SHANGHAI: Global fast fashion retailers are a prime target for China's mall developers who are rapidly expanding available retail space even as ecommerce continues to grow.
Inside Retail Asia reported that some 40 million square metres of mall space will be created over the next three years. In Shanghai alone there will be 55 new malls in that time, driven in part by an expanding metro system that has seen malls being built above stations or nearby.
On some estimates there will be around 5,000 malls across the country by the end of 2015 and not all will be successful, as, despite the numbers, there are relatively few experienced developers. Figures from property agency Jones Lang LaSalle suggest most have built only one or two and there are probably 15 who have built more than ten.
"Most of the real estate developers have looked at the mall as something to be sold," said Melanie Alshab, managing director of Kensington Asset Management. "Nobody stopped to look at the fundamentals of retailer demand or shopper demand," she told CKGSB.
But that mindset is changing as landlords become more pro-active in their management of malls, looking for a better mix of tenants and diversifying beyond retail into leisure and entertainment.
"To get traffic into malls now, landlords need fast fashion," according to Rebecca Tibbott, head of retail leasing at Jones Lang LaSalle Shanghai, adding that fast fashion brands themselves were all seeking prime high street space.
"H&M has around 250 stores in China and it's actively seeking space for 80 new stores this year; Zara has its sights set on 60 new stores and Uniqlo plans another 100, having already opened 100 last year," she said.
Other brands are also planning expansion or market entry, including Forever 21, which currently has nine stores and it intends to open a further 50, and Banana Republic, which is planning to enter the market next year.
Tibbott further noted that the luxury retailers who had previously commanded much mall space had been adversely affected by the government clampdown on extravagant gifting and that fast fashion brands were now appearing alongside luxury brands in many malls as millennials sought greater choice at lower prices.
Data sourced from Inside Retail Asia, CKGSB Knowledge; additional content by Warc staff