Online shopping is not the sole factor in reshaping malls

Urbanisation, high cost of living and out of home socialisation are factors at play that are reshaping malls


SHOPPING mall operators say the change in their business model is driven by urban lifestyle considerations and not solely due to the rise of consumers purchasing online.

Sunway Malls and Theme Parks CEO Chan Hoi Choy said the changes in consumers’ lifestyle is the major determinant. Urbanisation, high cost of living, out of home socialisation and demand for experiences are factors at play that are reshaping malls.

“For Sunway Malls, having the right strategy to address these impacts is more important. This is why against the rise of online shopping and other bigger forces at large, we were able to buck the trend,” he told The Malaysian Reserve in an email reply.

Chan added that the advancement in mobile technology, growth of smartphone penetration, lower costs of mobile data and higher broadband coverage have certainly encouraged e-commerce (online shopping). E-commerce transactions in Malaysia rose from RM37.7 billion in 2010 to RM85.8 billion in 2017, or at an average annual growth rate of 12.5%. The government is targeting an annual growth rate of 20%.

“Although e-commerce is making in-roads, online sales at this point still constitute only a low 2% of the total retail sales in Malaysia.

“If you examine the online shopping habit according to ecInsider, the most popular categories for Malaysians to buy online are food on delivery, travel, clothing, cosmetics and sports with an average value order of just above RM300.

“So, the value is still relatively low. But coming at a low base, it has potential to grow further and faster,” Chan said.

Asked on how retail businesses can continue to thrive with consumers, Chan said malls in Malaysia have been growing in significance as “communal space” with the proliferation of higher food and beverage (F&B), leisure and entertainment outlets.

“The changing of these trade mix signifies a shift from just shopping into more social experiences. Retail space in the future will be fundamentally altered with library, rooftop parks, co-working spaces, museums, communal spaces and other forms in malls. This is already taking place in Japan, South Korea and other Asian developed countries,” he explained.

Chan said the experiential factor consisting of socialisation, engagement and refreshment elements has to be harnessed in order for malls to expand and move forward.

“Just because technologically we are getting advanced, it doesn’t mean we will be spending less time physically in pursuit of leisure and entertainment and everything else,” Chan said.

Malaysia Retail Chain Association (MRCA) VP Datuk Liew Bin said new shopping malls in the country should design more towards “O2O” business, in which the shop is advisable to be online to offline.

As there is an oversupply of shopping malls space in Malaysia, the MRCA has urged the government to stop approving the licence for new shopping malls.

“I think even if the trend of online shopping is increasing, the offline business will still have its demand because there are people who want to touch and see the product they are purchasing,” Liew said.

He believes shopping malls should not be too big, cater for convenience and have shops that can identify with the customer’s buying behaviour.

Liew said malls should also take advantage of the technology such as facial recognition to track customers.

“This will help the shopping malls to collect data about consumer demographics and trace the feasibility of the consumer, so the malls can run their businesses according to consumers’ demand,” he said.

Sunway Malls is still enjoying 5%10% growth in traffic this year.

During the last festive season, Sunway Malls claimed that it chalked up record visitorship year-on-year without giving any figures.