Parkson’s exit a sign of tough times for retail stores?
MARKETS
Friday, 2 Feb 2018
by eugene mahalingam
Not sustainable: A file picture of Maju Junction shopping mall in Jalan Tuanku Abdul Rahman. Parkson says it exited the mall as sales at the outlet there were not sustainable.
Company says the outlet at Maju Junction Mall underperforming
PETALING JAYA: The sudden exit of the Parkson departmental store as a tenant from the Maju Junction Mall in Kuala Lumpur is another sign of challenging times for retail stores in Malaysia.
Parkson Holdings Bhd
image: https://cdn.thestar.com.my/Themes/img/chart.png
, which has around 50 stores in the country, announced recently that the company was shutting down the store in the Maju Junction Mall located along Jalan Tuanku Abdul Rahman.“Parkson Maju Junction Shopping Mall is moving out today. Thank you for your unconditional support throughout the years and we hope that you continue to shop with us at any of our other Parkson stores,” the departmental-store operator said in a statement on its Facebook page on Jan 12.
“Sogo is the most successful department store in the country, with an annual total sales turnover exceeding RM800mil. Most retailers there do very well, with some having their best performing outlet in Sogo,” said a property consultant.
“Rents can exceed RM25 per sq ft in Sogo and along Jalan Tuanku Abdul Rahman, it is also above RM15 per sq ft.”
Despite being located just down the road from Sogo, he said rental rates at Maju Junction Mall were “comparatively lower.”
“As a retail model, I think Maju Junction Mall is irrelevant and having Parkson there didn’t help. The reason is that Sogo is in the heart of the Jalan Tuanku Abdul Rahman shopping precinct, which is Malay dominant and many are from outstation, especially during the weekends.
“Maju Junction Mall doesn’t excite with its merchandise either. Sogo is relatively mass market in pricing and merchandising with lots of regular sales – and that captures the market well.”
When contacted, a spokesperson from Parkson confirmed that the Maju Junction Mall outlet has been underperforming.
“The decision to move out was made as the sales in Parkson Maju Junction was not sustainable. Due to the dynamics of the retail business, the opening, closing and/or relocation of stores were part and parcel of doing business.”
Another property consultant who requested anonymity, claimed that Parkson’s sudden departure from the Maju Junction Mall had resulted in a lawsuit between the two parties.
“It is understood that when Parkson signed on as a tenant at Maju Junction Mall, the landlord had to tear down walls to accommodate Parkson. This cost them (the landlord) a lot of money.”
He said despite the ideal location, the Maju Junction Mall could be “better designed” to be more appealing to shoppers.
“Personally, I believe Parkson made a mistake and should not have expanded to Maju Junction Mall,” he said.
Parkson’s spokesperson denied that a lawsuit was pending.
Parkson announced last week soon after closing down the Maju Junction Mall outlet that it was setting up an outlet at M Square Shopping Mall in Puchong.
“Parkson has just opened a new store in M Square, Puchong as well as in Paradigm Mall in Johor Baru and Kuantan City Mall in November last year. Upcoming stores will be opened soon in Bangi and Bintulu,” said the Parkson spokesperson.
Based on reports, the new store spans 78,000 sq ft of retail across four floors, carrying more than 350 local and international brands that cater to the diverse styles and preferences of shoppers.
At the 11th Malaysian Property Summit 2018 (11MPS) last week, Savills Malaysia Sdn Bhd deputy executive chairman Allan Soo said the medium term outlook for the local retail property sector “remained challenging.”
“With incoming supply over the next few years, we expect to see more consolidation,” he said at the full-day conference, adding that the local retail property market will be flat in 2018.
Soo forecasts that there will be a total of 197 malls in Malaysia by 2021, representing 86.2 million sq ft of retail space compared to 170 malls with 62 million sq ft of retail space as at end-2017.
Read more at https://www.thestar.com.my/business/business-news/2018/02/02/parksons-exit-a-sign-of-tough-times-for-retail-stores/#IQrtB0XYtIDJQsuz.99
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