The number of shopping malls in Asia is poised to see sustained growth, as mall operators continue their expansion into new markets. The growth phenomenon is largely attributed to the rising purchasing power of the middle-class in China and ASEAN countries.
The number of shopping malls in Asia is poised to see sustained growth, as mall operators continue their expansion into new markets. The growth phenomenon is largely attributed to the rising purchasing power of the middle-class in China and ASEAN countries.
The world’s three largest shopping malls (500,000 square meters and over) are all located in China, while the fourth, ICONSIAM, opened in Thailand in November 2018.
In 2018, Japanese mall operator
AEON opened two new malls in China and one Cambodia. With two malls under construction in Vietnam and another two in Indonesia all slated to open by 2020, the firm plans to open a total of 70 malls in China and Southeast Asia - roughly the same number of locations as in Japan .
According to AEON’s latest financial report for the first three quarters of 2018, 10 of its 17 shopping malls in China are profitable, while operating income increased 48 percent year-on-year.
Its seven malls in the ASEAN region meanwhile, were all profitable, with operating income surging 368 percent year-on-year.
Rising middle class
An expanding middle class has been a significant driver of mall expansion in the aforementioned countries. According to Pew Research Center, about two thirds of the global middle class will be living in Asia by 2030; in contrast, North America and Europe will together account for only a fifth.
While the middle class currently only makes up 20 percent of China’s total population, mall operators are banking on a sustained growth in the country’s purchasing power, as well as in the Asia Pacific region. Retail sales for the region are forecast to grow by 4.3 percent compared with other regions in the world, according to the World Bank.
Challenge from online shopping
Despite the growth potential there are still challenges, in particular from online shopping. In Deloitte’s study of the world’s 50 fastest-growing retailers between 2011 and 2017, online discount company VipShop Holding took the top spot, while China’s JD.com took the third place.
In the face of such competition, mall operators “have to optimize shoppers’ in-mall experience” so that “customers stay longer and make repeat visits,” according to Jeremey Sea, Senior Manager of Commercial Marketing for APAC at
Sensormatic Solutions, which is part of Johnson Controls.
Technology can help operators and retailers collaborate in order to create personalized offers, for instance allowing for the easy capture and sharing of footfall data.
What’s coming next
Facing pressure from online retailers, operators in Asia’s fast-expanding shopping mall sector are turning to technologies such as AI and biometrics to lure back consumers and boost revenue.
New technologies can help operators enhance the customer experience in a number of ways, such as utilizing facial recognition to identify VIP guests and carry out targeted promotions.
Technology is also playing a role in keeping malls secure, in the form of integrated solutions that combine fire safety systems, video surveillance, location-based security and intrusion detection products within a single interface.