How Alibaba is helping Asian malls survive during the Covid-19 pandemic

Thousands of retailers have rushed to set up online shops this year, but entire shopping malls are now going virtual to stay afloat

FILE PHOTO: A logo of Alibaba Group in Hangzhou, Zhejiang province, China, November 18, 2019. REUTERS/Aly Song/File Photo
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Clobbered by the effects of the coronavirus pandemic, thousands of retailers from Bangkok to Singapore have rushed to set up online shops on big e-commerce platforms to stay afloat this year. Now entire shopping malls are going virtual for the first time.

Marina Square Shopping Mall – nestled among luxury hotels and popular tourist attractions in central Singapore – is taking more than 30 of its tenants online with Lazada, the Southeast Asian unit of Alibaba. It is the first shopping centre in the city-state to create a mini virtual replica of its physical mall.

“It’s a new concept in Singapore,” James Chang, chief executive of Lazada Singapore, said. “From a shopping mall’s perspective, it could be seen as competition, but we worked out this partnership because it provides visibility and awareness of the tenants and offline mall.”

The lockdowns have meant devastating changes for the retail industry. In the US, more than 110 companies have declared bankruptcy this year, including JC Penney, Neiman Marcus and J Crew.

In Singapore, retail sales plunged 52.1 per cent in May from a year earlier, the most since records began in 1986. The island’s economy fell into recession last quarter as an extended lockdown shuttered businesses and decimated spending.

Retailers in Southeast Asia are experimenting with new business models to adapt. The region’s e-commerce industry is relatively young and fast-growing, compared with the US, where shopping malls have struggled against increasing online competition for years.

With Lazada, Marina Square is seeking “a balance of online and offline opportunities”, said Lim Hock San, chief executive of Marina Centre Holdings. “The online exposure we give to our tenants will benefit them and help support brand awareness.”

Marina Square’s partnership with Lazada will include about a dozen brands that were not previously on the e-commerce platform. The mall is also offering vouchers that can be used in physical stores, as part of efforts to draw shoppers back into its outlets.

This follows similar moves by Siam Centre, a landmark shopping mall in Bangkok built in the 1970s, which teamed up with Lazada to set up its virtual mall with about 40 tenants. In Indonesia, more than 100 tenants of three malls by developer Pakuwon Group are going live on Lazada.

Lazada, which operates in six countries in South-East Asia, launched its virtual mall called Lazmall in 2018, allowing brands to set up their online stores. Since then, the number of brands has grown nine-fold to more than 18,000, according to Mr Chang.

The company’s grocery business in Singapore increased by half in orders since lockdown measures were imposed in April, reaching a record in June, Mr Chang said. It hired 500 full-time and part-time workers to meet the demand.

“E-commerce adoption has been here, but Covid-19 has expedited that adoption,” he said.