S E C T I O N 3 S T R A T E G I C P E R F O R M A N C E 45 MANAGEMENT DISCUSSION AND ANALYSIS RETAIL SEGMENT - @MART KEMPAS ASSET PERFORMANCE As a community-centric hypermarket, @Mart Kempas has continued to prove its resilience in providing a place to shop for essentials during the MCO period. This was attributable to the large variety of household items available and convenient location. However, many of the existing tenants continued to face financial issues. As with our approach with KOMTAR JBCC, we provided support/rebates on a case-by-case basis. This strategy has enabled occupancy rates to remain stable at 96%. MAJOR ASSET ENHANCEMENT INITIATIVE The Fund is actively implementing ESG initiatives, and as part of Al-Salām REIT’s Energy Saving Programme, we have installed rooftop solar panels at zero cost. The expected outcome of this trial project is cost savings of up to 20% on electricity costs for the building. The project is slated for completion in 2nd quarter 2022. Initial plans for expansion to add 30,000 sq ft of lettable space were deferred given the unfavourable operating environment. The proposal will be relooked in the coming financial year. The expansion will see @Mart Kempas expand from a single storey hypermart into one and half-storey retail asset with extensions of the retail, supermarket and wet market zones as well as additions of drive-thru restaurants. This will meet requirements for sufficient medium and long-term capacity. CHALLENGES AND PROSPECTS The macro retail sector remains challenging, but @mart Kempas can leverage on its strategic competitive positioning within the local community. The retail asset’s strong branding and consumer familiarity, the presence of reputable tenants and many other compelling factors, cumulatively provide the supermarket with a distinct competitive advantage. The focus going forward, is to leverage on the inherent strengths of the asset towards pursuing business growth. The Manager will work closely with tenants, especially the anchor and mini-anchor tenants, to develop strategies to attract footfall to @Mart Kempas. This may include providing extra conveniences, such as free parking during specific operating hours, extending operating hours with the approval of regulatory authorities and other strategies. Focus will also be placed on seeking feedback from all tenants towards developing a more conducive physical environment for retailers as well as consumers. Other strategies include: • Continual assessment and if need be, repositioning the lessee trade mix to ensure the community mart is constantly fresh in its commercial space offering • Diversify and generate more robust non-core income flow including advertising space rental as well as creating new tenanted and promotional areas • Increasing footfall volume through year-round promotional activities, revenue-maximising events and continuing to offer quality products at affordable prices.
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