Sign of tough times for retailer stores

Parkson Holdings Bhd, 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.
“Sogo is the most successful department store in the country, with an annual total sales turnover exceeding 800 million ringgit. Most retailers there do very well, with some having their best performing outlet in Sogo,” said a property consultant.
“Rents can exceed 25 ringgit per sq ft in Sogo and along Jalan Tuanku Abdul Rahman, it is also above 15 ringgit 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), Savills Malaysia Sdn Bhd deputy executive chairman Allan Soo said the medium term outlook for the local retail property sector “remained challenging.”