How E Commerce has Altered Shopping Malls Operations and Consumers Spending

If the past 4 years were an indication of the future, the role of retailing in shopping mall is nearly gone. Ecommerce sites such as Taobao, Shopee, Lazada, Amazon has enabled consumers with a click of their handphone or laptop purchase items from bespoke shops locally or even from merchants overseas

The development of a strong logistics chain has shaved off the time deliveries happen (2 days for local merchants and a week plus for overseas merchants).

Shopping Malls Suffer

Tenants mix for shopping malls has changed. F&B and services such as enrichment centres and leisure/amusement have taken over the vacated spaces left by retail tenants. A simple visit to any Capitamall and one would notice that more and more stalls are of the F&B nature.

China has had it worse where China consumers sidestepped the stage of retail malls and went straight into e-commerce adoption. The many malls built around China are now experiencing declining vacancies with Alibaba and JD prospering as part of growing consumer spending instead.

While capitaland has continued posting growth in occupancy, I doubt this will be the case going forward. Its 98.7% high occupancy will likely see a fall as more and more retail outlets leave/reduce its physical footprint and move online. There is a limit to how much F&B outlets can be in Singapore unless Singapore rapidly expands its population to meet the growth in F&B store supply.

Trend is Now E-Commerce

The ease of e commerce knows no boundary. Besides earning a fee off each sale, e commerce platforms earn its keep as a marketing platform - elevating stores who pay more for advertising to more consumers by pushing it down as top search results. 

Think of it as a shopping mall where the first floor always has the highest footfall. E-commerce platforms can quickly rotate a "store" from say the higher floors to the first floor, and vice versa according to how much retailers pay these platforms for advertising.

In a sense, the flexibility to rent to be prominent when the brand needs to grow and then quickly move down the "rental pricing" when a brand stabilises can be done in days, unlike the physical malls where retailers are traped with leases and retrofitting costs.

Supermarkets are moving online now where the quick delivery of food items can be achieved such as what is observed in China - Freshippo working with cainiao has ensured same day delivery. Lazada in Singapore has achieved this in collaboration with Singpost.

I have no doubt South East Asia will be like this given the proximity to China and how Alibaba has expanded its presence here. If Alibaba does not achieve this, there is Sea Group, Bytedance and Go-to conglomerate waiting in the wings. 

In short e-commerce will supersede shopping malls as the place for retail and even within the e-commerce space, there are a variety of companies fighting to establish themselves and in the meantime are improving their last mile delivery as differentiation. This helps to improve the attractiveness of e-commerce and diminish that of the shopping malls.

No doubt shopping malls will re-invent themselves as experiential places and that of F&B draw, but the truth is that their pie has shrunk. E-commerce will grow exponentially to meet retail demand and eat into more areas that shopping malls once held control over. If i were to venture a thought, I forsee vacancy rates in south east asia (especially Singapore) to climb. On the e commerce sides, their revenue will keep increasing with growing adoption by the populus. 

F&B will be the last frontier for shopping malls to defend and when the day comes that e- commerce usurps it, it may spell the end of malls.