The latest report released by the Chinese Academy of Social Sciences on Monday revealed that China is experiencing a wave of department store closures, a process that will only further accelerate in the future.
The report predicted over the next five years that a third of the country’s physical marketplaces will be weeded out, a third will transform into shopping centres which integrate retail and wholesale shopping experiences and another third will combine online and offline shopping experiences.
The findings are alarming and add further to the evidence of the plight facing traditional mall operators and brick-and-mortar businesses, many of whom are facing dwindling sales and are struggling to head off challenges from e-commerce.
It would seem that the shopping mall business model led by China’s commercial property conglomerate Dalian Wanda is being overshadowed by the e-commerce model dominated by Alibaba.
Shopping centres that are under construction or have recently been built may face a serious crisis. The situation will require traditional commercial property developers and physical storefronts to evolve faster to differentiate themselves and develop a proper development strategy before they are wiped out by the growing dominance of e-commerce.
Without a new business model and innovative development strategy to cope with challenges from online shopping, the development of traditional shopping centres will be unsustainable and shopping mall developers as well as the local economy will suffer.
Some commercial property operators led by Wanda have recognised the risks and are seeking ways to evolve and embrace online to offline (O2O) channels to attract customers into physical stores. They are converting malls into spaces for restaurants, cinemas, fitness centres and even training schools. But they need to differentiate themselves to avoid falling into the old development model.
(Source: Global Times)