AFTER decades of prosperity, the retail market is facing winds of change.
The ever-growing number of shopping malls and retail outlets in Malaysia are starkly contrasted with the lack of evolution in its built-up and mode of operation.
However, with the progress of online shopping, food trucks, pop-up stores, changing consumer behaviour of Gen Z, globalised nature of retail market and the current depressed market, the traditional “Bigger is Better” malls are no longer a certain bet for success.
Savills Malaysia managing director Allan Soo said that previously, one could build a mall, knowing the rental yield will be good enough and the cost is relatively low.
“Today, location is no longer the deciding factor, as virtually the whole Klang Valley is filled with malls,” he said in the recent Rehda Institute CEO Series 2016.
In the Klang Valley area, there are approximately 56 million sq ft of retail space by 155 malls and hypermarkets, and there will be more coming up.
In this situation, strategic planning, targeting and positioning would become the keys to a successful retail facility.
As the current market is challenging on big or small malls alike, factors such as the catchment areas of the mall, the average household income and tenants’ needs have to be addressed to ensure the success of a mall.
Ideally, there should be a population of 80,000 people within a five-minute drive radius with an average household income of over RM5,000 to guarantee a chance of success.
“If there is 500,000 people within the 15-minute radius, but less than 50,000 people within five-minute drive, it is not going to work because the day crowd won’t be there, and there’s no guarantee that there will be a weekend crowd,” said Soo.
According to him, the next generation of malls have to reconsider the “brick and mortar” concept of retail experience, as forces of online shopping have made an impact on consumer trends and spending habits.
Soo said the Gen Z, who are the first real demographic group of digital natives, are accustomed to shop at the click of a button. The new shopping centres need to cater to their expectations of efficiency and the penchant for sharing their shopping experience on social media.
He added that some established international brands have been quick to adapt to Gen Z’s appetite. Some clothing brands have been launching new designs every few days rather than months to cater to the young.
Source : http://www.starproperty.my/
By Lee Yan Li