By guest author Doris Fung from the Research arm opf the Hong Kong Development Council
With a population of about two million, Kuala Lumpur boasts the largest consumer market in Malaysia, amounting to some USD 80 billion. The capital has the highest levels of household disposable income and spending in the country, and the huge flow of the domestic immigration from rural to urban areas supports the strong growth of its retail sector. According to Euromonitor International, the Kuala Lumpur conurbation is expected to account for 38 % of the country’s total consumer expenditure by 2030.
HKTDC Research conducted a study in Kuala Lumpur in January 2020, looking at the shopping behaviour and characteristics of local consumers both online and offline, through a combination of focus groups and an online survey. The study collected views from 1500 respondents. It found that local consumers pay frequent visits to shopping malls. 74 % of respondents go to shopping centres at least once a month. Mobile commerce is doing particularly well, with 53 % of respondents mostly shop with their smartphones. Kuala Lumpur consumers spend on average RM1138 (USD 274) a month. Many shoppers also actively explore the internet for the best deals.
Vibrant Shopping Scene
Malaysia is the second‑most visited country in ASEAN, with visitor arrivals reaching 25.8 million in 2018. One out of every 5 people travelling to ASEAN visits Malaysia. With such a large influx of tourists, it is perhaps not surprising to see a vibrant shopping scene in Kuala Lumpur, home of the renowned Petronas Twin Towers.
Among domestic consumers, the city’s most popular shopping destination is 1 Utama (known locally as 1U), even though it is located some 30 minutes outside the city centre. 11 % of respondents said they always visit 1U as part of their regular shopping routine. It is a megamall housing over 700 stores, including fashion labels, eateries, entertainment facilities, supermarkets, and more. Pavilion, which promotes itself as an “urban leisure” centre, is a regular shopping venue for 9 % of respondents in the survey. 8 % picked out Berjaya Times Square, which is one of the world’s largest malls, covering an area of 7.5 million square feet. It also houses the largest indoor theme park in Malaysia, the Berjaya Times Square Theme Park.
Perhaps as a consequence of Malaysia’s hot and humid weather, Kuala Lumpur consumers pay frequent visits to the air‑conditioned shopping centres for shopping, dining and other entertainment. According to the survey, a large majority (74 %) of respondents go to shopping centres at least once a month, 21 % visit them two or three times a month, while 17 % use them once a week.
An Integration of Shopping and Leisure
28 % of the respondents said they prefer a shopping centre that has the stores they like, while 18 % looked for a place with a large range of shops. 16 % consider the eating establishments int a shopping centre to be an important factor in choosing where to go, 12 % prefer shopping centres in convenient locations, while 11 % are attracted by a mall’s entertainment facilities, such as cinemas and ice‑skating rinks.
26 % of respondents said they usually purchase clothing and footwear in shopping centres, while 16 % cited electronic goods and 10 % gifts. Shopping centres are also the preferred location for a significant number of consumers looking to buy household items such as kitchenware (10 %) and home decor (9 %). Sellers of these sorts of products may find it useful to showcase them in malls as many focus group participants revealed that they learnt of new brands and products when visiting shopping centres.
Kuala Lumpur shoppers spend on average RM1138 a month (USD 274) on non‑essential items in shopping centres. Female shoppers spend slightly more than males. Those with a monthly household income of more than RM12000 (USD 2892) spend on average RM1772 (USD 427) a month, as much as 15 % of their income. In comparison, those with household income lower than RM5000 (USD 1205) spend an average of only RM319 (USD 77) a month in shopping centres.
The internet landscape in Malaysia continues to develop. According to e-Conomy SEA 2019 – a study produced jointly by Google, Temask and Bain & Company – the e‑commerce market in Malaysia has tripled in size since 2015 and exceeded USD 3 billion in gross merchandise value in 2019. The ASEAN Agreement on Electronic Commerce signed in November 2018, the first agreement to facilitate cross‑border e‑commerce transactions in ASEAN, is expected to increase the trust of ASEAN consumers in the use of e‑commerce and provide an extra boost for the online market in the region.
Mobile commerce is doing particularly well in Malaysia. According to the Malaysia Digital Economy Corporation (MDEC), the total number of smartphone users in Malaysia reached 20.9 million in 2018. More than half (53 %) of the respondents in the survey said they mostly shopped with their smartphones. 37 % used their personal computers to shop, while another 10 % most often used a tablet. Men are more likely to shop using their own computers than women are.
The survey also showed that Kuala Lumpur consumers shop online almost as frequently as they visit shopping centres. 65 % of respondents said they shop online at least once a month, while 74 % said they visit shopping centres with the same frequency.
The leading online shopping platforms in Kuala Lumpur are Shopee and Lazada. 15 % of respondents said they usually shop via Shopee and 13 % said they largely used Lazada. Other popular shopping platforms include Lelong (frequently used by 12 % of respondents), Zalora (11 %), 11street (7 %) and Superbuy (7 %).
Active Internet Searchers for Best Deals
Many of the participants in the focus groups are sophisticated and active online shoppers. The survey found that many Kuala Lumpur shoppers actively search on the internet either for the best deals or to compare retailers. A quarter of them said internet searching was the most influential online activity they took part in when making purchasing decisions.
21 %, however, regarded social media as having more influence on their decisions when they are shopping online. Among these respondents, more than half (54 %) ranked Facebook as the top influencer, followed by Instagram (19 %). Many consumers are now comfortable buying from these social media platforms, as well as using them as a source of information.
Many focus group participants said that their online shopping was linked to their visits to shopping centres. 14 % of the respondents indicated that they were more confident buying online when they had seen the products previously at bricks‑and‑mortar stores. This may explain the similarities between the respondents’ online and bricks‑and‑mortar shopping lists, with clothing and footwear (27 %), electronics (22 %) and gifts (12 %) topping the purchasing preferences in online marketplaces just as they do in shopping centres.
Kuala Lumpur consumers spend on average RM463 (USD 112) every month online on non‑essential items, less than half what they spend in shopping centres. Consumers with a monthly household income of more than RM12000 (USD 2892) spend an average of RM786 (USD 189) monthly online on non‑essentials, seven times more than the RM109 (USD 26) spent on average by consumers with monthly household incomes lower than RM5000 (USD 1205).
Going Green Slowly
Most Kuala Lumpur consumers do not yet regard the eco‑friendliness of products as being very important when making their purchasing decisions. However, they like the concept of going green and if the products they buy are eco‑friendly, that is seen as an extra bonus. Some focus group participants suggested that bricks‑and‑mortar stores should have a specific section displaying eco‑friendly products, which could attract consumers and improve the brand’s reputation.
Consumers, especially young shoppers, regard clothing and footwear as the most suitable non‑essential products to be manufactured in an eco‑friendly way. Focus group participants said they had already seen brands making clothes and shoes from recycled materials and recycled fashion is becoming popular in the market. Respondents also like the idea of being able to buy eco‑friendly gifts, which they believe sends a good message to the recipient. This is more evidence of a positive attitude towards the “environmentally friendly” label among Kuala Lumpur consumers.
The survey was carried out during January 2020 in Kuala Lumpur. A total of 1500 consumers were polled by online questionnaire. Before conducting quantitative studies, consumer focus group discussions were held to better understand Kuala Lumpur consumers’ preferences and shopping behaviour through qualitative analysis.