2020 will be remembered in our lifetime as the coronavirus pandemic sweeps across the globe. Without doubt, the brick and mortar business including malls are among the hardest hit in the economy. We analyze what challenges are coming for malls, the opportunities available and what some malls are doing in the face of the pandemic. Finally, the key question is whether our local malls will take action to seize this opportunity to defend and who in the organization will need to make it happen.
Part 1 - Business Model Disruption Across 2020
Part 2 - How Are Malls Responding To COVID-19
Part 3 - How Can Malls Use Digital To Defend Revenues
Part 2 - How Are Malls Responding To COVID-19
MallDash is in a unique position in terms of malls. With over 50 malls in our system, we speak with various mall operators in South East Asia as well as the Malaysia Shopping Malls Association, representing around 400 malls in Malaysia. Note that in this article, we do not reference any specific malls and this is a general feel of the situation upon speaking with different parties. We summarize into a few areas what malls are doing in this current situation:
Shopping malls have been very traditional in their approach. In a pre pandemic era, marketing promotions were usually centered around festive periods and company roadshows to attract crows. In the past few years, more malls have taken to Instagram, Facebook and other social media to promote themselves. Quite to our surprise, some shopping malls early in the pandemic are choosing to do nothing, like an extended holiday.
Likewise, the AGM for the Malaysia Shopping Mall Association has been postponed from 25th March to somewhere after 30 June 2020, so any joint efforts between malls are highly unlikely to be seen. Other mall operators and property owners have announced cuts. Singapore’s CapitaLand announced wage freezes, pay cuts and hiring freezes as early as February 2020.
2. Adapt and Survive
Malls need to provide assurances to the public that their malls are safe. Several malls like Sunway have set up monitoring stations and disinfecting stations for people like delivery partners to enter. Besides that, malls are running disinfection campaigns, thoroughly wiping down the entire mall on a daily basis.
Even supermarkets like Jaya Grocer have started monitoring, disinfecting and limiting the number of visitors into these stores. They also provide disposable plastic gloves to limit any chances of transmission, thereby reassuring shoppers that their safety is utmost important
Many super traditional F&B companies are also creating MCO menus. We have seen an acceleration of restaurants going onto delivery platforms like FoodPanda and GrabFood. Delivery platforms have recorded an increase in sales by 50%-200% during the pandemic as people swap out mall visits for in house delivery.
3. Early Investments In Digital
At the other end of the spectrum, there are malls or conglomerates which have been forward looking and have made investments in digital technologies. Some malls have made investments in AI technology while others have made investments in mobile applications or reward applications.
Only one mall in Malaysia, One Utama has an eCommerce shop online. However, our checks on 27th April 2020 showed that the eCommerce shop is not functioning. This means across the entire mall ecosystem in Malaysia, no mall has made significant headway in eCommerce.
Opportunities in Digital Innovation
The current pandemic has shifted consumer attention and spending to the online world as non essential brick and mortar remains in lockdown and people are being restricted in movement. The online shopping world has had a huge step change due to this:
1. 50% - 1000% increase in online traffic & Social Media
Social media giants like Facebook are reporting a 50% increase in messaging usage and time spent while platforms like Netflix increased by 200% usual subscribers. Other more essential services websites like healthcare report up to 1000% increase in traffic.
2. Growth of Online Malls 50-500% across different categories
With malls shut, shoppers have to go online for a majority of essential and non essential items. A significant amount of this is due to first time online shoppers who have never used online malls before but are forced to during this lockdown period. Given the stickiness systems built into online malls, these people are expected to continue to buy online.
3. Low competition among malls
5 billion searches are performed every day. 93% of online experiences begin with the search engine. 81% of shoppers search online before making a large purchase or visit a place. Malls have not been able to conquer the most important real estate online, the search engine. Interestingly, the competition in digital technology between malls is very low and the first mover might have a good advantage to collect virtual traffic and funnel them to their malls.
It is clear that malls have lost a large amount of shoppers to online platforms and online shopping malls. Will they be able to recoup the market share lost? Find out in Part 3 - How Can Malls Use Digital To Defend Revenues