Retail in Asia

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Why Malaysia’s shopping malls are suffering

KL Skyline - Retail in Asia

There has never been a more challenging time for shopping malls in Malaysia. Consider the facts: Perda City Mall in Bukit Mertajam Penang suddenly shut down after just 18 months in business, while the massive 2.3 million sq ft net lettable area (NLA) Empire city Mall in Damansara Perdana, Selangor, announced last year it would delay its opening from end-2015 to next month.

More recently, Sime Darby Property Bhd and CapitaLand Malls Asia’s joint venture – the RM670 million Melati Mall in Kuala Lumpur also postponed its opening from the year’s end to Q2 2017. The delay was due to “design planning and current headwinds” in the economy.

SEE ALSO: Malaysian retailers face stiff competition from abroad

Malaysia’s retail industry hasn’t had it easy of late – it saw a 4.4% year-on-year contraction in sales in Q1 2016, compared with a 4.6% growth a year earlier that was buoyed by pre-goods and services tax buying, according to data from the Retail Group Malaysia.

Meanwhile, data from National Property Information Centre shows Malaysia, as at end-2015, had 148.85 million sq ft of existing retail space, with another 16.2 million sq ft incoming, and a further 11.08 million sq ft being planned.

Given the growing supply of retail malls in Malaysia, Ng said tenancy mix and offerings are becoming more similar. This could lead to market share dilution for existing players while the newer ones that cannot differentiate themselves may find it hard to sustain footfall after the novelty wears off .

In short, mall operators and retailers now have to work harder to attract shoppers and reach out to previously untapped or under-served segments.