SM Group, one of the largest property developers in Southeast Asia, has 72 supermalls with a total GFA of more than 9.4 million square meters since 1985, now it has become a well-known business legend.
SM Group started its business in China from 2001, now SM has invested and built supermalls in Xiamen, Jinjiang, Chengdu, Suzhou, Chongqing, Zibo, Tianjin and Yangzhou, the total GFA of operating SM China Supermalls has reached over 1.5 million square meters.
SM Supermalls has just been awarded 2 Gold Awards of ICSC Asia-Pacific Awards, address again SM’s leading position, professionalism and great influence in the industry. What exactly are SM’s secrets in running malls in China? WinShang has interviewed Assistant Vice President – Operations of SM China, Ms. Johanna Melissa N. Rupisan.
Strategic Site Selection
Focus on developing cities
When talking about the commercial development of Xiamen, Lianhua-SM business circle cannot be missed out. Before 2001, it was still a deserted place until SM City Xiamen opened. A few years later, it became the business center of Xiamen City. In 2009, SM Xiamen Lifestyle Center opened, which further push the development and upgrade of the region.
As the first stop in China of SM, the site selection of SM City Xiamen was rather confusing at the time, however, it is the land purchasing strategy of SM. Ms. Johanna told WinShang that in China, the competition in big cities is very tense, SM would choose the second or third tier cities where have great potentials, and SM would stay with the cities, grow with them.
This strategy also shown in other SM China projects such as SM City Chengdu, it was the earliest shopping malls in JianShe Road business circle when the region was still undeveloped, after the opening of SM City Chengdu and other malls, it now has become one of the busiest business centers in Chengdu.
Ms. Johanna told us that SM China will stick to second or third tier cities in the future and will cooperate with government to help the development of cities and grow with them.
Precise positioning
Remain sensitive to the market
In recent years, China’s commercial real estate market has been growing rapidly, China now has the most shopping malls GFA being built in the world and 9 of 10 cities with most shopping malls GFA being built are in China.
While China’s commercial market grows rapidly, most of the commercial projects are large but not strong, overproduction and serious homogenization has brought both challenges and opportunities. Ms. Johanna believes that we should always update us with what the market needs and try to adapt. Let’s take SM Xiamen and SM City Tianjin as an example:
SM City Xiamen offers one-stop shopping experience to our customers which has famous brands including SM Store, Wal-Mart, Watson, H&M, Uniqlo, Only, Hi Hotpot, etc.
SM Xiamen Lifestyle Center first introduced the concept of Lifestyle Mall into Fujian and has targeted on young fashion families that care much about life qualities. SM Lifestyle Center has worked hard to bring 1st-time concepts to Xiamen city, such as Fujian’s first Apple Store, Xiamen’s first Pandora, Zara, Muji and popular HIMO (hai ma ti), an interactive photo-studio.
SM Xiamen Phase III is now under construction and has been listed as the key project of the city. As the upgraded project of SM City Xiamen and SM Lifestyle Center, it has shopping center targets at middle-high end market with entry luxury brands and high end hotel.
SM City Tianjin is the biggest project (560,000㎡) which SM group has invested in China. It soft opened on Dec. 17th, 2016 and has been working on becoming the destination mall in the Region. With the great performance and location advantages since soft opening, SM has attracted Jiawen Theme Park to open its biggest indoor children’s theme park in north China with an area of more than 14 thousand square meters. It also has a newly opened garden with an area of 6559 square meters which combines the tenderness of south China and boldness of North China.
Precise positioning has no doubt helped the project developing. According to Ms. Johanna, SM Xiamen project has huge customer flow due to great brands and tenants mix, SM City Xiamen has a record of daily average customer flow reached 120 thousand people and the highest daily customer flow reached more than 500 thousand people. Some brands may do ok in other malls, but they sure do great in SM, we have Wal-mart that sales best in south China and Watson that sales best in China. Less than a year of soft opening, SM City Tianjin has become the new popular shopping mall in the region. Bravo YH, which was opened at the same time with SM City Tianjin, remains the best sale store of the brand.
Innovation
When dealing with the consumption upgrade and the ever changing market, Ms. Johanna pointed out that we must innovate everyday so that we can keep up with the changing market.
Renovation in Every Ten years.
To better satisfy the changing needs of our customers, SM Malls will have its renovation every ten years. Recently, SM City Chengdu just had its re-opening after renovation includes outer walls, inner decorations, elevators, nursery room as well as brand mix upgrade.
For retail, SM City Chengdu has introduced MJstyle、Ochirly、Saturday Mode、Adidas kids、LILY
For F&B， SM also increase our catering area by 1200 square meters with famous F&B brands such as Fry Pan, Musang King in the south side of the mall.
We introduced experiencing programs like video game area Beanstalk Town and expanded Miracle Fitness Gym by 800 square meters.
One thing is worth mentioning that while renovation is ongoing, SM City Chengdu not only remains its usual customer flow but the sales of anchor stores have increase, such as Wal-mart,a growth of 5.3%, Uniqlo, a growth of 5.98% and McDonalds, a growth of 11.63%.
Upgrade and Adjustment of Regional Tenant Mix
Apart from renovation after 10 years’ operation, SM will upgrade and adjust its tenant and brand mix regularly.
SM Xiamen Lifestyle Center has introduced more “first” in Fujian region such as Apple Store, Sisyphe Store and Line Friends. Cartoon-related products sold in Line Friends are very popular among young families and tourists, while Line Friends SM also has coffee and deserts provided for our customers, which will definitely attracts more attention since sharing popular things in social platform is now very trendy.
In 2016, SM City Xiamen has introduced Carter’s Children and Dami Kingdom for children, this October, SM City Xiamen opened a new area themed Food Gallery.
SM also encourages its tenants to renovate with the mall in every aspect.
Innovative Marketing
Innovative marketing is also essential for commercial. This March, SM Xiamen Lifestyle Center built a 7 meters height 100% paper-made garden of 50 square meters, through which SM created an overall experience for customers in all senses of hearing, smell, touch and sight, which is the most fashionable environmental protection attitude together with art and fashion. Paper-art themed exhibitions, DIY shows and Earth Hour activities were also held during the event. SM Xiamen Lifestyle made a paper miracle and led the new lifestyle for citizens, it also impressed honorable judges of ICSC committee and finally won the gold award after a tense competition with other 22 strong finalists.
Ms. Johanna said that it was not only a creative marketing event, but also SM’s way of sending positive energy and environmental protecting messages to the public. Innovation should combine with mall’s position, SM Lifestyle Center has targeted at young fashion families so SM has introduced more art and culture related events.
Slow but Sure
After 17 years, SM has grown rapidly in China. Unlike some other property developers, SM’s expansion is slow but sure. SM sees long term, when decide to choose a city, it would stay with the city and serve for generations.
Talking about SM’s future in China, Ms. Johanna is very confident, she believes that China will keep developing and SM will stay in second and third tier cities.