Rise of online shopping forces mainland malls into rethink

The rise of online shopping on the mainland is forcing malls to restructure their retail mix to provide more entertainment and food and beverage outlets in order to boost customer traffic.

The winners in the mainland battle for customers will be the best-located shopping centres in prime districts, while super-sized malls in remoter areas will battle to maintain rentals, according to property analysts.

Old-format department stores were once courted by mall operators on the mainland as anchor tenants that could lure shoppers.

Then, as shoppers turned to the internet for merchandise offered by such stores, shopping centres looked to fast-fashion stores to play an anchor role, property consultancy Knight Frank notes.

China is set to overtake the United States as having the world's largest online retail sales market by total value. Online retail sales are expected to have accounted for 7.4 per cent of China's total retail sales last year, up from 6.3 per cent in 2012.

In a public forum earlier this month, Fosun International chief executive Liang Xinjun warned of a looming oversupply of mega malls. He said that as Beijing rolled out measures to cool the housing market, local governments had sought alternative revenue sources and encouraged developers to build mega malls.

Now operators faced a challenge to compete in an over-supplied market.