In terms of the Malaysian retail marketplace in 2022, the government lifted most movement restrictions for the public in May, as it began to enter the endemic phase of the Covid-19 pandemic. For retailers, it was a huge relief as there has been an evident increase in foot traffic in their malls. Here, Dato’ Joyce Yap, CEO and retail planner at Malaysian shopping centre business Pavilion her thoughts on the company’s developments, the retail scene in Malaysia and her observations on recent tr
trends in the marketplace as well.
The demise of physical stores?
Much has been written about the demise of bricks-and-mortar stores since the rise of online shopping since Covid, but the attraction of physical stores that exude a brand’s core value still has a lot of advantages, especially in the luxury sector.
“I believe that in the post-Covid world, bricks-and-mortar will not only survive, but thrive. We are seeing tenants offer value-added services and unique in-store experiences, that include limited edition products,” said Yap.
She is of the opinion that luxury goods bestow an allure of prestige, where customers can expect an indulgent and unique shopping experience.
“From getting a stunning makeover with the best quality makeup, smelling a range of luxury fragrances, feeling the quality of premium fine leather, or getting a branded suit tailored and fitted – these are services and luxuries that are best experienced in-store,” she explained.
Yap is convinced that customers still want to feel, touch and see items. The experiential part of shopping is important for customers and that will always remain.
While there is no denying that there has been a dramatic shift in consumer behaviour during the pandemic and the restrictive lockdowns in the Asian marketplace, Yap firmly believes that offline retail will not be replaced.
“Online and offline must exist, we have seen more shoppers returning to malls, as Malaysia and the rest of the world transition to an endemic phase. In fact, global trends are seeing e-commerce sales plateauing and e-commerce stocks plummeting as shoppers move away from online spending,” she explained.
A mindset shift
“Having gone through multiple movement restrictions, there’s been a mindset shift, and shoppers are seeking out physical retail experiences for their wants rather than necessities,” Yap said.
She added that there has been a higher demand for premium, high quality, limited editions and limited supply merchandise since the lifting of restrictions.
“Global Data found Asia Pacific’s luxury retail market sales fell by 14.6 per cent in 2020 in the height of the Covid-19 pandemic, but it has bounced back with impressive growth of 29.7 per cent in 2021, to reach US$122bn,” Yap said.
From her perspective, shopping malls need to be adaptable to shoppers’ needs and wants both emotionally and physically by creating immersive retail experiences for shoppers, whether it’s through interactive engagements with pop-ups stores or in-mall events.
The digital revolution
The last two years have been brutal for retailers in the Asian region, and the Malaysian marketplace was no exception.
The rapid pace of digital transformation has forced companies to go online to maintain a top-of-mind approach in the customer psyche. The Pavilion brand has embraced the digital pivot in more ways than one.
Yap explained that businesses need to stay on top of changing consumer behaviour, as shoppers are looking for value and quality of service.
The omnichannel approach is now omnipresent as retailers are marrying both online and bricks-and-mortar stores in order to give shoppers greater convenience and also improve their efficiency in distributing information to their customers.
“Pavilion malls have invested in technology and digitisation over the pandemic with the launch of the Pavilion mobile app last year. Our multi-feature app not only elevates the shopping experience, it also empowers shoppers with all the information they need at the palm of their hands.”
The app also serves as a digital platform for the mall’s loyalty programme, Pavilion Privileges, and shoppers can use the app to navigate the mall, discover new store openings, tenant discounts and promotions.
Changing consumer habits
When it comes to luxury items and big ticket items, Yap believes that the bricks-and-mortar experience is essential to the purchasing journey, particularly for categories like fashion, footwear, skincare and cosmetics.
“Where colours, fit, material, and touch matters,the percentage of growth in online shopping is lower,” she said.
This goes to show that shoppers still prefer the experience of offline shopping, and the interaction with human personnel that can give them real-time feedback and recommendations.
According to Yap, research has shown that shoppers who are engaged through all their five senses will spend more time at the shops and are more likely to make purchases.
While consumers will continue to purchase goods and services online even after entering the endemic stage of the pandemic, their purchases are mostly linked to essential products.
“These categories are relatively low-ticket items that do not require the tactile shopping experience for the shopper to sample the product before committing to purchase.”
New beginnings
Pavilion Bukit Jalil first opened its doors back in 2019, and has since been steadily expanding its list of tenants. They recently welcomed Thailand’s retail giant Siam Piwat (Absolute Siam, Ecotopia and Iconcraft), Japan’s iconic Tsutaya Bookstore, China’s tea retailer Tianyue Teajoy and Taiwan’s ceramic art store Lohas.
