Knight Frank’s new retail division head sees industry is in for a challenge

PETALING JAYA: Knight Frank Malaysia announced yesterday that it would launch a new service line, Retail Consultancy and Leasing.

“Adding this new service line further enhances the complete property solutions we offer in Malaysia and strengthens Knight Frank’s position in this growing market,” said Knight Frank Malaysia managing director Sarkunan Subramaniam.

This move will forge a closer synergy between Retail Consultancy and Leasing and the various service lines Knight Frank Malaysia is offering, such as commercial property management, he said.

The Retail Consultancy and Leasing division will be headed by Rebecca Phan, associate director of the new team. Phan has over 24 years of experience in retail consultancy in Malaysia and said the retail industry has seen a huge paradigm shift in consumers’ shopping habits in recent years. She summed it as destination versus convenience.

“Now it is all about choices. Where is the mall located and where is most convenient for the consumer as almost all shopping centres have similar collections of retailers,” Phan said, adding that discerning shoppers can choose the place to shop based on criteria such as traffic flow, parking facilities, layout, design concept, and stores in the mall.

“Most consumers expect their shopping experience to be of a certain standard, yet affordable at the same time for their income range,” she said.

As a result, developers are building more integrated projects where one can go to “live, work and play” under one roof rather than purpose-built ones, according to Phan. Most of these integrated projects are being built outside Kuala Lumpur and away from the Klang Valley area, she added, citing examples of Ipoh, Kuantan and Kuala Terengganu.

According to Phan, it is now a tenants’ market and retailers can pick and choose  to set up shop based on location and rental rates.

“In the next two to three years there will be about 10 million sq ft of retail space with an estimated 20 more retail centres adding to the current 145 shopping centres in the Klang Valley and retailers are almost spoilt for choice”, she said.

There has been a negative impact on the retail market boom as well. “Our local fashion retailers are taking a bit hit from the larger foreign players flocking in and taking up massive retail space in one go, yet offering their products at competitive prices,” said Phan, adding that the local fashion industry will have to undergo a re-branding exercise to maintain its market share.

“They have to create a fresh look and concept to enable them to compete on the same level,” she said.

Nevertheless, the food and beverage (F&B) sector is thriving. “Previously, the F&B sector occupied about 20% of space in a new development. Today, it’s as high as 35% to 40%”, said Phan.

She said this sector is still very much in demand and is continually rising.

“Landlords or developers must know that shopping mall is a long-term investment,” said Phan, adding that the overall concept and brands play a very important part in the success of a shopping mall.

There is a paradigm shift in consumers’ shopping habits in recent years — consumers can choose the place to shop based on criteria such as traffic flow, parking facilities, layout, design concept, and stores in the mall, according to Phan.

This article first appeared in The Edge Financial Daily, on March 28, 2014.

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