Department stores are being cycled out, while food and beverage (F&B) tenants occupying large units are being asked to make space for smaller competitors.
Anecdotally, three new F&B brands can fill the space previously occupied by one large restaurant of around 1,500 sq m (16,146 sq ft) in size; and F&B tenants with long, nine-year leases in the past now accept shorter, three-year leases in China’s malls.
In some cases, takeaway-only F&B tenants located in market-style basement floors are signing leases as short as 1.5 years. Some names are scouted after viral success on Chinese social networking and e-commerce platform Xiaohongshu, attracting crowds but only for a limited period. When the hype passes, these stalls can make way for fresh tenants.
From a leasing perspective, F&B tenants pay lower rent, but consumer preferences have changed and malls are following suit. “They not only drive footfall, but they are the reason why people come out. You can’t eat online, right?” says Puah.
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According to Puah, the F&B component now makes up 30% to 40% of a mall, compared to 25% to 30% previously. That said, CLI is receiving higher rent overall from these F&B names, despite their smaller size.
CLI has pivoted from charging high fixed rent with a “very low” component of turnover to a “fairer” model, says Puah. This means tenants pay a higher variable rent component that rises only when their sales grow. “The numbers do stack up… That’s how we have been able to help them help us.”
To spur higher turnover, CLI has encouraged F&B tenants to transform just one “turn” — or the number of seatings per table every service — to “three plus one” turns, says Puah. “[For dinner, for example,] you have to do three seatings: 6pm to 7.30pm, 7.30pm to 8.30pm, 8.30pm to 10pm.”
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In addition, CLI encourages its F&B tenants to pick up delivery orders as well. “We facilitate delivery riders coming into the mall, not affecting regular business but allowing them to do the ‘plus one’ — the fourth turn. Smaller area, higher churn — that’s how we do active retail management.”
Emotional spending
On a recent tour to Guangzhou, Suzhou and Shanghai organised by CLI, leasing managers and company executives took pains to explain China’s fad-driven retail scene to Singaporean media.
Perhaps the best example of this is the ubiquitous blind box, found in nearly every other mall tenant in one of the world’s largest consumer markets.
Blind boxes became popular when Pop Mart International started offering them via its pop-up stores and official app. The blind box is a sealed container with a random item – in Pop Mart’s case, often a Labubu, the viral collectible series — that is revealed only upon opening the box.
The trending sensation that is the Labubu may elicit a few chuckles in conversation, but its impact is no laughing matter. Aside from Pop Mart’s well-publicised share price rally — the stock is up 371% over the past year — the Hong Kong-listed firm has successfully brought the concept of blind boxes not just to Asia and the US, but also across retail categories.
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In September, Parisian luxury trunkmaker Moynat announced a collaboration with Labubu creator and artist Kasing Lung, unveiling a collection of Moynat monogrammed canvas totes starting at US$2,150 ($2,772).
It is also not uncommon to see restaurants in China’s malls bring out a table filled with bag charms and plushies — along with a claw machine — in a bid to keep diners in the queue engaged as they await their turn.
The success of Pop Mart has naturally attracted copycats; Guangzhou-based retailer and variety store chain Miniso announced on Sept 26 that it will spin off its subsidiary Top Toy for a listing in Hong Kong. Miniso itself is listed in Hong Kong; its share price has gained a relatively modest 15% over the past year.
Leasing managers say such pop culture-inspired collectible toys are part of an “emotional expenditure” megatrend among Chinese consumers. As costs rise, younger consumers in particular are choosing to spend their income on affordable treats rather than big-ticket items.
“What is currently working now — because of a decline in consumption, to some extent — are things that give someone a good experience [where] the ticket size is very affordable or contained,” says Puah.
Miniso Land, the brand’s flagship stores in China, are lauded for their immersive layouts, themed around popular characters. “They create small toys or small consumables,” says Puah. “It gives a very good feeling, a feel-good factor — for a little bit of money, you get a lot of fun and you get a surprise.”
