Commentary: Despite the huge e-commerce challenge, the Singapore mall is fighting back
It’s not just retail brands that have undergone disruption. Mall operators too have been forced to reinvent the shopping experience, says SUSS’ Lau Kong Cheen.
Once-mighty department stores like Metro and Isetan have also downsized operations.
These slew of developments have prompted questions over how well Singapore malls are adapting to this disrupted landscape, facing stiffer competition from e-commerce and perennial issues of labour and rental costs.
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Indeed, Singapore is not the only country experiencing this changed retail landscape.
Where mall rats used to roam shopping centres in the US, the once-colourful retail scene has seen the shuttering of K-Marts, Sears and Macy’s stores, not to mention Barneys filing for bankruptcy.
Just across the Atlantic, fate has also been less kind to UK department store chains Debenhams and John Lewis.
Even in the land of Alibaba, the Chinese Academy of Sciences and Social Sciences predicts a third of malls in China will close their doors by 2020. The remainder will have to adopt to a new “click-and-mortar” model or reinvent themselves into an experiential mall.
Although many developments characterise the 2010s, what have been defining features are the advancement of digital technologies and the enormous rise of platforms.
Retail has seen an explosion of digital commerce, social media and augmented reality (AR) transforming shopper behaviour in the last several years in a drastic fashion.
But the Singapore mall is fighting back. While it had been slow to react to the initial disruption at the turn of the last decade, its response in recent years has been bold.
The surest sign of malls reclaiming their position was the huge footfall achieved over Black Friday and CyberMonday, which attracted up to 46 per cent more shoppers in 2018 compared to daily averages, according to CBRE.
Ngee Ann City pulled out all stops, with most stores including anchor giant Takayshimaya offering steep discounts.
Department store Robinson’s, which offered up to 90 per cent off items, saw a huge line-up some more than 24 hours before its Black Friday sales begun.
Orchard Road was packed for the first time in a while, with many retailers offering a long sale period stretching from Singles’ Day to the post-Christmas week.
Strong sales figures released by many retailers have proven that the Singapore mall is still a vital part of the shopping experience. Queues continued all the way until the New Year.
ICONIC ATTRACTIONS, NEW EXPERIENCES
Apart from one-off sale events, new mega malls that have dotted the Singapore landscape over the last decade have zoomed in on creating experiences that make them a great lifestyle destination.
Many have incorporated a novelty feature that allows them to stand out from the crowd and earn top-of-mind recall.
The rain vortex of Jewel Changi Airport and Skywalk have been major attractions that keep many Singapore families chasing after something that will keep their kids mesmerised and youths looking for their next Instagram shot coming back.
In a similar fashion, what keeps people returning to Marina Bay Sands is its proximity to attractions nearby, whether the ArtScience Museum, or carnivals held in the adjacent space, which was home to Cirque Du Soleil last year.
Funan reopened as a rebranded modern industrial lifestyle mall with an outdoor urban farm, rock-climbing facility, a Golden Village cinema and a Wild Rice theatre.
Indeed, the shopping mall of the future is increasingly one that offers entertainment options and activities to engage in with friends and families.
These take a leaf from the books of some of the most popular Chinese malls that have built iconic features and provided lifestyle options that keep people returning.
These allow them to position themselves as a place for people to spend their weekends at and something more than a functional shopping mall where shoppers look to for their next purchase.
Kunming’s Aegean Shopping Mall houses an indoor horse-riding racetrack where patrons can ride, feed and pat horses, a swimming pool and an ice-skating rink.
Chengdu’s New Century Global Centre, as an integrated lifestyle resort and shopping nexus, has an indoor beach more than a kilometre long, a water park and multiple hotels.
Malls, however, do not have to undergo drastic infrastructural overhaul and expansion in order to compete in this market.
What remains important to the Singapore shopper is a strong retail mix of fresh brands and new stores which has been met in a variety of ways.
Many mall operators already change up their retail mix every few years to bring in new tenants but have been more aggressive in freeing up space for new ones in recent years.
JCube recently engaged Don Don Donki and cleared out a huge basement area for the Japanese retail and F&B giant, which has pulled more shoppers over.
ION Orchard brought in H&M at the turn of the decade, rejigging floor plans and making space across a few floors for the retail giant. It is now home to the only JD.com store in Singapore that sell the hottest sneakers.
Pop-up store concepts all along the length of Orchard Road have also piqued shoppers’ interest and allow mall operators to be more nimble in serving up fresh tenants.
Even the strategy employed by many neighbourhood malls to host a buzzy calendar of seasonal events, where retailers offer fresh produce and new items, seem to be a working strategy that continues to pull in recurring patrons from the surrounding estates.
CLEAR VALUE PROPOSITION AND BETTER CUSTOMER RELATIONSHIPS
Many malls have also crystalised their value-add in a crowded landscape to attract a specific target audience.
Paragon focuses on specialist medical needs while Wheelock Place offers a host of cosmetic and beauty treatments. Both serve up many luxury brands and fine dining to this clientele, with much success.
In Novena, United Square consolidates a wide range of educational enrichment specialists, Learning Lab being the most well-known, that draws in parents with complementary shop offerings – including children’s apparel, toys and books.
Some have also invested in developing a better customer relationship with returning consumers.
Frasers group, which operate a series of neighbourhood malls, has introduced an app to inform patrons of promotions and new events, which has a F&B reservation feature and a loyalty programme where customers can rack up points in e-wallets to be spent at their group of malls.
CapitaLand has collaborated with Alibaba in China and Lazada in Singapore to create an online mall on their platform, which allows shoppers who patronise the CapitaLand official store on Lazada.SG the option to collect purchases in CapitaLand malls.
This additionally gives customers better assurance of the product quality they intend to purchase where they can feel, touch and try before purchase – with fitting rooms and a product testing bench.
INVEST IN A DIGITAL EXPERIENCE
As much as we have seen many foreign brands shutter in Singapore, the Singapore mall has changed to meet new challenges.
But the digital transformation that has disrupted retail will demand that malls evolve further. A 2016 study by Temasek Holdings and Google suggest online shopping in Singapore could grow by five times by 2025 to reach SS$7.4 billion.
The next phase is for malls to invest in a holistic omni-channel experience. Location-based services can be one area.
Imagine if as a parent, being alerted to diapers and milk promotions when you walk into a mall with an NTUC. Or sent push notifications on the discounts of the weekend at your frequented retailers each Saturday morning as you stroll across Orchard Road.
Similarly, malls could leverage live-streaming to promote events or special sales at their respective malls in the way Tmall, Sina Weibo and JD.com have to gain sales in China.
THE FUTURE IS NOT SET IN STONE
It is telling that the Singapore retail real-estate investment trusts (REIT) are among the markets best performers – with the 12 retail REITs averaging a return of 23 per cent in the first 11 months of 2019, according to the Singapore Exchange and outperforming the Straits Times Index.
The Urban Redevelopment Authority Masterplan 2019 also plans to bring in more housing to downtown Singapore.
That, coupled with plans to revitalise Orchard Road and attract tourism to the country, could boost human traffic in those shopping districts and inject greater life into our malls.
Indeed, the future of Singapore retail has not been set in stone. The next decade could see malls wrestle back that future from e-commerce even more decisively.
Dr Lau Kong Cheen is a Senior Lecturer for Marketing Programme at the Singapore University of Social Sciences and he is passionate about branding and consumer behaviour.