China Retail
Ghost Malls
I've spent the past week in Las Vegas at the annual RECON convention. It's the world's largest gathering of retail real estate professionals, and every year is a dizzying array of specialized retail services, sectors, and technology. People here are serious about the business of retail, and this business clearly revolves around the customer.
In the US, with intense competition and fickle shoppers, most retailers, developers, and investors have figured out that in order to be successful, they need to understand their customer. There are so many shopping centers scattered around neighborhoods in the US that the focus is on what the customer wants rather than what the property developer wants.
Now on the other side of the world where I live, it's amazing to me that this equation is turned on it's head. So many investors and developers are building huge hundred million dollar properties across China thinking "I built it, now they will come." This is sort of the retail version of Descartes' "I think therefore I am." I don't know if these local developers understand Descartes, but they definitely understand Louis Vuitton. But do they understand their customers? From what I've seen, it doesn't look like it.
If they did, wouldn't they think about customer experience, tenant improvements, and merchandising mixes? Wouldn't they want to know where these customers were, how often they are likely to shop, how much they are willing to spend, and what kinds of things they are interested in buying? By not paying attention to these things, and fully analyzing their market (ie: understand their customer) these developers are now creating what we call "gui gouwu zhongxin" - or ghost malls.
Out of curiosity I did a quick search for "gui gouwu" and to my surprise found a fantastic article in Time that discusses every issue of why I'm in business. I highly recommend this article to anyone interested in Chinese shopping malls.
Retail: Aspirational Hazard
By KATHLEEN KINGSBURY/BEIJING
Beijing's golden resources mall ought to be a shopper's paradise. Built on the city's outskirts in 2004, the Art Deco-style center boasts a staggering 6 million sq. ft. (560,000 sq m) of retail space, making it the world's second largest mall, 30% bigger than Minnesota's famed Mall of America, once the largest. Golden Resources accommodates more than 1,000 shops, dozens of restaurants, 230 escalators and an ice-skating rink. On its five floors, you can buy everything from fur coats to exercise equipment to pet supplies.
May 23, 2008
Subscribe