Shopping malls turn to F&B for better yield

Need for more F&B outlets is becoming more significant, in line with the consumers’ evolution, says COO


Shopping malls in the Klang Valley are undergoing a “transformation period”, with more retail operators across all tiers remodelling their retail spaces into food and beverage (F&B) outlets.

Experts believe the integration of F&B outlets within a shopping space serves as a hedge against increasing competition, amid the aggressive rolling-out of new supplies of retail outlets.

Malaysia Retail Chain Association (MRCA) had projected earlier in 2017 that shopping malls were expected to allocate 30% of their retail spaces to be converted into F&B outlets compared to the previous ratio of between 15% and 20%.

Experts have since revised the ratio upwards to more than 30% as operators are pressured to introducing aggressive promotions, while integrating F&B outlets across different sets of retail genres.

One of the leading retail operators, Sunway Shopping Malls — which is part of the Sunway Group conglomerate — is already reinventing its strategies to convert its malls from a traditional buying and selling place into a lifestyle destination.

Sunway Shopping Malls COO Kevin Tan Gar Peng said the increasing retail supplies year-on-year are one important factor that has imposed the change.

“The social aspect of retail as a one-stop lifestyle centre is becoming more prominent. Hence, the need for more F&B outlets is becoming more significant, in line with the consumers’ evolution,” he told The Malaysian Reserve.

He said there is a significant integration taking place among many retail outlets.

“For example, cinema operators are now seen to be offering more physical F&B experiences to be indulged throughout screening time,” he said.

Tan added that the F&B outlet ratio is growing at a rapid rate amid robust movement in the social landscape.

“In Sunway Pyramid alone, we are currently housing approximately 170 F&B outlets, which is a significant number for a first-tier mall within an integrated surrounding.”

Additionally, he said stand-alone malls and newer supplies that are about to enter the market are expected to face challenging times ahead com- pared to first-tier malls such as Sunway, One Utama, Pavilion Kuala Lumpur and Suria KLCC, which are all leveraging on the integration of their surroundings and amenities.

At the moment, retail operators are burdened with approximately six million sq ft of additional retail spaces in the Klang Valley alone, which is expected to enter the market over the next two to three years.

The situation worsens as consumers get more cautious with their spending habits — anticipating the outcome of the upcoming general election, apart from having to deal with the rising cost of living, risk of unemployment, as well as other macro and micro economic factors.

The cloudy days projected for the retail segment are also reflected in Retail Group Malaysia’s downward revision of the industry’s annual growth forecast for 2017 from 3.7% to 2.2% for a total sales turnover of RM100 billion against its earlier projection of RM101.4 billion.

With the aggressive rollout of more F&B outlets amid booming demand, MRCA VP Datuk Liew Bin (picture) said retailers also need to equip themselves with unique selling points to stay ahead of the curve of facing stiff competition.

As such, Liew — who is also the MD of Bagman Corp Sdn Bhd — said malls with high vacancy rates should embark on corporate social initiatives by offering special incentives to Malaysian brands that could occupy vacant spaces in order to obtain higher overall turnover percentage.

“By doing so, the industry can benefit from this move by gauging foreign visitors’ interest in our brands which, in turn, would generate more revenue in the longer run.”