Get a demo Do I subscribe? News sign-up
Print

China faces mall overhaul

News, 09 September 2016

BEIJING: Up to one third of China's shopping malls may have to close during the next five years, according to a study which says that not only are there too many but they are largely undifferentiated.

Reports suggest that China already has some 4,000 shopping centres with another 7,000 in the pipeline, a development that has been encouraged by regional governments planning for the country's growing consumer market.

But the study by the Chinese Academy of Social Sciences (CASS) said that these destinations are losing appeal with consumers in many cities, due to their lack of competitive strengths, and closures were inevitable.

In recent weeks, for example, large shopping centres have shut in Qingdao and Dalian, Sina reported.

The CASS report suggested that in addition to closing one third of malls, another third would have to become wholesale or retail marketplaces, with an emphasis on customer experiences, while the remaining third would look to integrate online shopping with brick-and-mortar outlets.

The experiential option is already being explored, with global fashion retailers and children emerging as a potential focus.

The biggest challenge malls face is the extraordinary growth of e-commerce. Figures from the Boston Consulting Group show that in 2010, online transactions made up just 3% of total private consumption in China; today, online channels account for 15% and are projected to rise to 24% by 2020, as e-commerce grows more than three times as fast as offline retail sales.

Wang Xuefeng, a researcher with the National Academy of Economic Strategy at CASS, said shopping malls needed to integrate with e-commerce rather than remain at the receiving end of its shock effect.

Alibaba, the internet giant at the heart of China's online shopping story, is helping bridge the gap to bricks-and-mortar retailers.

Danfeng Li, Director of Big Data and Technology at Alibaba, told Warc recently how wifi sniffers and beacons are among the methods being used in stores to harvest first-party data about visitors which can then be used to determine traffic flows in stores, areas of longer engagement or even 'bounce rate' – how many customers enter a store then leave quickly.

Data sourced from Sina; additional content by Warc staff