Will traditional retail hold up in the digital era? Retailers in Malaysia give us their take (Part 3 of 3)

Will traditional retail hold up in the digital era? Retailers in Malaysia give us their take (Part 3 of 3)

Faced with low consumer confidence and the onslaught of online commerce, retailers in Malaysia are upping their game.

Elizabeth Tan

Head Of Leasing At IGB REIT Management Sdn Bhd

We now find ourselves halfway through 2017. How has business been so far?
Considering the soft economic climate, our malls have performed up to our expectations and we are seeing growth in overall tenant’s sales in comparison to last year’s first quarter. Global trends indicate declining sales and profits in the retail sector. In march, malaysia’s consumer price index rose to an eightyear high at 5.1 per cent. However, the department of statistics malaysia reported that sales value of wholesale and retail trade registered an 8.3 per cent growth in february 2017, compared to february 2016. Could you shed some light on this yoyoing trend? The retail industry is cyclical, and there will be times when the industry is doing well and others when it is more challenging. Retailers that evolve and adapt to customers’ needs will be able to sail through the difficult times. There will be certain retail categories that are doing well, while others face a slowdown in sales. As a proactive management, we need to ensure that we pursue more aggressive measures to market the categories that are weakening, as well as ensure that the tenant mix is still relevant and attractive to consumers.

How do you see the malaysian retail scene faring in the next few years?
If consumer sentiment remains weak for the year, we expect that the scene will be challenging. Retailers will be faced with tightening margins if the Malaysian Ringgit does not strengthen. At the same time, the need for discounts and promotions continues, and there will be a consolidation of stores in the market. This does not bode well for the increasing supply of shopping centres that is entering the market over the next few years. Existing shopping centres will be faced with growing competition in the face of rising costs and weak consumer spending.

The rising popularity of e-commerce and online shopping cannot be ignored as we see technology becoming integral to everyday life. How do you see this affecting consumer spending habits in malaysia?
As consumers become more technologically dependent and shopping online gets easier, the popularity of online retail will only keep growing. Certain categories have already resorted to concentrating solely on their online businesses, but this has also facilitated the emergence of more start-up businesses at a lower entry level cost. Consumers are becoming more sophisticated and with easy access to comparing products and pricing, they are more discerning when making a purchase.

How can physical retailers evolve to remain competitive in this rapidly changing landscape?
As mentioned above, some retail categories have resorted to solely focus online and some have closed stores as price competition and the variety from online retail have significantly affected store sales. But where online retail currently lacks is the personal aspect, and I believe this is where physical retailers are able to capitalise on. Customer service is imperative in attracting consumers. Additionally, for shopping centres, we will need to adapt our tenant mix and create an environment that enhances the shopping experience and engages the consumer.

Finally, what can be done to stimulate malaysia’s retail sector?
Accessibility to rail transport for shopping centres and connectivity between neighbouring shopping centres would greatly aid in creating a seamless shopping experience. Tax incentives or subsidies for retailers and shopping centres on marketing and upgrading initiatives will also be helpful in stimulating growth.

PART 1 | PART 2 | PART 3

, , , , ,

Type keyword(s) and press Enter