyle now where we are very exposed to social media and going towards shopping in the clouds,” he added.
Adzman said more people have gone to online shopping due to its convenience and cheaper prices offerings.
However, he said some people still prefer to look at the products first and try on to match their suitability, quality and materials before deciding to purchase.
“Most Malaysians find shopping is a very important past-time. There is difference between going to shop and serious shop, as well as online shopping,” he said.
Adzman pointed out those only highly competitive malls would receive influx of traffic if operators offer the right dynamic of retail mix-options.
“Malls are now offer foods and beverages (F&Bs) offerings as well as affordable luxury brand retails,” he said.
He added malls have become a social interaction centre, noting that people go to the mall for leisure and social as well as recreational activities.
“Malls who have got strong advertising promotional activities, tend to draw a lot more people compared to those conventional rental purposes malls.
“Shopping has become a coincidental. But most people now enjoy going to the mall for air-conditioned place with F&B offerings,” he said.
Kenanga Research said shopping malls are under pressure to change with the ever-changing technological trend such as e-commerce, artificial Intelligence, Internet of Things, robotics and financial technology.
The research house said this has a huge impact on consumer expectations on how the malls should position themselves.
“The Malaysian government has vouched for the importance of digital marketplace by setting up Digital Free Trade Zone (DFTZ) (full launch in third-quarter 2018) in collaboration with Alibaba Group, pushing boundaries further for the local companies to compete in the global market,” it said.
Kenanga believed that shopping malls under its coverage, AEON and Parkson have been exploring the opportunity to widen their reach into the digital space.
For example, AEON Maxvalue supermarket tieups with Honestbee (Singapore based e-Marketplace) to do on-demand delivery of grocery items.
Kenanga Research noted that the outlook for retail real estate investment trusts (REITs) are not exciting due to increased supply of retail space and shifting demand as e-commerce continues to bite into the market share.
“This has resulted capping strong rental reversions over the long run. To stay relevant, mall managers need to adapt to the rapid changes in the retail environment to integrate and animate shoppers’ experience,” he said.
However, Kenanga Research believed landmark malls would fare better than neighborhood malls due to better footfall traffic, and maintain a ‘Neutral’ call on consumer and mall REITs.
Adzman said mall operators should also provide adequate car parks, actively involve in advertising activity and have strong retail mix of at least 30 per cent for F&B to face the challenging time.
“Mall operators should evolve and always have the strength to attract new businesses and trade with better offerings and give better value and choices to attract the traffic.
“They must have strong retailers (tenants), particular foreign brands by offering good fashion apparels to attract consumers,” he said, adding that this will set the branding and positioning of the mall.
On the digital space in mall, Adzman said more people look into ways of using e-wallet for their purchases as retailers offer special deals.
“Our society always looks at value for money before making their purchases. As long as there is an offer, they will use it (e-wallet) and it is popular payment method among the youngsters,” he said, noting that technology advancement was a choice and convenient for consumers.
Kenanga said rapid technoligical advancement has adversely impacted consumer perception of shopping malls position as the main shopping destination.
It said the shifting in demand to plaftforms, which continues to bite into the market share of physical stores, have completely distrupt the normal physical business especially during the major festive celebration.
“Shopping malls should reimagining their physical retail space for an experience that only physical stores can offer by exploring into the new retail trend such as retailtainment, active entertainment, grandeur entrance, mixed developments, unique dining options as well as combining physical space and digital space through Online-to-Offline (O2O) retailing.”
Lazada speaker and regional chief executive officer, Will Ross said Southeast Asia’s (SEA) digital economy was growing rapidly, but e-commerce penetration rates are still only at 4.0 per cent of total SEA retail sales.
“Both shopping malls and e-commerce has to co-exist together by combining the traits of physical stores (as physical viewing, inventory storage, and pick-up point) and the traits of boundless digital space to widen the reach,” he said.
To address the gaining prominence of ecommerce, it said mall managers should work on adapting to the rapid changes in the retail environment by animating and integrating the mall experience with technology to enhance the consumer experience.
It noted that there was a growing trend shifting from the “large anchor tenants” into more mini anchors and themed and concept plays with niche tenants.
“Most REITs are also upping their online presence by beefing up their websites and including mobile phone applications for malls to update shoppers on latest happenings and tenant promotions.
“Over the longer run there are talks of establishing in-house online portals that supports tenants to market their products and services to reach a wider market.”
Although the retail REITs remain challenging, Kenanga believed landmark malls (i.e. PAVREIT, SUNREIT, KLCC, IGBREIT) will continue to weather the storm better due to higher footfall traffic (versus neighbourhood or suburban malls), and tenants preference to maintain a presence at these malls.