Mainland shopping malls embrace entertainment and affordability in effort to woo consumers to bricks and mortar experience
Joy City Property says increasing the share of physical space given over to entertainment at its malls has led to an increase in footfall
Shopping mall operators in China are incorporating entertainment zones with Ferris wheels, giant slides and pet parks, in an effort to woo customers back to the bricks and mortar shopping experience.
Joy City Property, the Hong Kong-listed commercial property arm of state-owned food giant Cofco, is a believer that physical malls can win back the hearts and minds of consumers by providing the right environment.
Against the slowdown of China’s overall retail sales, the company has managed rapid growth.
They introduced China’s first roof-top Ferris wheel, 98 meters above the ground, in its Shanghai mall phase II, which opened in December last year.
“The Ferris wheel attracts an average 1,500 guests daily at 80 yuan per ticket. It has not only brought in considerable revenue itself, but it has boosted foot traffic and sales,” said Zhou Zheng, chairman of Joy City.
The company says tickets sales alone can contribute an estimated 20 million yuan in annual revenue. Meanwhile, the attractions have also enabled the retail landlord to boost monthly store rents in Shanghai by 3 per cent on year in the first quarter.
Since launching its first shopping mall in 2007, Joy City has opened in total seven malls in six Chinese cities, including Beijing, Tianjin, and Shanghai. Separately, it has two malls under construction.
The mall operator has positioned itself a leisure space provider targeting trendy people aged from 18 to 35.
Zhou said physical mall operators have to differentiate themselves through creativity amid the onslaught from online shopping sites.
“The competition is fierce, only industry leaders will not be kicked out,” Zhou said.
Joy City has raised the share of entertainment to tenant numbers in the complex to 30 per cent from 20 per cent, allocating huge spaces for exhibitions, sporting events, and community activities such as painting and cooking.
“We want to build up a landmark destination, you don’t have to buy something, you can just come for a coffee,” Zhou said.
In terms of tenants, Zhou said they avoid luxury brands in favour of affordable luxury, such as retail goods and restaurants geared towards the mass consumer. For example, hand bags that sell for around 2,000 yuan are within an affordable price point for many Shanghai shoppers, he said.
Zhou believes his company’s core competence is in understanding the youth market. But he added that creativity remains a priority.
The next mall, slated to open in Hangzhou in 2017,will embrace the themes of technology and entrepreneurship, reflecting the city’s role as China’s e-commerce capital.
Joy City said it was able to boost rentals across all seven malls that it operates in the first three months of the year. Average unit rentals at Beijing Chaoyang Joy City and Shenyang Joy City increased by more than 20 per cent, as the average occupancy rate of the seven malls was as high as 94 per cent.
Zhou expects 20 to 30 per cent growth in store sales from investment properties this year, with rental income to increase more than 10 per cent.
Looking to the future, Zhou said the company is speeding up expansion and has set a target of owning or operating more than 20 shopping malls by 2020.
He said the company was on the lookout for upgrading opportunities to take advantage of the current depressed market values of traditional malls.