Malls remain cautiously optimistic in the endemic transition

Daily footfall in malls has increased considerably and malls will continue to learn and adapt to the changing situations

by AZALEA AZUAR / pic by MUHD AMIN NAHARUL

LOCAL malls are cautiously optimistic with the reopening of borders and festive seasons in the transition to endemic phase as traffic has increased considerably since last year.

Berjaya Times Square (BTS) GM Alex Tan said they have seen a consistent day-to-day increase in visitors since October 2021.

Tan felt that this year, malls would feel optimistic with the announcement of the endemic shift and they would continue to learn and adapt to the changing situations.

“As always, we look to serve the needs and wants of the local and foreign shoppers. We believe that as long as we continue to add value to the lives of people by creating better shopping experiences and building a sustainable competitive edge for our tenants, we would do well in 2022 and beyond,” he told The Malaysian Reserve in a recent interview.

“While the authorities fine tune the standard operating procedures and regulations for Malaysia’s endemic, which we expect to know in the next few weeks, BTS Kuala Lumpur will continue to observe temperature checks at all our entrances in the interest of public health and safety.

“However, there are still many challenges that we would need to overcome by offering a sustainable competitive edge to our tenants and adding value to our customers’ shopping experience,” Tan added.

Malaysia have transition to the endemic phase beginning April 1 where all restrictions on business operating hours are removed and prayer activities allowed without physical distancing.

This allows Malaysians to return to near normal after having to battle the Covid-19 pandemic for nearly two years.

Tan, however, said it is unlikely that local malls will reach the pre-pandemic levels given that the country only has a total population of 32 million.

Despite the low numbers recorded in the previous years, he has observed an increase of visitors in 2021 compared to 2020.

“As many would, we attribute this to ‘cabin fever’ and the simple fact that loved ones who were forced to be apart during these turbulent times were looking to reunite,” Tan explained.

“We feel that it is our duty as a mall operator to provide not only a safe and hygienic environment for our shoppers but to also provide opportunities for our guests to capture and create precious moments with their loved ones,” he said.

“In anticipation of this, we have developed new attractions at BTS Theme Park, one being a World’s First Ever, even enhancing and improving on our facilities and tenant mix.

“We hope that Malaysia and the mall industry will do even better than we did pre-pandemic,” Tan concluded.

On the other hand, Sunway Malls had observed better traffic and sales recovery since the easing of restrictions in Phase 4 of the National Recovery Plan despite a challenging 2021.

Its fourth quarter of 2021 (4Q21) figures revealed that its traffic and sales have recovered to 100% normality back before the pandemic in 4Q19 which is a milestone, while it is higher than its 70% normality recovery in 4Q20.

The high recovery was due to strong pent-up demand, festive seasonality, high percentage of fully vaccinated population and de-escalating Covid-19 daily numbers.

Mall and retail industries also peaked during the 1Q and 2Q periods due to festivities whereas improving consumer sentiments also encouraged better consumer spending on the back of better labour market expectations.

The Malaysian Institute of Economic Research Consumer Sentiment Index 3Q21 showed that it soared to a record-high of 101.7 points on the back of easing restrictions from 64.3 points in 2Q21 which was the first time it hit more than 100 points.

Sunway Malls and Theme Parks CEO HC Chan said they reached 100% normality in the current quarter as well as surpassed their highest recovery rate in 2020 (90%).

In terms of recovery, the group observed that a majority of its retailers have recovered (92%) while less than a quarter have exceeded their sales recovery (32%).

These include retailers in the jewellery, health and personal care, and digital lifestyle category.

Those that reported to have the highest recovery rate were fashion and beauty (80% to 85%), followed by food and beverage (85% to 90%), which was slightly higher than its non-food and beverage tenants (5% to 10%).

Chan observes that recovery rates differ among retailers as it is largely dependent on the retail subsectors they are in.

“Consumer electronics category is an outperforming subsector as consumers seek digital connectivity while leisure and entertainment is still hampered by capacity limitation.

“But on a collective aggregate basis, they worked out to be 100% normality,” he said in a statement.

Moreover, it also depends on when each industry is allowed to reopen and operate so it has an impact on different retail sub-sectors.

“In 2021, in totality, there was 150 days of lockdown before all retail subsectors were permitted to operate compared to only 50 days in 2020.

“This three times longer duration which was equivalent to five months of non-full trading meant there was a lot of catching up to do for the mall and retail businesses,” Chan added.

The figures in January 2022 indicated that the group’s Jan 1 traffic is the best traffic count for the past 22 months since the momentum is sustaining well and they also expect a strong performance.

Therefore, Sunway Malls expects its consumer confidence to remain on the back of pick-up in economic activities and ongoing booster shot rate while interest rate is expected to be accommodative for the first half of the year (1H22) with no rate hike until 2H22.

Sunway Malls’ performance and recovery is expected to be progressive with less headwinds in line with broader economic indicators improvement.