Yap is excited about these new developments, and feels that these new entrants serve an important purpose by strengthening the bilateral relations between countries through retail experiences.
“Shoppers will be able to experience international shopping from all around the world without having to leave the mall, as there will be unique retail experiences through curated Asian-themed precincts,” she said.
Japanese bookstore chain, Tsutaya Books will debut at Pavilion Bukit Jalil on the 7th of July 2022. This will be its first Southeast Asian outlet.
Famously dubbed “one of the world’s most beautiful bookstores”, the 31,000 square feet bookstore also offers a variety of curated beauty and skincare items under Ainz & Tulpe. Meanwhile, the bookstore also features a quaint cafe and a kid-friendly space.
The Pavilion group is always looking at new and innovative retail concepts that will excite and delight its shoppers in order to drive traffic, shopper engagement and boost tenant visibility among the Malaysian and international market, said Yap.
Gen Z and millennials
In the retail space, the Generation Z and the Millennial target market is always a topic of discussion. This group is on track to become the largest generation of customers globally in the next few years.
Yap says this growing demographic for Pavilion’s malls are becoming big retail spenders and are visiting physical stores more often too.
“According to research from commercial real estate firm CBRE, 81 per cent of Gen Zs prefer to go to stores, despite also spending a great deal of time online.”
She feels that malls provide a social experience that younger people crave. They want a place to share a meal with friends, watch a movie, or even capture an ‘Instagrammable’ moment.
“The younger generation grew up with the Internet, and rely on social media and apps to discover new places and things to do. Pavilion’s app was built to make our tenants more discoverable, and to keep shoppers up-to-date with mall activities and promotions,” Yap said.
In her mind, it’s important for malls to capture a good retail mix to provide new experiences and places for young people to hang out.
Supporting good causes
As the world grapples with issues revolving around climate change, Yap has also seen the trends of young people using their wallets to support environmental causes.
“The vast majority of Gen Z shoppers are willing to spend 10 per cent more to buy sustainable brands and products, and they are also more likely to make purchase decisions based on values and causes.”
Several tenants of the Bukit Jalil mall have shifted to a sustainable and fair trade model to cater to the growing demand for eco-conscious products and goods that empower communities.
“Tenants are also launching store features and products to encourage shoppers to live more sustainably, such as L’Occitane Pavilion Bukit Jalil’s first Green Store featuring innovative and first-ever refill fountain, and Kiehl’s with their range of eco-friendly refills, sustainably sourced ingredients and eco-friendly packaging,” she elaborated.
Meanwhile, premium grocer The Food Merchant encourages shoppers to shop with its sustainable and reusable bags in both orange and blue designs. To meet its zero-waste target, the grocer consciously sources fresh products in sustainable packaging.
The way forward
Shopping malls like Pavilion have to remain dynamic, nimble and agile in an ever evolving marketplace, as it continues to cater to discerning consumer lifestyles and nuanced purchasing behaviours.
“It is important to stay ahead of the retail competition by creating new retail concepts, exciting tenant mixes, and shopper engagement activities to stand out among retail competitors,” Yap said.
She has observed that retailers are starting to understand that e-commerce is in fact an asset to them rather than their competition.
“Embracing digital technologies and services is not a disruption, but rather an additional channel to engage with consumers.”
Shopping has also become hyper-personalised and experiential, due to the hybrid nature of online and offline shopping.
“I believe that retailers will continue to evolve by leveraging the digitisation of technology in order to provide their customers with a unique in-store experience with optimised store layouts, mall facilities and customer service,” she noted.
Revenge shopping
Interestingly, Yap mentioned that global retailers are observing a sustained “revenge shopping” trend, especially from luxury retailers, with shoppers splurging on expensive items and experiences after being cooped up during the pandemic.
“With several years of people confined by Covid-19 restrictions, we are finding more shoppers willing to go out and treat themselves, we have seen this trend in Malaysia during the Hari Raya festive period dubbed ‘revenge Raya’, with sales spiking as shoppers prepare for the many social events during the festive season.”
As far as the second quarter of this year is concerned, Yap believes that the retail sector will continue to thrive.
“We have noticed more shoppers coming back to malls and am positive that this upward trajectory will continue with more tourists visiting Malaysia and the rest of the region now that borders are opened,” she explained.
According to Yap, shoppers are increasingly seeking ‘retailtainment’, both inside and outside shopping spaces, as well as omnichannel and immersive shopping experiences.
She anticipates an increase in foot traffic with festive celebrations, sales and end-of-year celebrations coming up.
“Ultimately, shopping malls have evolved beyond being a retail hub, and have transformed into a vibrant retail mix that combines shopping, F&B, entertainment, learning, arts, and health and wellness,” she concluded.