By Sharina Ahmad
EVERY year, new malls are being developed around the country. They need to stay relevant and evolve with the rapid changes in the retail environment.
However, those existing malls need to continuously re-invent themselves to keep up with the competition as today’s shoppers are looking for more than just what’s available online. They want an experience.
Retail design firm Visata Creative Sdn Bhd co-founder Timothy Liew says malls have always been a destination, but the concept of a “mall rat” no longer exists.
“The days of meeting friends at the mall and shopping all day are gone. It refers to a third place apart from home and work.
“Malls are still considered a destination, but it’s because they now offer amenities, experiences and entertainment to enhance the shopping experience. They are now anchored not only by department stores but also with popular restaurants, salons, cinemas, and fitness centres,” Liew tells FocusM.
What is this third place?
According to Liew, the third place can be described as a public place where people can gather and interact, as well as be easily accessible.
“So what do these malls have to do to stay attractive and be able to pull in the crowds? Good facilities and customer service must go beyond expectation. Also, it is for retailers to ensure the growth of their business.
“What this means is there should be a focus on creating a unique experience for customers when they visit the retail store or the mall. For example, when you go into high-end stores such as Gucci or Prada, you expect a level of service that is beyond that of an average store like Uniqlo.
“As such, there are a few brands in the US that use their stores as guide shops rather than just retail outlets,” he explains.
A guideshop is a version of a showrooming approach that allows consumers to touch, feel and try on products before ordering the items to be delivered to their homes – there are no physical items sold in the stores.
PKNS Real Estate Sdn Bhd (PREC) CEO Fakru Radzi Ab Ghani says malls should be a safe place for people to dine in and shop. PREC, which spearheads real estate related investment for Selangor State Development Corp, manages Shah Alam City Centre Mall, Kompleks PKNS Shah Alam and Kompleks PKNS Bangi.
“Hence, mall management has to take preventive measures for the health and safety of their patrons amid the Covid-19 coronavirus outbreak. Shopping mall operators should frequently disinfect surfaces such as escalators and handrails, trollies, doorknobs and lift buttons,” says Fakru Radzi.
He emphasises that composition of food and beverage (F&B) offerings in a mall should be around 30% to 40% to attract people to visit the mall for dining and gatherings.
Other supporting factors such as children’s play area, beauty centres, groceries, gym and entertainment centres are important to make customers stay longer in the mall, he says.
Fakru Radzi adds that for a mall to stay relevant, the operator has to understand the needs of the surrounding communities (in the case of a neighbourhood mall).
“Positioning the mall to be a family-destination mall is an ideal thing to do. It caters to three important groups of customers: children (navigator), parents (spender) and teenagers/young executives (marketer/influencer).
“All merchants/retailers need to have a strong online presence through social media campaigns in order to have good brand exposure and be able to reach out to the target audience (customers),” he says.
He adds that malls will then get a good spillover effect from merchants’ strong marketing campaign.
“Getting all merchants to get on board with cashless transactions is also important as this provides convenience to customers without having to carry too much cash.”
He shares that the physicality of the malls will need to be refreshed continuously by having a theme depending on certain occasions or festivals, for instance.
“It’s important for a mall to have its theme changed from time to time. The theme will depend on what events/functions/campaigns to be organised in the mall. This will give a different experience to the customers.
“It is also to retain their regular customers and attract new customers. Some high-impact events are able to give a good introduction to new customers.”
He adds that malls need to be located in an integrated development to have an advantage as it has supporting developments such as high-rise residentials, hotels, convention centres and office buildings, and some even have theme parks.
“These components will provide the traffic to the mall and will have sufficient traffic for weekdays and weekends,” says Fakru Radzi.
UEM Sunrise Bhd managing director and CEO Anwar Syahrin Abdul Ajib tells FocusM that with the change in consumption trends, retail malls are evolving beyond mere sales. UEM Sunrise owns Publika in Kuala Lumpur and Mall of Medini (Iskandar Puteri) in Johor.
“We are increasingly seeing more experiential and activity-based concepts giving shoppers reasons to visit over and over again. We can expect malls to add more communal spaces and non-retail components into their mix.
“More concepts like urban farm-to-table, workshop spaces for tutorials by professionals and a cycling track can create a vibrant space where shoppers and families can shop, eat and play,” he shares.
The farm-to-table concept is a social movement that is on the rising in KL’s dining scene. This is where restaurants and chefs use ingredients and produce sourced from local farmers and suppliers – such as fruits, vegetables and fish. Generally, food is sustainably sourced to maintain a healthy ecosystem in the food business.
In the city, restaurants like Sitka and Dewakan have been championing this sustainable concept for a few years.
For UEM Sunrise, the company has strived to make the visits to malls a delightful experience to patrons.
“We have been curating placemaking activities and events in our malls such as the ‘Publika Jazz’, the ‘Publika Street Circus’ and the upcoming ‘Ahimsa Life Festival’ which are targeted at our increasingly discerning and sophisticated customers looking for one-of-a-kind experiences,” he says.
He opines that the retail landscape is ever-changing and is expected to remain fluid. Malls should continue to offer some spaces for pop-up retail, which serve as testbeds for new products.
This provides malls the opportunity to offer new options on top of their existing retail mix. This ever-changing nature will create a sense of excitement to attract shoppers, says Anwar Syahrin.
