What Is Driving China’s Shopping Mall Boom and Bust?

on October 27 2014 | in Retail | by | with No Comments

Shopping malls, a favorite of real estate developers in China, have been flourishing all over China.

Driven by rapid urbanization and growth of disposable incomes, China holds the title as the world’s most active shopping mall development market in 2013, according to real estate services firm CBRE. Nine cities out of the world’s top 10 for new shopping malls were in China.

According to a recent report from Fung Business Intelligence on China’s shopping malls, the China Chain Store and Franchise Association (CCFA) estimated that about 300 new malls are opened in China each year and there will be a total of 4,000 malls by the end of 2015.

shopping_mallsThese shopping malls are not all destined for success. In fact, due to poor market positioning, many fail. With the current shopping mall building boom in China’s softening retail market, many industry experts fear supply will outstrip demand.

Who will win?

The winners are those who constantly innovate and keep up with China’s evolving retail environment.

Chinese consumers are now increasingly seeking a “lifestyle experience” when they shop. Malls that provide opportunities – shopping, dining, entertainment –  to socialize with family and friends are proving to be very popular.

To meet this changing need and build customer loyalty, some malls in China are adjusting by increasing floor areas for food and entertainment, having “experiential stores and international fast fashion brands” as anchors instead of department stores or supermarkets, and adding exhibitions, galleries, and kid-related elements.

So far, China’s mall developers are great at development, but not as good as operators.

image source: flickr/chris

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