Retail space glut killing older shopping malls

Reuters pic

KUALA LUMPUR: An oversupply of new malls is causing the ‘death’ of older and less trendy malls, according to a report in The Malaysian Reserve (TMR).

Urban centres such as the Klang Valley were especially facing a major glut in retail malls, with Kuala Lumpur alone expected to have more than 27 new shopping malls in the next 10 years.

The stiff competition has resulted in some older malls getting fewer customers or visitors.

According to CEO Fione Tan some of the older malls are “dying” quicker due to an oversupply of new malls and limited choices of retail shops.

She told TMR: “The pond is only that big. Thus, the growing number of people trying to fish at the same pond means the more interesting bait might catch more fish.”

Tan said older malls had to find a “niche” in the modern retail industry if they wanted to thrive.

However, the report said, old specialty shopping centres that catered for one or limited categories of goods and services, such as Plaza Low Yat and Pertama Complex, continued to prosper.

According to the report, top-performing malls such as Suria KLCC, Pavilion KL, Mid Valley Megamall, Sunway Pyramid and One Utama are unlikely to be affected by the mushrooming malls because they are well established with strong management teams.

Sunway Shopping Malls chief operating officer Kevin Tan Gar Peng said any addition to the existing malls would only increase competition for retailers already in a bad situation.

“A shake-out is imminent in poorly designed, managed, researched and developed malls which will suffer a drop in occupancy rate, average rent, and viability to sustain.

“The population base and growth of KL, as well as the arrival of tourists, are not up near to the numbers compared with cities like Bangkok and Jakarta,” he told TMR.

Kevin said malls were developing into a lifestyle destination, providing experiences of shopping, leisure and dining under one roof.

Shopping malls these days were not only a marketplace to buy and sell but were also a social place for people to rendezvous for dining, entertainment and fulfilling leisure wants, he said.