By Anthony Dylan Anak Frankie Jurem
I once replied this to a question asked, ‘What Is a Shopping Centre to you?’ during my first job interview in 1996.
“A Shopping Centre or a Shopping Mall is a place for social and economic connection. It is not just a place for business but is also a hospitable and communal space.’
It helped me to elaborate then that visiting a shopping centre was a journey. Managing one was both art and science when you look at the tenancy mix and marketing activities. This would be mutually connected to a well-run operations and administrative team. Every person coming in to visit, buy, your tenant or your partner vendor are consumers. Each experience would affect you.
That perhaps got me the opportunity to enter the shopping centre industry right after university. I never looked back and have been in the industry ever since then. I had good mentors and teachers who I was eternally blessed to have. I learnt so much through the old school ways by being thrown into the deep end and allowed me to seek survival before guiding me to better myself. It worked.
A shopping centre is in fact not just a concrete building. It is a place where trades and events congregate for the convenience of the community it serves. To manage a shopping centre is not as easy as one could easily think. It requires a lot of strategic thinking and feedback research to improve. Back then in the 1990s and 2000s there were not many shopping centres around. In Subang Jaya, Subang Parade was the only one before Summit USJ and Sunway Pyramid came along just before the year 2000.
A shopping centre would of course need an exceptionally good operations and administration team to ensure all the facilities and administrative aspects which include the areas of accounts and finance to be well oiled. These two departments would be the key pillars of stability in ensuring your property’s health is good.
The elements of placing tenants and the type of marketing activities would fill in the content and improve the popularity of your shopping centre. Typically, a shopping centre in the 1990s and 2000s required the need of a department store as the main anchor. This would be complemented by mini anchors like a food court, a supermarket and a cinema.
It then evolved to include fashion mini anchors and arcade centres. Throughout the years, this began to evolve further to include fitness gyms and family entertainment centres for children. These family entertainment centres are unlike the typical machine arcade games but are more likened to an indoor playground.
Today, the shopping centre industry has evolved in their offerings as shopping centres in the late 1990s onwards try to outdo each other with size and variety of shops. The monetary crisis of the late 1990s and the Covid -19 pandemic had not affected much. But what has changed is the ability to continually understand the market. Many failed to understand changing customer behaviours and demographics.
Having a good mix of tenants offering the trade which would complement each other and attract customers and visitors is as important as keeping the mantra of ensuring marketing efforts promote the value of such partnerships towards the goal of improved sales. Sales would determine the effectiveness of your leasing strategy to get the best recipe for the tenant mix. This would weather out the storm when crisis happens and would improve the value of the property.
Are department stores still relevant today? In my opinion, I think that department stores in their current ways of doing business is no longer attractive. This is something to be worried about as there is a need for shopping centres to engage with their department store and determine if being an anchor is still relevant. Otherwise, change.
In today’s context, the real retail anchors are large format fashion stores, supermarkets, fitness and wellness centres, family entertainment centres and a strong mix of eateries. It is best not to have too many within a category to ensure you cover the market in which you are located. It is rather mind boggling that many have decided to increase the offerings in eateries instead of fashion due to the demand by potential tenants. This is not the demand primarily of customers and consumers. If not careful, this would make your shopping centre no different from an oversized food court.
One cannot forget that when a person visits a shopping centre alone or with friends, family of couples, they need to make sure their precious time is worthwhile. One has only one wallet and one stomach. The role of retailers and tenants after one has reached a shopping centre is to attract and increase sales.
Without improved sales, you can never hope to improve your shopping centre’s value proposition and improve rents. Having too many eateries would mean cannibalising each other in the pursuit of that single stomach each person has. Hence, it is particularly important to understand why a good tenant mix of non-food and food would provide the desired outcome. Today, you have to be savvier with your strategies as alternative online business and shop house potential are the added competitors.
Marketing is an important part of a shopping centre’s effort to drive traffic and sales. Traffic without being converted into sales is useless. One cannot be happy with ad hoc events driving up beautiful traffic making the place crowded but sales within the shopping centre have not shown significant increases. This would irk tenants as the money spent which comes from the fees each tenant contributes on a per square feet basis rather ill spent. The simple and hard fact is that any effort by marketing to improve footfall with a good conversion of sales should be prioritised offer feel-good one-off events.
It would be tougher from July as shopping centres would start charging 8% SST as per the government’s directive. Good shopping centres would surely breach the RM1 million per annum mark or RM83,333.00 per month leasing and rental income. The 8% trigger would come into play and would impact retailers with an extra cost.
Retailers are the ones paying the rent. This would include small retail players and entrepreneurs. If shopping centre owners take the effortless way out by just charging and talking later, I am quite sure the debtors would increase, and entrepreneurs would suffer if shopping centre owners just let things move as they are.
It is best for shopping centre owners to take the sure and trusted long road of meeting each tenant to renegotiate commercial terms. There is no other way. Perhaps it is time to look for a new way to do business as shopping centres begin realising the need to be more disciplined with a long-term view of the strategic plans for leasing and marketing instead of doing things on a whim and past experiences. Being stagnant or complacent is not an option.
