PPK’s adviser Chan says malls will survive

Malaysia is special. So special to the point that it will remain effervescent through the worse of times despite a global retail meltdown led by mature markets.

According to the Malaysia Shopping Malls Association’s adviser, Chan Hoi Choy, Malaysian malls will not be facing irrelevance amidst rising competition from online retailers, not even when Alibaba’s regional hub opens in 2019.

(Read also: Malaysian malls are in for a rough 2017Malls are delaying their openings in MalaysiaMalaysians buy more online than ever)

“A trip to the mall will take on a different dimension and meaning in years to come,” said Chan to Free Malaysia Today, in response to recent comments made by Hoo Ke Ping, a veteran economist.

“It is a question of what you do with the space, how you make it experiential,” said Chan. “To face the onslaught of online retailers, malls need to ask themselves what are the trade categories that can conjure up experience and socialisation, among other pertinent questions.”

(Read also: Foreign retailers still think Malaysia is a ‘must’ marketInflation at eight year high in MalaysiaZalora opens e-Fulfilment Hub in Malaysia)

Chan suggests that there is already a shift in the division of retail space, with 25-30 per cent take up by F&B outlets that can drive in foot traffic. “Technology disrupts, but it can be equally enabling. The advance in technology has also enabled malls to deliver and customise experiences like never before.”

To add to his case, he used examples of Amazon and Alibaba being in the midst of setting up brick-and-mortar businesses for the convergence of online to offline.

(Read also: Amazon Go retail store is seriously mind blowingAlibaba partners with China’s largest brick-and-mortar retailer)

While online sales has slowed slightly, it is mainly due to geopolitical challenges and a slowing economy in the United States and China. However, in Malaysia, there is an oversupply of retail space that continues to grow. Furthermore, the buying power among Malaysians is also not on par with the US or China.

Malls may no be meeting its total demise, but its attractiveness and sales receipt will decline, as it has in the past few years. Consumer sentiment in the country is weak and tourism has slowed. Sales weekends have also been decreased to four this year as opposed to previous years.

The reality is, regardless of when Alibaba opens its regional hub to support the growth of online retailers, malls in Malaysia are seeing some of the worst returns in 10 years. Whether malls provide an immersive experience or integrate technology, operational costs will increase and consumer spending will remain flat as long as the cost of living continues to rise.

It is a classic riddle of the chicken and an egg.

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