How are our MALLS FARING?

PropertyPlus speaks to retail industry insiders to see how the landscape has changed with all the new malls the Klang Valley has to offer

About three months have passed since the Klang Valley welcomed new additions to the retail space — Pavilion Kuala Lumpur, The Gardens Galleria at Mid Valley City, and the revamped Sunway Pyramid. PropertyPlus visited the three malls one Friday afternoon just before Christmas to check out the festivities and witnessed a joyous Christmas mood with the decorations all around and the carols playing in the background.

However, human traffic was slow in all three malls despite the school holidays and festive seasons, except for the F&B outlets and main concourse areas, which held live performances.


Pavilion Kuala Lumpur (picture above)
Visit Pavilion Kuala Lumpur Website here

Terence Ong, Pasta Mania’s general manager at Pavilion says business for the Italian casual dining outlet has been good so far as consumers are always looking to try something new. “With only Pizza Hut as our direct competition, we have been enjoying strong patronage until the food
court opened, which slightly decreased the number of visitors to our outlet,” he told PropertyPlus.

At Sunway Pyramid, the new Jaya Jusco has improved foot traffic to the mall, observes Susan Lai, manager at The Body Shop. But Lai said business for the Body Shop outlet was better at its old location in the mall. “Now that we’ve moved to the new section, our rental rates have increased but business has been slow as most of the new shops in this (new) section have yet to open,” she added.


Sunway Pyramid (picture above)
Visit Sunway Piramid Website here

At the Gardens Galleria, anchor tenant Robinsons has been enjoying a steady stream of customers since the mall opened. Robinsons Malaysia general manager Deepak Sharma said, by offering a varied mix of products, Robinsons caters to almost everyone, including expatriates and tourists, which comprise 5% to 10% of its customers.

“We chose The Gardens to open the first Robinsons in the country because of the success of Mid Valley Megamall as well as the ready catchment of clientele available in the area,” he said, adding that business is expected to pick up with the completion of the connecting bridge from Megamall to Gardens Galleria.


Gardens Galleria (picture above)
Visit The Garden's Website here

Regroup Associates Sdn Bhd managing director Allan Soo said it is still too early to gauge how well the shopping centres are performing, with retailers expecting the maturing of the malls to take a longer time from the normal gestation period of six months to one year.

“This can be attributed to the fact that there is suddenly so much for the consumers to choose from that perhaps more time is needed for things to settle down,” he told PropertyPlus.
The three malls account for approximately 3 million sq ft of the current 39 million sq ft of net lettable retail space in the Klang Valley.

Henry Butcher Retail managing director Tan Hai Hsin believes the three malls are having difficulty getting all their retailers and tenants to open at the same time, which might have affected human traffic and first impressions of target shoppers.

“Shoppers in a mall without full occupancy will not stay long and will not be making return visits in a short period of time, whereas potential visitors will also wait for all retail shops to be fully opened before making their trips there,” he said.

Getting the mix right
Sunway Pyramid senior general manager H C Chan said, maintaining the buzz in shopping malls involves innovation and creating a memorable shopping experience.
The former can come in the form of product offerings, retail-mix planning and excellent customer service, while the latter encompasses design aesthetics, comfort, music, and ambiance.

“The right delivery of this potent combination will draw crowds and profits back to the malls,”
sid Chan, who is also vice president of The Association for Shopping Complex and High Rise Management (PPK).

He added that striking a balance between leisure and retail components for a mall in a ratio of 80/20, 70/30 or 60/40 is dependent on whether it is located in an urban or suburban area, and whether it is catered to the high end or mass market. “The core product of a shopping mall is still, essentially, retail-based unless it’s a very niche boutique mall, which is very rare in the country.”

A count of selected shopping centres in the Klang Valley by Regroup Associates shows a slight drop in occupancy from 85% to 84% till September. “Suffice to say, the occupancy levels have dropped with the additional supply for the time being, but it will rise to at least 85% within another four months as more shops open in the new malls (next year),” said Regroup’s Soo.

He added that rentals in the new malls have reached a high of RM45 psf in the city and RM27 psf in the suburbs. “The highest rent in the best malls has touched about RM80 psf.”

Nonetheless, Sunway City Bhd property investment managing director Ngeow Voon Yean remained upbeat on how the expanded Sunway Pyramid has been doing since its opening. “Our current occupancy rate in the mall stands at 98% and we have been, so far, meeting the targeted 2.5 million visitors per month,” he said.

According to Ngeow, the group has been aggressively promoting the shopping centre in Asian countries such as Indonesia, Singapore, Thailand and China. “Sunway Pyramid has also played host to several international, high-profile events,” he said, adding that about 2% of the mall’s turnover is usually allocated for A&P annually.

Pavilion KL has also received many visits from international delegation for workshops, conventions and familiarisation tours. “We recently hosted some 1,000 participants from Germany and Austria under The Reiseakadamie group, which is a promotional and incentive group in the travel industry for selected travel agents and Dertour’s staff,” says John Sironic, director of centre management for Kuala Lumpur Pavilion Sdn Bhd.

Since its opening, the shopping centre is currently more than 95% leased and more than 80% occupied. It has 450 retails stores over seven levels occupying a net lettable area of 1.37 million sq ft.

To continue bringing in a steady supply of visitors, Pavilion KL is holding an array of activities throughout the festive season leading into next year, with its Celestial Christmas and year-end promotions currently ongoing.

“We are already putting the finishing touches for festive events like Pavilion KL’s New Year Eve Countdown Party and Chinese New Year, and of course, the mall’s official opening on Jan 31,” Sironic said.

Sales to remain stable
According to Retail Group Malaysia, retail sales for 2008 are forecasted to grow at 8% but may be revised taking into consideration the expected rise in the cost of living starting from next year. The group is an independent local retail research company that has provided consultancy services to numerous Singaporean and Malaysian chain store retailers as well as publishing the quarterly Malaysia Retail Industry Report.

“The purchasing power of Malaysian consumers has decreased due to higher raw material prices as a result of higher oil prices, which is not compensated for proportionally by increases in salaries,” said Henry Butcher’s Tan, who is also managing director of Retail Group Malaysia.

However, he added that sales would remain stable because Malaysian consumers would still be buying retail goods. “As long as (they) continue to have jobs and receive their regular salaries, the drop in retail spending is not expected to be significant.”

Soo agreed that 2008 would be a tough year for the retail market as there is more competition and sales may drop after Visit Malaysia Year 2007. On a brighter note, he said retailers and industry players agreed that the new malls have raised standards in the industry by increasing the potential of more international brands.

“We are, at last, on par with the region’s best malls in terms of merchandising depth and breadth as well as the quality of the overall mall experience,” he said.

By theSun (by Yap Yew Jin)