Future bright for China’s shopping malls despite e-commerce threat, says DBS Vickers
Higher salaries and house prices will encourage spending on luxury goods as malls offer customers an experience they can’t find online
China’s shopping malls are in for a good three years despite the threat from online retailers and a recent slowdown in consumption, according to brokerage firm DBS Vickers.
Higher salaries and house prices in major Chinese cities, and tighter controls over money leaving the country will spur robust personal spending, especially on luxury goods, said Carol Wu, the company’s head of research for Hong Kong and China.
Shopping centres have been taking on the challenge from e-commerce by offering their visitors something their internet-based rivals cannot: a complete experience.
The impact of online shopping has been mitigated over the past two years because shopping mall operators have adjusted their selection of tenants
Restaurants, cafes, entertainment areas for children, and even educational classes are an increasingly common feature of malls as they embrace “experiential” shopping and opt for the type of outlets that cannot be replaced by online vendors, said Wu.
“The impact of online shopping has been mitigated over the past two years because shopping mall operators have adjusted their selection of tenants,” said Wu. “Retail space used to account for 70 to 80 per cent of a shopping mall, but it’s only 50 per cent now.”
China’s retail sales growth slowed in August to 10.1 per cent year on year, the worst in six months and weaker than the market consensus of 10.5 per cent, according to a Bloomberg poll.
However, retailers of luxury goods and cars contacted by DBS Vickers had reported solid sales, Wu added.