Specialised malls – carving a niche for themselves

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SHOPPING centres have been evolving since the 1950s. And to date, there are eight types of shopping centres as defined by the International Council of Shopping Centres (ICSC).

Although specialised malls are not included in the list, we have over time seen a number of malls in Malaysia evolve into specialised malls, focusing on one particular product category. These include Low Yat Plaza, which focuses on IT, digital and mobile phone technology and gadgets, and Viva Home Shopping Centre, which focuses on home furnishings and furniture. Both malls are in Kuala Lumpur.

Other specialised malls include The Wedding Hub @ One City in USJ, the Ideal Convention Centre (IDCC) in Shah Alam (home decoration), Ikano Power Centre in Mutiara Damansara (furniture and home decoration) and The School @ Jaya One (children’s education).

Henry Butcher Retail managing director Tan Hai Hsin does not consider specialised malls a new trend in retail industry but a sign of market evolution.

“More specialised shopping centres are established as the population becomes more affluent.

The specific category of goods or services in a specialised shopping mall usually accounts for more than 60% of the total retail space, he says, adding that there are not many specialised shopping centres in Malaysia. (See list)

He says it is usually the surrounding environment that has shaped the market position of these retail centres into specialised ones.

“For example, Kenanga Wholesale City in Jalan Gelugor, Kuala Lumpur is surrounded by major fashion wholesalers that have been operating there for decades. Similarly, GM Plaza in Chow Kit is surrounded by wholesalers of fashion, gifts and homeware who have been there for many years,” Tan shares.

He reckons that changes in the immediate market also contribute to the evolution of a mall into a more specialised one.

“For instance, when the rentals in Plaza Imbi became too high for some operators, they moved to Low Yat Plaza. The same goes with Berjaya Times Square. Today, Berjaya Times Square has overtaken Sungei Wang Plaza as the leading shopping centre that caters to teenagers and young adults.”

Tan says specialised shopping centres tend to be more successful in city centres and major shopping districts where there is a high concentration of shoppers.

Focusing on a specific trade offers a wider variety of goods and services in a particular trade and could attract shoppers from near and far, but the risk of operating a specialised shopping centre is also high, says Tan, as the trade depends on consumer shopping behaviour and patterns which may change.

According to JLL Property Services country head and managing director Y Y Lau, malls such as Low Yat Plaza, where the majority of its tenants are specialised in a particular category of product or service, can be considered as a new category of retail centre.

She believes a specialised shopping mall has the advantage of attracting a more focused group of shoppers or enthusiasts who can’t find what they want at a general retailer.

“If a specialised shopping centre is located near to another non-specialised mall, both malls would benefit each other as there will be visitors moving between the two malls,” she says. “Specialised malls are seen to be complementary and could be located close to places offering activities for a similar age and income group of shoppers of the specialised mall.”

On the outlook for specialised malls, Lau says as a large supply of retail will be coming into the market in the next few years, product differentiation is important in attracting tenants and, more importantly, shoppers.

“As specialised shopping malls only cater to a specific group of consumers, they lack the attractiveness to entice shoppers to visit the mall for leisure. Therefore, we do not foresee specialised shopping malls to be immune from this challenging economic situation,” Lau says. Although specialised shopping malls are a niche market, she believes it won’t be a retail hotspot for the time being.

“Moreover, the growing online shopping trend may have an impact on sales of brick and mortar retail outlets. Therefore, it is important for retailers to differentiate themselves to attract higher sales in this competitive environment,” Lau remarks.

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This story first appeared in TheEdgeProperty.com pullout on June 10, 2016, which comes with The Edge Financial Daily every Friday. Download TheEdgeProperty.com here for free.