THE Covid-19 pandemic has drastically changed the way a lot of industries have had to conduct their business, with the retail sector being no exception.
Deloitte, in its paper “The future of the mall: Building a new kind of destination for the post-pandemic world, ” notes that the pandemic has shocked the retail industry.
“Shopping malls, once popular meeting hubs that were already feeling the pressure from e-commerce and decreased foot traffic, were suddenly devoid of customers as the world locked itself down in an effort to contain the virus’s spread.
“One thing is certain, our retail experience is about to be revolutionised, ” it says.
One industry observer concurs that retail operators will certainly have to “start thinking outside the box” to pull in the crowds.
“While the pandemic is still far from over, mall operators will need to come up with innovative and unique ways to increase the footfall at their premises.
“There is a need to build confidence in the shopper that malls are still a safe and convenient place to convene.”
No doubt, this will be a tall order, considering that social distancing has become the new normal.
Deloitte says retailers and mall owners have been investing in their digital and e-commerce capabilities to elevate their brand and customer experience even before Covid-19 is clearly poised to come out ahead.
With the pandemic, Deloitte notes that today’s shoppers are demanding a safe, frictionless environment.
“The consumer’s needs and shopping habits after Covid-19 will be in constant flux as their emotions battle opposing forces, namely the desire to get in and out quickly; and the need to be social and interact with one another.”
Deloitte says the key to getting shoppers back into malls will be for owners and retailers to work together to invest in customer safety and to provide tools and applications that make for a smoother, more convenient shopping experience.
“There has been a rapid rise in the popularity of convenience services such as self check-out, click-and-collect, curbside/store-door pickup, buy-online-pickup-in-store and free or hassle-free returns through services like a centralised returns area in the mall.
“Curbside delivery emerged during the Covid-19 crisis as a way for shops and major chains alike to continue to provide products to customers while making safety a priority.”
Deloitte emphasises that malls can no longer be purely about shopping.
“For daily essentials such as grocery, bakery and pharmacy, consumers increasingly prefer one-stop shop destinations.
“As the restrictions imposed to protect public health during the pandemic are eased, people will likely be craving more social interaction.
“If their functional needs are being met close to home, malls themselves will need to build broader, more dynamic experiences that people can’t find elsewhere.”
Deloitte says landlords and retailers will need to collaborate creatively to drive foot traffic and boost dwell times to increase their revenue productivity.
“Retailers need to take a page from digital-first companies. It’s never been more important to build a seamless omnichannel brand presence.
“Customers are increasingly looking for a digitised experience both online and off, enabled by technological innovation at every turn.
“Malls and retailers need to use digital tools to maximise productivity and efficiency and create a dynamic, engaging experience.”
But most of all, Deloitte says malls must become the new meeting place for the community, namely a multi-purpose destination that offers extensive leisure activities as well as other functions, like office, residential, and cultural amenities.
“Shops should be mixed in with other complementary uses, giving visitors an interactive experience in which the entire environment comes into play.
“Owners may need to rethink their rental models to allow for different types of retail experiences, such as short-term pop-ups or exhibitions.
“There is a great opportunity here to be innovative, ” it says.
Meanwhile, Retail Group Malaysia (RGM) has revised downwards marginally its 2021 growth forecast for the industry to 4% from 4.1% previously.
The revision is in light of the re-introduction of the movement control order (or MCO 3.0) on May 3, as well as the national lockdown on June 1.
The first phase of the lockdown, which was supposed to last for two weeks until June 14, has been extended for another two weeks until June 28.
RGM managing director Tan Hai Hsin warned that any extension would have an adverse impact on the local retail industry.
“Any extension of the two-week lockdown will damage the retail industry further. Any delay on the re-opening of non-essential retailers after two weeks will lead to more closures, ” he says in RGM’s latest Malaysia retail industry report.
Tan also says the second-quarter (Q2) growth estimate of 18.4% given by members of the Malaysia Retailers Association and Malaysia Retail Chain Association is no longer attainable.
A large majority of retailers gave their estimates before the announcements of the MCO 3.0 and lockdown. In addition, Tan says RGM is revising the growth rate for Q2 of 2021 from 7% to 5.6%.
“The Malaysian government will continue the lockdown beyond the two-week period with revised movement restrictions and ban on the opening of certain retail trades. Retail sales during Q3 of 2021 will be affected as well. RGM revises the growth rate from 4.1% to 3.5% for Q3, ” says Tan.
Additionally, he notes that the interstate travel ban is expected to be enforced for a longer period of time and will severely affect domestic tourism spending.
“Travel bubbles with selected countries will likely begin towards the end of this year. Malaysia will witness rising foreign tourist arrivals only from the first half of next year.”
Tan adds that vaccinations on the majority of the population will take a while.
“Thus, movement restrictions and social distancing measures will remain until the end of this year.
“RGM expects the retail industry to begin its gradual recovery by the end of this year.
“For Q4 of 2021, the retail industry is expected to grow by 12.7%, ” he says.