In the ever-evolving landscape of retail and entertainment, Sunway Malls has emerged as a beacon of success, defying economic headwinds and setting new benchmarks for growth. In 2023, the mall operator reported 5 per cent year-on-year growth, surpassing its own record-breaking achievements of 2022. At the helm of this success stands HC Chan, the CEO of Sunway Malls and Theme Parks, whose strategic vision and leadership have propelled the company to new heights. In an exclusive interv
ve interview, Chan shared insights into the factors driving Sunway Malls’ exceptional performance and outlined the roadmap for future expansion and success. The current state of affairs “There were several factors that drove Q1 2023’s performance. At the macro basis, the large amount of liquidity infused from the EPF (Employers Provident Funds) withdrawals in 2022 was still propping up the retail sector well into Q1 2023 alongside strong festive spending seen from Chinese New Year,” he told Inside Retail. Chan also attributed the sustained performance at the mall group level to a resilient F&B mix, which grew 5 per cent despite higher food and beverages inflation. Due to the sizable footprint of F&B tenants within its malls (in the range of 20 per cent of total leased area), this provided resiliency. “From the micro perspective, certainly Sunway Malls’ unifying Chinese New Year campaign that encompasses all malls under our portfolio had been a unique proposition as it provided a differentiator factor that drove higher footfall and sales,” he added. Pent-up demand and an uptick in travel saw the travel-related retail sub-sector grow the highest at 28 per cent year-on-year among Sunway Malls’ retail sub-sector categories. “An amalgamation of factors in 2023 like easing of travel restrictions and regulations, gradual pickup of flight frequencies and successful renewals of passports had pushed outbound travel. Certainly, coupled by retailers in these sectors capitalising on that trend by offering targeted promotions helped drive the growth,” he noted. The rise of F&B Chan also revealed that the F&B category has made headway and emerged as one of the top 20 sale categories in Sunway Malls. This was previously dominated by non-F&B categories. This in tandem with the growing dominance of F&B categories in recent times, which occupy 25-30 per cent of the total lettable area he said. This trend is expected to move further towards the 35 per cent range in the near future. In line with the growing importance of F&B, Sunway Malls has introduced several Muslim-friendly brands, such as ‘Pokok’, ‘Serai’, ‘Me’nate Steak House’ and more, to cater to the increased demand in this space in 2023. According to Chan, the halal food market is expected to grow at a CAGR of 7.1 per cent between 2021 and 2025. “The selection of the right mix is important. In this respect, full-service restaurants, casual dining, and family dining categories are both growth and resilient categories to bank on. Apart from the appeal, they command larger ticket sizes too. And this was proven when F&B broke into the top 20 sales category,” he stressed. Chan believes that urbanisation and high-rise living are the two main factors behind the growth in F&B. Demand for Muslim-friendly food and offerings has also grown substantially. Asset Enhancement Initiative The mall group is currently undergoing an RM550 million (US$115 million) Asset Enhancement Initiative (AEI), which will see the company add 800,000 sq ft retail space to Sunway Pyramid and Sunway Carnival, with a respective investment of RM200mil (US$41 million) and RM350mil (US$ 73 million). In addition, Sunway is also building two new malls: Sunway Square with a retail space of 300,000 sq ft in Sunway City Kuala Lumpur, with an expected completion at the end of 2024, and Sunway Ipoh Mall with a retail space of 1 million sq ft in Sunway City Ipoh, which is expected to be completed by 2026. “Higher rental yield always comes from quality retail space. And quality retail space comes about from constant rejuvenation and refreshment. Despite the fact that retail might be performing well today, a longer time frame outlook is always advisable since retail trends and formats continue to evolve. It is about ensuring to catch the wave on time, not before or after,” Chan opined. Chan said that both Sunway Square and Sunway Ipoh are being designed to create a niche offering and also to tap into underserved locations. Sunway Square closes the gap for a more unique, intimate and experiential retail format in a community mall type of setting. Sunway Ipoh Mall, on the other hand, is being developed for a largely underserved market. Looking ahead to 2024, Chan is optimistic that tourism is expected to normalise to pre-pandemic level this year mainly driven by arrivals from Singapore, Indonesia and Thailand. “Indicators on the labour market also showed resilience in terms of labour participation rate and low employment rate. Coupled with our strong network with retailers, strong brand and a proven track record, we are confident in meeting the target of a 5 per cent growth rate,” he concluded.