indepth

Shopping mall outlook remains healthy in a different business model

HC Chan, CEO of Sunway Malls & Theme Parks

“The CMCO 2.0 has certainly pushed back recovery. We were worst hit was when the work-from-home took effect, whereby traffic and sales in Sunway’s malls plunged to the lowest by 80% to 90%.

Read also
Shopping malls fight on to stay afloat in CMCO
Rebuild economy to revive retail industry
Embracing challenges
An opportunity to review tenancy mix
Always be ready to manage different scenarios

There has been some incremental recovery of 25% to 35% normality during the last week of October, but still relatively low in relation to 80% normality that was observed in Sept 2020 compared to the same period in 2019.

For the short term in Q42020, we hope to see a V-shape recovery with the year-end festive season; similar to what we witnessed in CMCO 1.0, subject to the R-naught coming close to zero. However, travel-related, leisure and entertainment sectors including cinemas and theme parks may take more time as they are generally the most impacted.

The good news is Sunway Malls is seeing 98% shops open (except the few categories not allowed to operate) under CMCO 2.0.

Overall, the long-term outlook of the industry will remain healthy, resilient and robust albeit in a very different business model.

One important aspect we foresee is that non-commoditised products and services will become a staple of physical mall attraction. Things that can be commoditised will move online as a natural progression. This is where leisure, entertainment and engagement retail come in, whereby the experiential factor (i.e. five senses) is not easily replicable online. And of course, it will also be complemented by smart retail whereby AI, digitalisation and technology form the core backbone.

Currently, Sunway Malls are working on a major digitisation initiative to be launched early next year to provide a full online-to-offline (O2O) experience. We still believe offline will continue to play a significant part both in terms of experience delivery and income generation.

Profoundly, this will alter the mall business model moving forward. What we will be seeing is the increasing prominence of co-sharing, be it profit, risk or resources between mall operators and retailers.

The new maxim is one of shared prosperity and shared burden, where rental will largely be on percentage of sales into the future. Hence, the basis of business will be one that requires dexterity, flexibility, maneuverability and adaptability.”

This story first appeared in the EdgeProp.my e-Pub on Nov 6, 2020. You can access back issues here.

Get the latest news @ www.EdgeProp.my

Click here for more property stories.

Looking for properties to buy or rent? With >150,000 exclusive listings, including undervalued properties, from vetted Pro Agents, you can now easily find the right property on Malaysia's leading property portal EdgeProp! You can also get free past transacted data and use our proprietary Edge Reference Price tool, to make an informed purchase.
SHARE
RELATED POSTS
  1. CMCO: Sabah to continue allowing inter-district travel according to zones
  2. Sabah placed under CMCO from April 29 to May 17
  3. No corporate merger proposal received so far, says IJM Corp