THE IMPACT OF INFORMATION TECHNOLOGY ON RETAIL PROPERTY

IN MALAYSIA

MUHAMMAD NAJIB RAZALI (mnajibmr@utm.my)Universiti Teknologi Malaysia (UTM)

Yasmin Mohd. AdnanUniversiti Malaya

Mohd. Nazali NoorLiverpool John Moores University

INSPIRING CREATIVE AND INNOVATIVE MINDS

Introduction

• Information technology is becoming a major form of communication, marketing and information dispersion tool in a business.

• Gives wide coverage to reach potential client, better and

quick information gathering and probably the cheapest way to sell the products.

• E- commerce is one of the tools in information technology and it is believe it able improve the retail sales

INSPIRING CREATIVE AND INNOVATIVE MINDS

• While some analyst predict a negative impact on retail sales due to the Internet, others argue that the Internet has no real future and that physical space will continue to attract shoppers (Worzala et al. 2002).

• E-services not only overcome previously conceived limitations of service marketing, it creates hitherto of opportunities for the marketers (Rahman, 2004).

• Internet simply a reallocation from other consumer spending or a siphoning off of some of the disposable income that would be going to mall (Kim, 2002)

• But essentially deterministic terms, the argument went, if ICT pervaded, productivity would increase and space requirements would reduce, thereby reducing the demand for real estate (Dixon and Marston, 2005)

INSPIRING CREATIVE AND INNOVATIVE MINDS

• Over the period of 2007 to 2009, the total commercial property transaction value in Malaysia recorded a positive growth despite the global financial crisis (JLL, 2010).

• Malaysia came in second place in term of retail property transaction worth of US$1 billion (RCA,2010).

• Retail market in Malaysia also showed an average performance in 2009 although hit by global financial crisis in 2007/2008 (RCA, 2010).

• Rapid growth of economy in Malaysia has also resulted in higher internet penetration. Malaysia listed as one of the top 10 highest internet penetration in Asia and ranked at no. 57 in term of global internet penetration (Internet World Statistic)

INSPIRING CREATIVE AND INNOVATIVE MINDS

• Dixon (2005) and Dixon and Marston (2005) discussed on the impact of information technology on real estate in the new economics specifically using e-commerce among shopping centres in the UK.

• Kim (2002) surveyed in the US market.

• Worzala et al. (2002) explore on E-commerce on retail property in the UK and US.

• Dennis et al. (2007) discussed on the major issue in the economic and social effect of e-commerce on consumers on e-retailing and e-shopping.

• Some authors discussed on online shopping such as Bigne-Alcaniz et al. (2008) and Hand et al. (2009).

• The impact of information technology in retail property in certain countries such as South Africa (McClatchey et al., 2007), UK (Hand et al., 2007) and Spain (Alcanz et al., 2007).

• Littlefield (2000) focusing on internet real estate information on home purchasing.

• The survey was conduct from January 2010 to December 2010 to obtain information concerning the implementation of IT among retailers in Malaysia and the impact on retail space specifically in major urban areas in Malaysia.

• This survey examined the perceptions from retailers of wide key range of key IT applications issues.

• Retailers were also asked about their opinion about the requirement space in term of future retail business in Malaysia.

• 233 major retailers throughout major urban areas in Malaysia participate in this study (28% of sample respondents).

 

INSPIRING CREATIVE AND INNOVATIVE MINDS

Methodology

INSPIRING CREATIVE AND INNOVATIVE MINDS

Results and Discussion

Business activities Number % of total respondentHouseholdsApparel/ accessories 45 19.3Lifestyle 34 14.6Multi-product 54 23.2Food and beverage 46 19.7Others 54 23.2Company categoryIndividual 63 27.0Corporation 32 13.7Proprietorship 38 16.3Franchise 40 17.2Partnership 29 12.4Joint venture 11 4.7Others 20 8.6Size of workers5 or less 26 11.26-10 42 18.011-20 65 27.921-30 63 27.031-40 12 5.241-50 14 6.0More than 50 11 4.7

Respondents’ profileRespondents’ profile

INSPIRING CREATIVE AND INNOVATIVE MINDS

IT Implementation in Business

5% 5%

19%

27%

34%

10% 0%-10%

11%-20%

21%-30%

31%-40%

41%-50%

More than 50%

INSPIRING CREATIVE AND INNOVATIVE MINDS

IT application among retailers in Malaysia

Applications % responding “Yes”

1. Hardware

a. Desktop computer 100

b. Tablet PC 62

c. Office appliances (e.g. scanners, fax machine, laser printers) 100

d. Video camera 32

e. LCD TV 67

f. Broadcasting system 23

2. Telecommunication

a. Local Area Network (LAN) 5

b. Virtual Private Network (VPN) 0

c. Very Small Aperture Network (VSAT) 0

d. Intranet 53

e. Internet 100

3. Office productivity software

a. Microsoft office 100

b. Document readers 100

c. Web browser 100

d. Statistical package 72

e. Graphic editors 75

f. Special inventory software 53

4. Electronic applications

a. Inventory stock control (e.g. RFID, Barcode system). 82b. Enterprise resource planning 12

