Online platforms will dominate the industry this year with Lazada and Shopee expected to lead

by S BIRRUNTHA / pic by HUSSEIN SHAHARUDDIN

SHOPPING complexes will continue to struggle in the future, dogged by the opening of more malls at a time when consumers are abandoning these establishments and choosing online purchases, turning these huge structures into deserted buildings.

Uncontrolled building of shopping complexes in the last decade has contributed to the sector’s fallout.

National Property Information Centre’s third-quarter of 2019 (3Q19) figures showed there were 1,035 shopping complexes in the country, offering 16.42 million sq m of retail space or the size of 63,300 tennis courts. It is expected that 39 more shopping complexes will come on board with total retail space of 1.52 million sq m and another 27 shopping complexes with 1.03 million sq m are being planned.

The overbuilding of shopping complexes, largely tied to the development of serviced apartments and corporate offices, has worsened the situation as footfalls drop and retailers opt for cheaper options and higher traffic areas.

Malaysia Retail Chain Association VP Datuk Liew Bin said the oversupply of malls has contributed to the struggle and survival of shopping complexes.

“In the next three years, we are expecting more and bigger shopping malls to arrive in areas like Tun Razak Exchange, Bukit Bintang and Dataran Merdeka.

“We are also anticipating the arrival of Pavilion 2 which is going to be here very soon. So, it is going to be more and more competitive.

“With the retail sentiment being not so good this year, the retail industry will have to prepare to deal with bigger challenges,” he told The Malaysian Reserve (TMR) recently.

He said online platforms will dominate the retail industry this year with more products coming from China, and Lazada and Shopee are expected to lead in the segment.

“These are all threatening shopping outlets, especially the bigger ones, and it is not going to be easy. Malls will have to continue to find ways to keep shoppers coming,” he said.

Besides the prominent and crowd favourites, local and neighbourhood malls are witnessing a massive drop in footfall. Retailers are shifting to online platform to deliver cheaper products, living some malls almost uninhabited.

He said there are now 671 malls nationwide, including the newer malls like Toppen, iCity Central, Mid Valley Southkey, KL East Mall and the Sunway Big Box Retail Park.

From the second half of 2019 until the end of 2020, about 40 new malls are expected to open their doors to the public, adding to the already difficult segment.

Sunway Malls and Theme Parks CEO HC Chan said the outlook for shopping malls this year will remain challenging, but certain ‘resilient’ segments of retail will continue to thrive.

“The food and beverage segment is going to continue its steady 30% growth in some malls.

“Another trend that we are seeing is the rise of co-working hubs in shopping malls, experiential spaces and themed playgrounds.

“This is not surprising as urbanisation intensifies, society will crave more space and consumer demand evolves as well.

“We are also going to see more traction in Asian brands as we head off to the new year. The Asian brands over the years have been making significant in-roads across the globe,” he told TMR.

Chan said these are defining factors, and malls and retailers need to understand how to create a place for people to converge and socialise.

“There will be an increase in competition as online and offline players compete for consumer spending.

“A certain degree of retail and consumer saturation will take place, which means there has to be a clear and distinct brand differentiation. And it doesn’t just stop there.

“Consumers will demand more brand story and authenticity as they need to feel some form of relevant emotional connection, otherwise, purchases will not take place.

“As consumers become more aware of exposure, foundational values and sustainability, I think social stand will become an important consideration for malls,” he said.

In its recent report, Retail Group Malaysia (RGM) has cut its annual retail sales growth forecast for 2019 from 4.4% to 3.7%.

This is in line with a disappointing 1.8% growth in 3Q19. RGM also expects weak growth in 4Q19. This was RGM’s third revision since the beginning of 2019. For 2020, the group has projected a 4.6% growth for retail sales.