by Anh H. Nguyen
Many would argue that the heyday of shopping malls has long passed, at least in the US and India. While one is a stable developed economy and one is a rapidly developing one with plenty of room for growth, the malls in both countries are failing. This phenomenon is dramatically dubbed "The Fall of the Mall", "Retail Apocalypse," or simply "Dead Malls." The numbers are discouraging: 8600 US malls have been closed so far in 2019, and between 20% and 25% of malls would be closed by 2022. 60% of malls in India have performed poorly with a vacancy rate of 30%. The unexpected arrival of Covid-19 cast an extra dire outlook with many people fearing that it will be the final nail in the coffin: some have called Covid-19 the accelerator in the death of shopping malls.
Five years ago, in the article "From Mall Madness to Sadness: Why Shopping Centers Will Soon Be Obsolete", author Sudeep Banerjee outlined the main reasons why malls were being phased out: online shopping was easier, more social, and all around better. But she also acknowledged that while malls had been facing difficulties for a while, they could rise again given the right strategy. So how do shopping malls in Vietnam today go about avoiding the same fate as their counterparts in the US and India?
Switching the mindset
Before all else, Vietnam's retail builders need to get rid of the complacent, "build it and customers will come" mentality. Too many sparkling malls are erected in the prime spots of metropolitan areas only to wither or die quietly: Parkson, Saigon Square, and Diamond Plaza for example. Some other shopping centers like Crescent Mall seemed to head the same way a few years back, but they have made some major overhauls to change course. And the new generation of malls consisting of Takashimaya, Aeon Mall, and Landmark 81 are thriving despite recent setbacks induced by Covid-19.
What do those successful malls have in common? There are several factors. Surprisingly, a mall does not need to be smack in the middle of a big city to draw a constant stream of visitors. Notable examples are members of the Aeon Mall group, most of which are located in the outer rims of city centers and require shuttle buses to travel to, proof that "off the beaten track" malls could still prosper. Well-to-do malls are designed with customer experience in mind, e.g. they are easy to navigate, they are well-kept, well-lit, and spotless at all times, they provide ample parking space, multiple lifts, escalators, and restrooms. The goal is to maximize the amount of shopping time by reducing the so-called "friction" - inconveniences for customers like walking from the car park to the shops. The best malls nowadays, however, are no longer for shopping only.
The catalyst for change
The populace of Vietnam, once poverty-stricken, now has a growing middle class with a growing average income to match. Merely 20 years ago, most people in the country still got their groceries and everything else from wet markets and other specialty stores. Going to the supermarket then was treated as an occasion, a fun outing in and of itself: the air conditioning, cleanliness, and orderly, varying selection of goods were welcome reliefs, even novel attractions. In 2020, shopping in supermarket has become normalized and "just another errand" to the majority of city dwellers. Vietnamese people, especially youngsters, are also getting more worldly: they have the means to travel abroad frequently, stay up to date on the latest news and trends, and buy fashionable technology gadgets. They are raised on a diet of Facebook, Instagram and TikTok. They crave new experience, not just new toys. Tired malls with identical, uninspiring shops are boring, outdated, and remind them of chores, not enjoyable times. Mall visitors of all ages, not just Millennials and Gen Z, want to socialize and be entertained, even thrilled in a cool place, both temperature and culture-wise. If one's only goal is to shop, then online shopping is oftentimes much faster and easier.
Steps in the right direction
The arrival of the Internet has forced all malls to adapt in order to survive. To add value that online shopping cannot, modern shopping malls need to curate a diverse mixture of tenants in order to satisfy discerning visitors with ever-shortening attention span. All malls strive to be fun, but only the successful ones truly become destinations, not just for retail therapy but for everything else: entertainment, F&B, wellness, beauty, even offices and mini hotels. People could walk in, grab a drink, buy some shoes, watch a movie, get their nails done, have lunch, play some arcade games, shop for dinner, and never even leave the building. Those micro-city malls are popular both to visitors from afar and local citizens, for different reasons. For infrequent visitors, these malls provide enough options for a whole day of enjoyment, whether they travel in groups of friends, as couples, or as families. For the locals, the malls both come in handy for their everyday needs and add value to the area they live in.
In order to make this happen, many mall developers choose to support tenants with short-term or flexible leases, even popup stores in order to bring variance and fresh colors to their space. This decision to optimize customer experience instead of rental profit is a visible departure from traditional mall practice. Top malls engage visitors even further by constantly hosting events such as music concerts, workshops, exhibitions, interactive games, and photo-ops, with eye-popping displays ready to be #trending any minute. Modern malls in Vietnam also keep in touch with their target visitors by being active on social media, running creative marketing campaigns, and providing loyalty programs.
A contemporary art installation in Vincom Mega Mall Royal City
Is all that enough, though? Besides selecting the right location, ensuring proper upkeep, and having the right mix of tenants, retail developers also need a solid understanding of shoppers' behaviors and mindset. But customers' tastes change, sometimes too quickly to keep up with, let alone predict. In order to stay ahead, mall developers need to invest in proper technology tools for measurements.
(to be continued)