Department stores in crises

By Tan Hai Hsin, MD of Retail Group Malaysia

On October 30, media reported the closing of Robinsons in Malaysia. Early morning the following day, long queues were seen at the two of their stores as regular customers were trying to buy goods at heavily discounted prices.

Subsequently, Robinsons in The Gardens Mall and The Shoppes @ Four Seasons Place shut down last month.

Robinsons is not the only Singapore department store operator that exited Malaysia this year. The iconic Tangs department store exited earlier this year.

The department store sector has been facing intense competition from specialty stores over the last two decades. The rapid growth of specialty stores over the years led to more choices for Malaysian consumers to shop for similar retail goods found in traditional department stores.

Online shopping has played a very important role with Malaysian consumers during this COVID-19 pandemic. However, it is not the main reason for the poor performance of department store operators in Malaysia. Because online retail data does not only affect department stores, but also all other types of retail stores. Online retail sales account for less than 1% of total retail turnover in Malaysia.

Department stores are still relevant in today’s market environment but its merchandising mix is critical to its future success. They are doing well in smaller towns in Malaysia. There are not many modern large shopping centres in small towns. Thus, department store is still the ‘shopping centre’ for locals.

… Department stores are no longer an all-under-one-roof general merchandise retail store. They have become large Lifestyle stores…

Similar to department store operators in United States, the concept of department store is evolving in South-East Asian countries. Department stores are no longer an all-under-one-roof general merchandise retail store. They have become large Lifestyle stores.

Muji is a lifestyle store. IKEA is a lifestyle store. Even Mr. DIY can be classified as a lifestyle store now. Consumers enjoy shopping in these places where they find a wide variety of interesting products, and for ideas and inspiration. 

The future of department stores will offer retail brands that cannot be found in specialty stores and will include cafes, restaurants, salons, event spaces and community halls.