Innovate or die: How malls are keeping pace in the modern retail landscape
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Innovate or die: How malls are keeping pace in the modern retail landscape

THE end is nigh!

Not for us of course, that’s far too dark for Christmas day, but for a mainstay of Malaysian life – the shopping mall.

At least, that’s what many experts would have us believe. There has been plenty of commentary about the era of the shopping mall coming to an end in the face of exploding e-commerce, coupled with an uncertain economic outlook and an oversupply that can sometimes feel like Kuala Lumpur has a mall on every block.

As it’s the Christmas season, a time when many people are frantically hitting the shops, Asian Correspondent decided to look at how and if these meccas of merchandising are staying relevant in today’s market.

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Empty lots at DC Mall in Kuala Lumpur. Source: Asian Correspondent

In the previous article we looked at the challenges facing bricks-and-mortar retail outlets. In this, we look to the future and see how malls are innovating to fight for their place in our spending habits.

While there is legitimate concern with rising e-commerce and dropping occupancy rates, this doesn’t have to be the kiss of death for Malaysia’s malls that some have feared. Instead, it could be an opportunity.

Malls don’t need to die, they just need to change.

And the leading malls in the country are doing just that and reaping the bountiful rewards.

Innovation

When played correctly, the challenges facing modern-day shopping malls can become a source of innovation and an opportunity to change the face of retail spaces away from a utilitarian function to something much more fun entirely.

Speaking to the CEO of Sunway Malls, a Malaysian developer with six malls in Kuala Lumpur and a seventh opening soon, Chan Hoi Choy explained how malls are evolving to keep pace with modern shopping habits.

The first thing they did was drop the “Shopping” from their name.

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Rock climbing wall in Camp 5, 1 Utama Shopping Mall, Kuala Lumpur. Source: Camp 5

“The non-shopping elements, including F & B (food and beverage), leisure, entertainment, services, it all exceeded the 50 percent mark,” Chan said. “If shopping constitutes less than 50 percent, we can’t call ourselves shopping malls.”

Shopping just isn’t representative of what they offer anymore. Instead, Chan prefers to view malls as places for people to congregate and meet with friends, he calls them “modern-day marketplaces.”

Just as in the past, people come to socialise, connect with the others, and have a friendly gossip. Yes, people can also buy their groceries, but it’s the social engagement that keeps them coming back.

This shift in consumer needs is reflected in the evolution of tenants in modern malls. Moving away from purely retail, F & B outlets now constitute approximately 25 to 30 percent of lettable space in Malaysia’s malls. A sharp rise from the single digit figures of 20 years ago.

Leisure is also dominating space with major installations of state-of-the-art entertainment facilities taking over sometimes entire floors of mall space.

Tan Hai Hsin, Managing Director of Retail and Director at real estate consultancy Henry Butcher Malaysia, points to the examples of The Rift at Mid Valley Megamall, the Hero Central virtual reality (VR) Park at Empire City Mall, and the activity area of 1 Utama Mall – complete with its own climbing wall and indoor skydiving. Just a few years ago, these would all be more at home in a theme park rather than a shopping mall.

What all these malls have in common is recognising the value of diversifying. As Tan puts it: “Modify the trade mix and tenant mix to meet the changing consumers’ shopping behaviour and patterns.”

Sunway calls it “five senses engagement” in which customers get a fully-rounded experience and all their needs are catered for.

Sunway Pyramid, the developer’s flagship mall, has recently opened a family wellness centre, where mum can get a massage while dad hits the shops, and the kids can relax – a whole family experience, enjoyed by all.

Tech

Rather than see technology as an adversary, Sunway has leaned in and made it a central role in the malls’ evolution.

Technology has made the mall a more interesting and more accessible place. From the simplicity of free Wi-Fi and chargers for e-cars, to far more high-tech features.

Sunway Malls have their own app in development that will be used to create a more personal experience for their customers. People can be tracked in the mall to show where their interests lie, and the app will then tailor alerts, special offers, and useful information to suit their personal needs.

It also helps management get a better understanding of how customers use their mall and allow them to plan appropriately, for example, where they need extra security or cleaning services.

Virtual reality is also planned to play a big part in their future.

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Sony Playstation Play Everything Lounge, Sunway Pyramid, Kuala Lumpur. Source: Asian Correspondent

Having already embraced the gaming generation with Sony’s first Play Everything Lounge – a welcoming space where people can test all the latest PlayStation games with no pressure to buy – Sunway has big plans to expand on this success.

Chan’s excitement is clear when he talks about the next phase of Sunway’s development, most notably the plans for interactive museums, complete with Harry Potter-esque dancing pictures and a talking Mona Lisa.

Their team is breaking down the boundaries of what it means to be a mall. Other plans include the inclusion of libraries, theatres, and co-making spaces where customers can do anything from baking a cake to painting a picture.

It’s working

Sunway’s adaptability is working. Sunway Pyramid mall has recorded an increase in footfall and revenue year-on-year, and have succeeded where many others have failed in maintaining an occupancy rate well into the high nineties.

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Source: Sunway Malls

Part of this success is down to not fearing the rise of tech and e-commerce, but embracing it.

Chan is a firm believer that malls and e-commerce complement each other, rather battle each other. Shopping malls can become the interface of this convergence of digital and physical – or as Chan calls it, “digical.”

“There will be convergence. Not just a physical shop or just a digital shop, but a convergence. I think it’s already happening,” Chan said.

“Online people get so much information – you can check the price range, the products, so many choices. But when you come to a position when you want to purchase, digital is limited. People still prefer to see it in the physical world.”

And the statistics support this. Google’s consumer barometer shows that over half (51 percent) of Malaysians research a product online but ultimately buy the product in store.

The online behemoths are also coming to this realisation, with top e-commerce brands like Amazon and AliBaba recently setting up physical shops for walk-in customers.

This bodes well for the future of Malaysia’s mall empire. No matter how ingrained tech becomes in people’s lives, there are some things – activities, meeting with friends, trying a product before you buy – that online will never be able to replicate – well, at least for now.