Pop Mart, too, is “doing great” in CLI’s China malls, Puah adds. “Again, it’s not like you’re buying a diamond ring; you’re buying something that gives you some thrill. It’s not too expensive, maybe RMB50 or RMB60 [each]. So, this category of experiential retail, with lower ticket size, is one sector that’s doing very well.”
Cash and car-ry
That is not to say consumers are shying away completely from bigger purchases. While today’s consumers are “careful in terms of how they spend” compared to as recently as three years ago, consumption demand is “holding up”, says Puah.
One bright spot is the booming electric vehicle (EV) industry. “EV car manufacturers have chosen to go into malls and they take up [units on] the first floor. They are prepared to pay very high rental rates because they do such good sales,” says Puah.
According to data from China’s statistics bureau, the total retail sales of consumer goods in China in June reached RMB4,228.7 billion, up 4.8% y-o-y. Taking aside the sale of automobiles, the retail sales of consumer goods reached RMB3,764.9 billion, up an identical 4.8% y-o-y.
EV sales have been “doing very well” for the last three years “because of this big push towards greening the environment”, says Puah. “Some of the smaller players are being consolidated, but so far, there is some churn. The whole sector itself, if you take a horizon of a few years, they are one of the recent trending sub-classes.”
Even outside of EVs, the numbers tell a story of recovery, especially when viewed over recent years. In 1H2025, the total retail sales of consumer goods reached RMB24,545.8 billion, up 5.0% y-o-y, of which the retail sales of consumer goods other than automobiles reached RMB22,199 billion, up 5.5% y-o-y.
CLI group CEO Lee Chee Koon said in May that the Chinese government “is trying to encourage more spending”. Lee adds: “I take the view that the economy has essentially bottomed out.”
Fan power
Besides tapping a catchment of tourists, residents and office workers, some of CLI’s malls in China are playing host to a novel segment of shoppers: idol fan groups. This segment of young consumers may not visit the mall regularly, but their loyalty to their favourite Chinese actors or singers is a strong pull factor into malls that welcome them, especially when attending a concert in the vicinity.
During The Edge Singapore’s visit to CapitaMall SKY+ in Guangzhou on Sept 27, for example, fans had taken out ads on the mall’s digital screens celebrating Chongqing-born actor and singer Xiao Zhan’s upcoming birthday on Oct 5.
CapitaMall SKY+ is also located next to the 10,000 capacity Guangzhou Gymnasium, which hosted rising Chinese rapper Zhang Yanzhuo, also known as Capper, for two dates of his concert tour. The mall allowed fans to set up temporary pop-up booths selling merchandise featuring the rapper near the main entrance, attracting footfall before and after the show.
In a bid to capitalise on fan footfall, CapitaMall SKY+ has created a fan event space out of a 250 sq m unit on the fourth floor of the six-storey mall (plus two basement levels). According to the leasing manager, fans rented the space to hold meet-ups and karaoke events related to their favourite singers, even without the star present.
A similar story is playing out at the massive Suzhou Center Mall — owned by CapitaLand Development and managed by CLI — located in the heart of the western CBD of Suzhou Industrial Park. Even with its GFA of 300,000 sq m, the mall has seen thousands of fans crammed into it to catch a glimpse of their idols during special events.
Fans throng Suzhou Center Mall to catch a glimpse of Chinese actor Ding Yuxi on Aug 5
According to the mall’s leasing manager, the pandemic period minted a wave of livestreaming stars. The mall works with brands to curate fan events at least a month in advance, and has had to implement stricter security measures in the lead-up to each event — fans have been found hiding in restrooms the night before a fan event, hoping to be the first to see their favourite stars the following day. Some fans have even pretended to be shop staff members in order to get a closer look at their idols.
Some malls may be pulling out all the stops to draw shoppers in, but with an agile tenant mix, an ear to the ground and heavy footfall, it appears CLI’s malls are finding it harder to close for the night.
Photos: Jovi Ho/The Edge Singapore, CapitaLand Investment
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