Retail in Asia


A perspective on retail in Malaysia – EXCLUSIVE INTERVIEW: HC Chan, Sunway Malls & Theme Parks CEO

The Southeast Asian country went under a total nationwide lockdown earlier this summer to curb the spread of COVID-19. As economic sectors reopen and various states in Malaysia continue to progress through more phases in the National Recovery Plan, Retail in Asia had the pleasure to interview HC Chan, CEO of Sunway Malls & Theme Parks, to discuss the challenges and opportunities of retail in Malaysia.

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RiA: The pandemic battered the retail sector worldwide. In Malaysia retail performance has been affected by a series of lockdowns and restrictions. How have Sunway Malls navigated the past few months?

Chan: Certainly, the pandemic is the great equaliser – no matter if the business is big or small, it levels the playing field into the same for everyone. The last 20 months and counting is perhaps one of the most tumultuous for all businesses. For Sunway Malls, the narrative in dealing with the pandemic has shifted from initially, safety-led to one that is livelihood-led. The sphere has also grown wider looking beyond just our business but our business partners as well. Fundamentally, much of our effort has been directed to address these three most important issues 1) cash flow management 2) confidence management and 3) sustaining occupancy.

Source: Sunway

RiA: Which product categories have been the most resilient during the pandemic? Which categories of retailers have performed the best in Sunway Malls since the beginning of the pandemic?

Chan: Gadgets and home-related sub-retail categories have generally performed the best as the mandated Movement Control Order (MCO) saw the population outfitting their homes with these. Leisure and entertainment were the hardest hit sectors since they were among the last to re-open. In general, the performance is highly dependent on the restrictions imposed and how long the physical stores were shut. For the industry in general in 2020, retail sales contracted at 16.3 percent while estimates for 2021 places it at 0.8 percent growth. But Sunway Malls is confident about its recovery as typically we outperform the industry average by 10 percent – 15 percent.

RiA: You implemented measures to help your tenants during these challenging times. Can you elaborate on these measures and their impact?

Chan: As mentioned earlier, the primary focus was to address three issues. For cash management, we instituted up to RM250mil rental relief to our tenants for 2020 and 2021. In fact, Sunway Malls was the first to announce a rental relief of RM20mil when the first 14-day MCO1.0 was announced. There was also a facilitation effort of RM200m working capital injection by RHB and CGC. We allowed our tenants to operate 8-hours flexibly while the mall continued with its 12-hour trading hours during the initial days of recovery. Others include special settlement schemes and cost rationalisation exercises. The intention was to address cashflow beyond just rent alone.

Source: Sunway

In terms of confidence management, the continuous raising of safety bars, like fully vaccinated entry, was imposed across Sunway Malls. As part of national service, we had also set-up two mega scale vaccination centres which administered 350,000 vaccinations which also enabled speeding up vaccination rate including our 12,000-working population. 

Engagement with our retailers formed an important on-going dialogue throughout this period. In many aspects, it has enabled us to understand what they are facing and collectively find a solution which resulted in our 97% occupancy. In fact, since the pandemic started, we also saw the opening of 360 new shops thanks to their continued confidence and support toward Sunway.

RiA: New shopping malls will open before the end of the year (or will do later in 2022). At a time where retail sales are sluggish, how do you intend to keep your market share and stand out from the competition?

Chan: We are immensely grateful that a solid track record and a strong Sunway brand are two key assets in Sunway Malls. Having been in the mall industry close to 25 years in many ways allows us to have a head start in many aspects – branding, network, practices. As part of the integrated development which Sunway is known for, we derive a lot of synergy between different business components. In every way, the competition is no longer mall versus mall but integrated development.

RiA: You are embarking on your digital journey. Can you tell us more about Sunway eMall, the e-commerce platform you have launched recently?

Chan: This is part of Sunway Malls’ strategic digitalisation masterplan to complete both physical and digital presence. For us it is not a question of should but when as we see both physical and digital space converging. Sunway eMall eliminates two key challenges for Sunway Malls’ portfolio of physical malls: we are no longer time and geographically bound. The e-commerce push allows us to grow our footprint beyond those physical malls. We are also eyeing the e-commerce platform as an insurance and contingency against unforeseen geographical or retail sub-sectors lockdown. Since we have a sizable physical mall footprint – 4.5million square feet of net lettable space to serve Offline-to-Online-to-Offline (O2O) journey, we see potential in creating upside in mall footfall. What separates us from pure e-commerce players is the option for in-store collection apart from delivery, which is a further catalyst in driving more footfall into our malls.

Source: Sunway

RiA: Speaking of digital transformation, are there retail technologies you have adopted in the past few years to enhance customer experience and boost sales?

Chan: Our digitalisation journey started quite a while back. Initially, much of the work was done at the backbone, which fundamentally laid the foundation for our digitalisation over the years. You can say it is more ensuring the backend is taken care of before rolling out customer fronting technology. We deployed and amalgamated CRM, POS, carcount, footfall and other enterprise systems which before this was operating individually. Having established this, we moved on to mobile app, sensor enabled directories, chatbot and other customer fronting technologies to enhance the customer experience part.

RiA: Malaysia is looking to reopen its borders to foreign travel in December once 90 percent of its adult population is fully vaccinated. How busy do you expect the year-end sale to be? Are you planning specific promotions and campaigns towards the tourists?

Chan: It is good news that plans are underway for international re-opening. That will certainly bring relief and upside to some of our malls. Q4 is the most significant quarter for retailers and malls alike. Traditionally, it sees strong buying driven by the festivity and school holidays. And that momentum sustains into Q1 of the following year. Certainly, the earlier prolonged movement restriction had dampened demand and businesses hoped to gain from the pent-up demand. We definitely will be leveraging this. At Sunway Malls, our October figures indicated 80 percent range normality (benchmarked against 2019 same period). We reckon this will continue to grow steadily as we head off to the end of the year.

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RiA: How do you think the retail landscape will be like in Malaysia in the years to come?

Chan: Broadly, 3 key trends have emerged or are emerging. Recovery will be fragmented : F&B, leisure & entertainment will be limited by capacity issues. Demand varies for different communities (i.e., ethnicity). Purposeful shopping: More buying than browsing. Sales do not hold parity with footfall & traffic. And lastly, differentiated mall recovery: Widening gap between successful and average malls.