Shopping malls in Malaysia have long been iconic landmarks, serving as hubs for retail, dining, and entertainment. However, the evolving market landscape, changing consumer behaviors, and external economic pressures have introduced significant challenges for mall operators.
The Current Challenges
1. Shift to E-commerce
The rapid growth of e-commerce has fundamentally changed consumer shopping habits. Platforms like Shopee, Lazada, and Amazon dominate the online retail space, offering unmatched convenience and competitive pricing.
"Shopping malls must pivot to incorporate omnichannel strategies to stay competitive," JLL reports in their 2024 retail insights. "Traditional retail is no longer enough; malls need to integrate digital platforms to retain their relevance."
Clarence Chia, Director of AND Lab, comments:
"Retail spaces can no longer afford to be static. They must become dynamic environments that merge digital and physical experiences. At AND Lab, we are exploring ‘phygital’ concepts that allow shoppers to engage with brands on multiple levels, both online and in-person."
2. Rising Operational Costs
Inflation and high rental costs continue to weigh on mall operators and tenants alike. Vacancy rates are increasing, particularly in older malls that struggle to compete with newer, more dynamic spaces.
CBRE’s market analysis highlights that operational costs have risen by 15% across Southeast Asia, pressuring retail tenants to renegotiate leases or downsize.
"In the APAC region, malls that focus on creating shared economies—such as co-retail spaces or revenue-sharing models—are seeing better resilience," notes CBRE's Retail Outlook.
Chia adds:
"Sustainability is not just about green architecture; it’s about economic sustainability too. AND Lab is working with clients to design modular retail spaces that can adapt to fluctuating tenant demands, optimizing space and minimizing operational waste."
3. Post-Pandemic Recovery
While foot traffic has improved post-COVID-19, consumer spending habits remain cautious. Many malls have shifted to focus on essential goods and services, while discretionary retail struggles to regain traction.
"The pandemic has forced malls to rethink their purpose," according to JLL. "Today’s consumers expect more than just shopping—they want experiences, wellness, and connectivity."
Chia elaborates:
"We see malls becoming micro-ecosystems for urban living. Imagine a mall that doubles as a community hub, offering co-working spaces, fitness centers, and cultural venues. This integrated approach aligns with what AND Lab envisions for the future of commercial spaces in APAC."
How Malls Can Evolve
1. Creating Experiential Destinations
Malls must offer more than just products—they need to deliver memorable experiences. Incorporating entertainment zones, cultural exhibits, and unique dining concepts can set a mall apart.
"As retail evolves, experiences become the anchor," states CBRE in their 2024 Global Retail Report. "Experiential retail increases dwell time, driving higher sales per visit."
Chia remarks:
"At AND Lab, we’ve seen the impact of immersive design firsthand. For example, in our recent project in Beijing, we created a dining concept that blends storytelling and architecture, turning a restaurant visit into an unforgettable journey."
2. Leveraging Technology
Integrating AI and smart technologies can enhance customer experience and operational efficiency. From interactive directories to data-driven tenant mix optimization, technology is transforming how malls operate.
"Retailers must embrace data analytics to predict customer trends and improve sales," says CBRE.
Chia adds:
"Technology should serve as an enabler, not a replacement. At AND Lab, we’re focused on using technology to create seamless customer journeys, whether through smart navigation systems or personalized retail experiences."
3. Embracing Sustainability
Green architecture and eco-friendly initiatives are no longer optional. Malls that prioritize sustainability appeal to environmentally conscious consumers and reduce long-term operational costs.
JLL notes, "Sustainability initiatives, such as LEED certification, are becoming a differentiator in competitive retail markets."
Chia comments:
"AND Lab has always been a strong advocate for sustainable design. In Malaysia, we’re exploring how malls can integrate biophilic elements and renewable energy systems to create eco-conscious yet commercially viable spaces."
Emerging Trends in Shopping Malls
-
Phygital Integration
Interactive AR-powered fitting rooms and app-based loyalty programs are merging digital and physical shopping. -
Mixed-Use Developments
Malls are increasingly becoming part of mixed-use developments, integrating residential, commercial, and leisure spaces. -
Localized Community Engagement
Hosting cultural events and local artisan markets can strengthen a mall’s connection with its community.