“Technology adoption and capturing consumer behaviour and shopping patterns will also be increasingly important for mall owners and retailers to reach out to customers effectively.
“With rising competition and newer malls coming up, an increasingly important key element is for existing mall owners to invest and upgrade malls. Asset enhancement initiatives include improving the circulation areas of the mall, as well as creating inviting and open retail space with better visibility,” he adds.
Impact of Covid-19
Visata Creative’s Liew says it is still too early to tell the impact Covid-19 has on the sector.
“To date, Malaysia is facing 673 cases (as of March 17) of Covid-19; we can see that it has not really dampened the mood of shoppers visiting most shopping malls.
“We perhaps may see a slight potential slowdown in the retail business as everyone is a little on edge. In our opinion, the virus has caused fear in the general public and as such shoppers might hold back on spending patterns,” he says.
Liew firmly believes that the most heavily impacted industry would be hospitality and tourism, which, due to less visitors coming to Malaysia, will ultimately affect the retail business especially for retailers with businesses that are heavily dependent on external visitors to Malaysia.
At present, Liew says mall owners are closely monitoring the situation. “Some malls are considering allowing certain tenants to operate shorter hours in an effort to reduce operating cost. Malls in Malaysia have also been seen to provide marketing assistance to tenants in an effort to stimulate spending and drive sales.”
However, PREC’s Fakru Radzi says due to Covid-19, fewer patrons have been visiting malls since the outbreak.
“Even tourists have cancelled their travel plans; footfalls are dropping mostly at main touristy malls. Hence, more crowds are diverting to go to neighbourhood malls. For PREC, we have not seen any significant drop in the footfalls as our malls serve communities in the neighbourhood.”
The situation has impacted the retail business, he says.
“The retailers claimed that their sales have dropped 30%-50%. However, we are unable to measure the drop precisely. Apart from sales, product supplies coming from China are affected due to the temporary closure of a lot of factories in China.
“This has affected the supply chain in the business. This outbreak has also affected maintenance work which involved some parts coming from China,” he says.
Fakru Radzi adds that the actions taken by malls are through social responsibility cost by engaging extra manpower to clean public areas, taking cleaning precautions and creating awareness campaigns.
Anwar Syahrin noticed a slight decrease of foot traffic through its carpark transactions in Solaris Dutamas which declined by less than 10% yoy in January 2020.
“This is to be expected with shoppers who are more cautious now under the current circumstances with the outbreak of the Covid-19 virus.
“We do not see the drop as significant in the central region as our shopper base is still predominantly locals or residents living in the vicinity. For the southern region, the impact felt was greater and this is to be expected given the proximity to Singapore,” he notes.
However, he says the company is optimistic and believes that the overall situation should improve by May 2020, taking a cue from the SARS outbreak back in 2003 when a seasonal decline in infections when the weather warms in China.
Anwar Syahrin adds that there has been a general decrease in sales in January compared to the previous year by some of its F&B tenants. The decline in sales can range from low single digit to as high as 29%.
“However, there have been some exceptions to the trend where there was a yoy increase in sales for one of our grocers, a quick snack outlet, a coffee place and one of the eateries which had undergone refurbishment in 2H19.”
With that, he says some of the measures that the company has taken include increasing the frequency of cleaning and disinfecting in common areas. “We have made hand sanitisers available around Publika in six different locations and have also identified an isolation area in case we have to deal with suspected cases.”
According to Liew, he foresees more malls focusing on creating experiences for their shoppers with malls such as 1 Utama taking steps to create a new wing in their mall which heavily emphasises experience such as the “wave rider” and “air rider” – a hybrid boardsport combining the techniques of surfing, snowboarding, skateboarding, wakeboarding and skimboarding.
Nevertheless, Fakru Radzi says with 85% of malls in the market being in a segment of small malls (less than 500,000 sf) which are neighbourhood malls, it is important for these malls to understand the demographic in their neighbourhoods.
He claims that only then will the malls be able to fulfil the needs of the communities.
Turning malls into multi-purpose spaces
Fakru Radzi said malls are becoming increasingly more community-centric.
“In the US, non-performing malls are turning into community centres. In Malaysia, we are already seeing malls shaping to be more community-centric. In a matter of time, we will see more malls offering tuition centres, self-defence classes, cooking classes, wedding hall, co-working spaces and co-living.
“Being a third world country, we are famous for our street-product offerings. Very soon we will see street retail to be part of mall content,” he says.
This will attract communities of little spending power to come back to the mall, says Fakru Radzi.
“The concept has already been implemented in countries like Thailand. GDP Architects Sdn Bhd (the architect for Pavilion KL) has also made a study on how street retail can be incorporated in a proper mall setup.
“Malls are competitive in giving the best and safest place for crowds to come in and shop. Giving public notices of the precaution of the outbreak is one good example. The retail industry has become more and more competitive each day. Hence, giving people the most comfortable environment can be one of the reasons for people to visit our malls.”
UEM Sunrise’s Anwar Syahrin says some of the new things that can be expected in the industry include crafting user experiences to entice multiple visits – for example, open green space for the surrounding community to use.
“This is specially crafted family-friendly cinema halls. Designed for families, the halls will be equipped with play facilities that inspire audiences through edutainment. More established online merchants are expanding into physical stores, malls embracing omnichannel through click-and-collect services and retail spaces turning to the power of data to ensure that the experiences offered to their customers are personalised and relevant.” – April 9, 2020
