Home > Archives
Monday November 19, 2012
By THO XIN YI and JAROD LIM firstname.lastname@example.org
With more than 200 shopping complexes in the country, is the industry saturated or is there room for more? StarMetro tackles the question.
Packed malls on weekends and public holidays are a testament to shopping as a “national pastime” in Malaysia.
From just a handful of neighbourhood malls, many shopping centres have mushroomed in the Klang Valley over the years.
Even as newcomers enter the fray, existing malls opt for expansion and refurbishment to continue offering exciting retail experience to shoppers.
The inclusion of a retail entity in integrated developments has also become a trend lately.
Malaysia Shopping Malls Association (PPK) president HC Chan said the shopping complex industry in the Klang Valley was now facing an oversupply.
Out of some 300 malls in Malaysia, half are in Kuala Lumpur and Selangor while a quarter of it are located up north and the rest are scattered in other parts of the country.
“Malls are huge investment as each costs about RM400mil to RM500mil.
“Lately, there have been signs that some of the malls are failing and running on deficit. This is not good for developers and owners, retailers and consumers,” Chan said.
He explained that when mall owners and developers, as well as retailers, face higher business risk and lower profit margin, high costs would be transferred to consumers in terms of prices.
“A vicious cycle is thus created. This is unhealthy and not good for the market,” he said.
Founded 28 years ago, PPK is governed by a set of guiding principles covering education and training, representation, networking, info-sharing and professionalism.
Chan, who is also the chief executive officer of Sunway Shopping Malls, said more than 90% of malls in Malaysia were PPK members.
“The industry of shopping complexes in Asia is new, as they were introduced four decades ago.
“We started by trying to follow the European or American malls, but now we are trendsetters.
“For instance, food courts within shopping centres were introduced by Malaysia,” he said.
The “dare to try” spirit also saw an increased ratio of food, leisure and entertainment contents in a mall.
Kuala Lumpur was recently named the second best shopping city for the Asia-Pacific region, in the Globe Shopper Index.
The index was created by the Economist Intelligence Unit, which was commissioned by Switzerland-based shopping tourism company Global Blue.
Just one spot below Hong Kong, Kuala Lumpur was placed ahead of Singapore, Sydney, Tokyo, Seoul, Bangkok and Shanghai.
Chan said it was a recognition to the overall mall industry in Malaysia, which had gone from being non-existent 40 years ago to be among the top in Asia.
“We have some of the best malls in the world, and we look forward to working with the Tourism Ministry to promote our country as a shopping destination,” he said.
To PPK, malls provide more than just the convenience to shop.
“Although shopping is the core activity, people go beyond shopping in a mall; they catch up with friends and family, pay bills, watch a movie, do their laundry, visit a dentist, enjoy a massage or run errands at post office or bank,” Chan said.
“People throng malls on weekend to relax in a comfortable environment with controlled temperature,” he added.
Nonetheless, the saturated state of the industry has become a bane for both mall owners and developers.
“It is very stressful for the retailers as well. They feel a compelling need to be present at new malls, but operating more outlets do not necessarily translate into bigger market share.
“Therefore, there have been active discussions among the Malaysian Retailers Association, Malaysian Retailer-Chains Association and PPK to see how we can put forward a proposal to the Government to impose a moratorium on the construction of new shopping centres,” Chan revealed.
The industry players want to emulate the Jakarta model to introduce a temporary prohibition of new shopping centres for a period of time, probably one or two years.
“We need to regulate the supply because there is a gap between supply and demand,” he said.
Henry Butcher Retail managing director Tan Hai Hsin agrees that oversupply of malls occur in major cities — Kuala Lumpur, Petaling Jaya as well as Penang, Johor Baru, Kuching and Kota Kinabalu.
“There is still a clear disparity between success and failure where popular malls will continue to attract shoppers despite intense competition and weak economy, while poorly occupied shopping complexes will continue to suffer.
“However, the oversupply does not mean there is no room for growth, since oversupply is not apparent in small towns,” he said.
Henry Butcher Retail Malaysia is a consulting firm that provides retail analysis and consultancy services relating to the development of shopping centres and retail centres in Malaysia.
According to Tan, Klang Valley has adopted a common development format where malls are part of a mixed development consisting of hotel, serviced apartments, offices, SoHo (small office, home office) or a combination of these.
“The non-retail components in mixed development contribute less than 30% of the shoppers.
“This cannot be the driving factor as malls need to attract 70% shoppers from outside to remain sustainable,” he said.
Tan also highlighted some critical points for malls to maintain a competitive edge.
“A mall should be 100% for lease only and constantly provides a wide variety of goods and services to its target shoppers.
“A pro-active complex management team and a determined complex owner will help in the tight competition of retail market,” he said.
Looking ahead, Tan said the first five months of next year would bring good news to many retailers, thanks to the cash incentives announced in Budget 2013.
“The second round of 1Malaysia People’s Aid (BR1M), 1Malaysia book vouchers for students, RM200 rebate on smartphones, tax reliefs and rebate will benefit the retail market as they encourage more spending during the first and second quarter of the year among middle-income individuals and families,” he said.
Tan, who is also the Retail Group Malaysia managing director, estimated the Malaysian retail industry to grow 6% next year.
New shopping centres to be in Cheras, KL Sentral, Kota Damansara and Cyberjaya
Expansion and refurbishment needed to keep up
Copyright © 1995-2014 Star Publications (M) Bhd (Co No 10894-D)