China economy

Why Chinese malls are filling up with ball pits

PUBLISHED : Monday, 25 January, 2016, 3:55pm
UPDATED : Monday, 30 May, 2016, 5:09pm

Across China’s malls, the ring of cash registers and the crinkle of plastic shopping bags is being replaced with the clatter of ball pits – but will new playgrounds soon choke the country’s shopping centres?

As online shopping continues to cannibalise their bricks-and-mortar colleagues’ sales and competition grows among a surging mall sector, analysts say many leasing agents are turning to entertainment as a way to fill space and reel in customers.

“It kind of manifests itself in two streams — one, you see existing properties which are struggling to adapt to e-commerce who are trying to retrofit themselves or patch holes in their vacancies,” JLL senior manager of Research Warner Brown said.

READ MORE: Malls in China left empty as shoppers go online

“Then you have new properties that are planning themselves from the ground up... I can think of an actual mall in Hunan province who are going to have theme-park style attractions.”

From inflatable slides to huge ball pits, along with childcare centres and even English-language schools, an appeal to children is seen as the panacea for China’s flagging malls.

JLL North China head of Research Steven McCord said it is a move which makes sense for the sector – not only can they capitalise on parents and grandparents lavishing money on children, but they can also increase the amount of time spent in malls.

“You might get them for lunch and dinner and they might just make some impulse purchases along the way at one of those expensive boutique malls,” he said.

The new strategy comes as unsold new homes in China jumped 11.2 per cent in 2015, according to new data released on Tuesday, rising to an enormous 452.5 million square metres.

Colliers head of China research Carlby Xie said it isn’t just a way to fill space for China’s retail landlords – it has become a way to give their customers a unique shopping experience.

“Most landlords on the market have to adjust their brand a bit to improve their competitive edge on top of the slowing economic background and the drop in revenue among many luxury brands,” he said.

“To do so I think it’s much more practical and realistic to improve the scale or enlarge the scale of trademarkers, including entertainment, education, that kind of experience in shopping retail chains.”

Xie said the trend towards playgrounds and parks inside malls began about a year ago and he expects it to continue for several years yet. “In first-tier cities, boutique brands or new brands coming into China will have a lot more opportunity to enlarge their market presence, given that consumer fashion taste is getting much more demanding,” he said.

“There are now upgraded requirements for shopping experiences in first-tier cities.”

But McCord said there may not actually be enough children to fill Chinese malls’ new gleaming playgrounds.

“I think of cities I’ve gone to where I go and see a mall, which I know to be struggling and talk to their leasing officers and they say, ‘We have a new strategy, we’re going to fill it with children’,” he said.

“Then the next quarter I go back to the mall up the street and ask them what they’re going to do with their place... and they say they have a new strategy. They’re going to focus on children... I start to wonder if there’s such a thing as too much children’s retail.”

While some malls appear to be banking on a second wave of children from China’s relaxation of the one-child policy, McCord said their approach is naive at best.

“You could argue those who were going to have another child already did anyway and the high cost of living in urban China has come up so much just because of policy relaxation,” he said.

“That is not enough to incentivise people to have another child.”