This article first appeared in City & Country, The Edge Malaysia Weekly on November 6, 2017 - November 12, 2017
Excellence in International Luxury Shopping Mall | Pavilion KL | Pavilion Real Estate Investment Trust
Every major city has its exclusive shopping area — Fifth Avenue in New York, Rodeo Drive in Beverly Hills, Mayfair in London, the Champs Élysées in Paris and Orchard Road in Singapore, to name but a few.
In Kuala Lumpur, it is Jalan Bukit Bintang, and one of its shining stars is Pavilion Kuala Lumpur. Since opening its doors in 2007, the mall has continued to draw the crowds with its innovative and luxurious offerings, and this year, it is the winner of The Edge Malaysia Property Development Excellence Award 2017.
Constructed on the former site of the Bukit Bintang Girls’ School, Pavilion KL occupies 12.6 acres and has a net lettable area of 1.37 million sq ft. It features seven levels of retail that showcase a mix of 60% fashion, 24% food and beverage and 16% urban leisure products. The mall is fully tenanted and draws 2.5 million to three million shoppers a month. Last year, its sales revenue hit RM3 billion, growing 5% year on year despite a soft market.
What is the secret of its success and what can shoppers expect from this iconic mall? Datuk Joyce Yap, CEO for retail, and Kung Suan Ai, director of marketing of Kuala Lumpur Pavilion Sdn Bhd, tell City & Country what it takes to run the mall.
Leaving no stone unturned
Yap compares the development of Pavilion KL to the growth of a human being from conception to birth — a slow and patient process.
“The conceptualisation of Pavilion KL was done through a lot of market studies, understanding consumer behaviour and identifying the stakeholders, which was very important at this stage. Then, the finances must be there, the contractor must build the right product and retail planning must be correct on a functional layout.
“Once the mall is up and running, marketing takes precedence. Marketing has to know how to bring in the traffic, what people want and how to lengthen the shoppers’ stay in the mall.
“So, from planning to delivery, from the landlord to the retailers, and now being a service provider, all these components play an important part in the mall’s success. Even the government plays an important role by facilitating tourism,” she explains.
One of the key features of Pavilion KL is its long shopfront.
“We are very lucky to be framed by a very long shopfront facing Jalan Bukit Bintang. We saw in Tokyo, Japan, how the international brands occupied the ground floor of 2-storey or 3-storey units. We felt it was such a waste,” says Yap. As a result, at Pavilion KL, the luxury brands that lined the street operated from two levels while prominently displaying their brands.
One of the challenges for malls is finding the right balance of products and their positioning. According to Yap, about 10% movement — be it leaving the mall or moving to a new location within the mall — is considered healthy.
“Since the opening of Pavilion KL, we have seen 5% to 10% movement every year. Brands that are strong in Europe or the UK may not gain a following here, possibly because of the timing and Malaysians being more influenced by commercial brands. If the brand is too niche, it is hard for us to accept it.
“So, through trial and error, you can see that over 10 years, the mall’s layout has changed. We used to have a speciality anchor tenant but today, the space has been converted to house 36 brands. And we used to have high-end brands in one segment of the mall but now similar brands have taken up space near our centre concourse,” Yap points out.
Creating new opportunities
With the hardware in place and competition for shoppers increasing, marketing has become a fine art for Kung. She recalls how, in the beginning, a lot of hard work was needed to make Pavilion KL a household name.
“In the beginning, we designed Pavilion KL to be a destination and a benchmark for the industry as a whole. And as Bukit Bintang is a tourist precinct, being the defining authority for fashion, dining and urban leisure, it was important in the first few years to build the mall’s brand regionally,” she says.
“This was done through partnerships with airlines, overseas travel markets, the government, tourism agencies and travel trade bodies. I think that, over time, we have developed that brand equity. And in line with the role of shopping malls, it soon became the epicentre of activity. It later evolved into the epicentre of grand festivals and decorations. After a while, whole communities gathered for many different reasons. So the mall has become a great social and corporate meeting place.”
As trends and preferences change, so too have marketing strategies.
“Now we are going for more service experiences and making it personal. Tourists no longer come here just to shop. They want to take home lasting memories. So we try to give them a ceremonial welcome and engage with them in every way possible.
“The retailers have also contributed to this personalised experience that is in line with the position and synergy of the mall and brand.
“Now, with technological advancements, you can see that people are talking about connectivity. So we have to provide seamless connectivity with the convenience of shopping. As an example of this, we recently introduced free WiFi because it has become a necessity.”
With today’s smartphone users and social media, free WiFi has enabled Pavilion KL to reach far beyond its borders. For instance, in August, the mall hosted a meet-and-greet event with the stars of South Korean blockbuster movie The Battleship Island. Korean heart-throb Song Joong-ki, of The Descendants of the Suns fame, along with co-stars So Ji-sub and Hwang Jung-min and director Ryoo Seung-wan attracted hordes of fans. Kung says the millions of views and sharing via social media gave Pavilion KL plenty of advertising mileage.
“We have reached a digital community of one million across all our social media accounts, which allows us to engage with them on different levels. That is why it is very important for us to do a lot of events — to connect with our digital community,” she says.
Staying ahead of the curve
As shoppers become more technologically savvy, the way they shop has changed. Compared with the baby boomer generation, who prefer to touch and feel a product before they make a purchase, shoppers today use technology to find the best deals.
“Now, shoppers not only want the brand and quality but they also compare prices. Most are well travelled and computer savvy. For the brands, if you live up to your product promise, you will continue to attract customers,” says Yap.
“Luxury brands have changed their business model .... giving tailor-made services is important.
“Advertising and commercials are key for lifestyle brands. You even have to touch the hearts of value shoppers. If the product can connect with the shoppers, they will buy it. And with big data, you should know 70% of what your target market wants.”
On e-commerce, Yap says it will grow from its current 5% share of the retail pie in Malaysia. “Some retail formats will be affected more than others, like music and books. You have to evolve. I remember 15 years ago, people told me cinemas would be gone but ... they have improved the sound systems and seating and they have special effects. Now, corporations are using cinemas for events. So you just have to evolve.”
Apart from knowing the customer, Yap says the mall is constantly being enhanced and upgraded and its social media channels are well taken care of. Moreover, having a robust tenant mix in trying times is helpful. Yap and Kung list some of the new retailers that have set up shop in the mall as Paul Café, French luxury baker LaDuree, Manolo Blahnik, YSL Beauté, and Bao Bao and Pleats Please by Issey Miyake.
Being involved in corporate social responsibility programmes is another way to connect with customers.
While market conditions continue to be challenging for malls and retailers, Yap is optimistic about Pavilion KL’s performance. She sees a possible 5% increase in sales turnover from last year’s RM3 billion.
Indeed, with its strategic location, tenant mix and strong management team, Pavilion KL has cemented itself as one of Kuala Lumpur’s premier shopping destinations.
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