August 10, 2022

Can’t beat the brick and mortar stores

4 min read

MALAYSIANS love to shop, hence it’s not really a surprise to find out that there are a whopping 671 malls in the country.

And there doesn’t seem to be signs of this trend stopping. Upcoming malls in the Klang Valley include Mitsui Shopping Park Lalaport at Bukit Bintang City Centre, KL East Mall, Pavilion Bukit Jalil, Pavilion Damansara Heights, TRX – The Exchange and Tropicana Gardens mall in Kota Damansara.

Along one single highway alone – the LDP which connects Sunway to Kepong, there are a mind-boggling 11 shopping complexes!

Despite the onslaught of online shopping sites, the demise of the brick and mortar stores appears to be a tad premature.

True, malls especially, have been feeling the pinch as shifting consumers habits towards e-commerce has put a dent in retail spending but these shopping centres have had to reinvent themselves to face the challenges of a digital age.

Amazon, Lazada, Alibaba, Shopee, Zalora and the like have made armchair shopping a breeze for Malaysian consumers yet studies show that online shopping only accounts for less than 5% of total sales, and these include everything from groceries to clothes to cosmetics. China, where almost 80% of transactions are via e-wallet, has a 35% online sales figure, the highest rate in the world.

This shows that the brick and mortar retail model isn’t dead.

But retailers and malls have to transform to stay ahead of the game.

An example of this is the popularity of premium outlets – Mitsui in KLIA, Design Village in Penang and Genting and Johor Premium Outlets.

Retailers in these huge complexes are usually premium brands and offer discounts of up to 50% on their goods, sometimes having sales on already discounted items. Needless to say, if you have visited any of these premium outlets, chances are you would have ended up buying something. The other thing they have in common is that they are invariably packed with shoppers.

Other innovative features from your neighbourhood mall that we are seeing more off, includes virtual reality sports outlets, landscaped gardens, digital entertainment, elaborate festive decorations, more health-related activities and trendy, new food and beverage outlets.

The target for these malls are families and the millennials, who will become the biggest spenders in the future.

A millennial colleague I spoke to told me that even though she buys a lot of stuff online, the mall is still the go-to place for certain items.

“For example, even though some of my friends buy their groceries online, I prefer touching and smelling fresh produce,” she told me, adding that the credibility of some sites were questionable.

But as digital penetration increases, and more consumers take their business online, retailers have also adopted a “if you can’t beat them, join them” philosophy.

These retailers, while maintaining their outlets, have started to sell their products online. Many renowned brands have ventured down this road, but the results have been mixed.

One success story though are the F&B outlets that have capitalised on the food delivery services trend.

The proliferation of mobile delivery applications has made it super simple for you to order a meal without having to step into a restaurant or mall.

But it is a win-win situation for the restaurants as well as the online delivery companies.

The restaurant increases sales while the delivery company gets a percentage. This is apparent because many restaurants in the malls now have a special counter for pick-ups reserved for delivery riders.

In a recent interview with The Star, Malaysian Shopping Malls Association (PPK Malaysia) president Tan Sri Teo Chiang Kok said a report commissioned by the association found that the main malls were still performing well with an occupancy rate of 80%.

“There are challenges from the current economic situation as well as e-commerce although the latter is still not very significant in Malaysia.

“The good thing is, there is a reverse worldwide trend that shoppers go back to physical stores, which shows that people still need to socialise and malls provide them the social space and attractions.

“The market sentiments remain challenging but malls largely remain resilient although they will need to renew, refresh and regenerate to remain competitive,” he pointed out.

And this reverse shopping trend is clearly seen in the number one consumer market in the world, the United States.

Amazon, the world’s largest e-commerce company and one of the pioneers of the online shopping trend, has opened nearly 80 pop-up stores across various locations in the US in an effort to engage with its customer base.

There are a number of reasons why the company as well as other e-commerce brands are opening physical stores, but more importantly, if the world’s largest retailer sees a future in brick and mortar, who are we to argue?

The writer believes that a physical store offers a holistic sensory experience that can simply never be replicated online.

Stay tuned for a new offer coming to you soon.