c. Clock-in system 100

d. E-mail system 100

e. Other applications 54

f. Electronic catalogue 72

g. Business transactions 75

INSPIRING CREATIVE AND INNOVATIVE MINDS

Perception of retailers the growth of ICT application in retail business

Apparel/Accessories Lifestyle Multi-product Food and beverage Others Overall

Mean SD Mean SD Mean SD Mean SD Mean SD Mean SDSecurity

4.42 0.72 3.65 0.49 4.26 0.62 4.26 0.43 4.69 0.47 4.30 0.63Maintenance

3.05 0.58 2.38 0.55 2.87 0.89 3.57 0.69 3.15 1.22 3.03 0.97Trust from customers

4.14 0.60 3.85 0.70 3.85 0.67 3.87 0.65 4.00 0.82 3.94 0.70Internet speed

4.04 0.79 4.41 0.61 3.59 0.59 4.24 0.72 4.11 0.80 4.05 0.77Knowledge

3.73 0.82 3.56 0.86 4.02 0.66 3.74 0.68 4.04 0.78 3.84 0.76Options

2.88 0.85 3.29 0.97 3.67 0.69 3.09 0.67 3.31 0.66 3.26 0.83Competition

3.18 0.78 2.82 0.58 3.33 0.82 2.76 0.68 2.83 0.69 3.00 0.78Law and regulation

2.90 0.76 2.50 0.66 3.59 1.04 2.83 0.72 2.59 0.54 2.92 0.88Customer fulfilment

4.78 0.52 4.47 0.66 4.78 0.32 4.65 0.70 4.50 0.82 4.65 0.70Image

4.49 0.63 4.24 0.61 4.72 0.39 4.67 0.55 4.17 0.82 4.47 0.70Overall

3.76 3.52 3.87 3.77 3.74 3.75

INSPIRING CREATIVE AND INNOVATIVE MINDS

Perceptions for the space requirements in 5 years

Panel A Increase0-10% 11%-20% 21%-30% 31%-40% 41%-50% More than

50%Overall

(%) (%) (%) (%) (%) (%) (%)Apparel/accessories 8.9 4.4 13.3 17.8 11.1Lifestyle 11.8 5.9 23.5 13.7Multi-product 38.9 22.2 11.1 24.1Food and beverage 26.1 28.3 34.8 4.3 23.4Others 25.9 22.2 11.1 19.8Overall 22.3 16.6 18.8 11.1 18.4Panel B Decrease

0-10% 11%-20% 21%-30% 31%-40% 41%-50% More than 50% Overall

(%) (%) (%) (%) (%) (%) (%)Apparel/accessories 26.7 28.9 27.8Lifestyle 20.6 17.6 20.6 19.6Multi-product 3.7 9.3 14.8 9.3Food and beverage 4.3 2.2 3.3Others 11.1 22.2 7.4 13.6Overall 13.3 16.0 14.3 14.7

INSPIRING CREATIVE AND INNOVATIVE MINDS

Perceptions of ICT on real estate space

Panel A Increase0-10% 11%-20% 21%-30% 31%-40% 41%-50% More than

50%Overall

(%) (%) (%) (%) (%) (%) (%)Apparel/accessories 8.9 4.4 13.3 17.8 11.1Lifestyle 11.8 5.9 23.5 13.7Multi-product 38.9 22.2 11.1 24.1Food and beverage 26.1 28.3 34.8 4.3 23.4Others 25.9 22.2 11.1 19.8Overall 22.3 16.6 18.8 11.1 18.4Panel B Decrease

0-10% 11%-20% 21%-30% 31%-40% 41%-50% More than 50% Overall

(%) (%) (%) (%) (%) (%) (%)Apparel/accessories 26.7 28.9 27.8Lifestyle 20.6 17.6 20.6 19.6Multi-product 3.7 9.3 14.8 9.3Food and beverage 4.3 2.2 3.3Others 11.1 22.2 7.4 13.6Overall 13.3 16.0 14.3 14.7

INSPIRING CREATIVE AND INNOVATIVE MINDS

Retailers characteristics SpaceICT OppICT PerfICT

By business activities Reject Do not reject Do not reject

By size of workers Reject Reject Reject

By company category Reject Do not reject Reject

Non-parametric tests of the response ICT related issue by different categories type of respondents

• The null hypothesis on negative ICT use and real estate space relationship were rejected for all treatment effects of firms by business activities, size of workers and company categories.• There is evidence that companies’ perception that ICT use will not have a negative impact on real estate space needs differs across sample firms with different characteristics. • SpaceICT (ICT use will lead to reduction in office space) = dependent on business activities factor• OppICT (ICT could create new opportunities) = Differ only across companies occupying office of different sizes•PerfICT (ICT could improve business performance)= The null hypothesis was not rejected for business activities factor at 5

percent significance level.

Conclusion

This paper seeks to look into the impact of Information Technology (IT) among retailers in Malaysia in several major shopping complexes in Malaysia.The findings showed that majority of retailers in Malaysia using almost 40% of IT application in the business. TThe most popular IT applications and equipment such as desktop, office appliances, Internet, Microsoft office, document readers and web browsers as well as clock-in system and e-mail system indicated 100% practice among respondents. Most of retailers’ also have high confidents the development of IT in retail business specifically in he measure of security, customer fulfilment, and for image purpose. The survey showed that although retail business will hit by online trading in future, however most of the retailers perceive the space will increase around 0%-10% and only 14% of respondents believe the space will decrease about 21% to 30% in 5 years time.

From this research although most of the retailers comfortable with the IT development and some of the also highly applied in their business, it is believe in future the space requirement to retail property will increase. This is due most of the customers are still needs physical shopping experience. In this new economy era and globalisation world IT play an important role in business and eventually to the growth of property. However in Malaysia the theory space requirement will decrease due to the growth of IT and borderless is not necessarily true. As retail property form a major growth in urban areas, as such it is important to study the impact of IT to retail business. The growth of retail property will accelerate the economic growth in urban areas which also contributes by the growth of population.  

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