Orchard road losing its shine

It is after work on Thursday and shoppers should be streaming in to malls like The Centrepoint and 313@Somerset.

But it was a quiet evening.

Orchard Road is set to reveal a new look with $40 million worth of refurbishment and enhancement to infrastructure.

But an article in the Japanese publication Nikkei Asian Review last month said Orchard Road is struggling.

In a Straits Times report in March, Metro Holdings, which opened a new department store in The Centrepoint in the final quarter of last year, said a "disappointing level of sales resulted in losses being incurred by the new store".

In the same report, department store operator Isetan Singapore had earlier reported a net loss of $3.1 million for the year ended Dec 31 on the back of higher rents and slower sales.

So, stores have closed and Orchard Gateway, one of the newest malls in the area, is struggling to gain traction with customers despite opening to much fanfare only a year ago.

What happened?

Experts offer many reasons. Among them, online shopping and the habits of the smartphone generation.

Take business school student Peter Lim, 22, who is graduating this year and joining the workforce soon.

Wanting to make an impression, he has been eyeing a pair of Oxfords since April.

So he popped into a retailer at Ngee Ann City last month to suss out the shoes, confirm his size and yes, the price.

"I wanted to see if the shoes look nice on me. Having tried them on at the store, I thought they looked really good on my feet but I didn't want to spend more than $200," he tells The New Paper on Sunday.

The shoes cost $269.

He walked out, saying he would "think about it" but then went online and bought the same pair for about $160 - a savings of about $110.

Apart from shoes, Mr Lim buys his clothes, magazines and books online.

"It is more convenient. I don't have to deal with parking, transport or jostling with hordes of people," he says.

Perfumes such as Giorgio Armani Code Luna Eau Sensuelle Eau De Toilette for women costs $50 less online than at the store.

Even branded bags and dresses can go for between 15 and 50 per cent less online compared to prices at brick-and-mortar shops.

A confluence of easy access to the Internet, broadband speeds and smart devices have contributed to fewer people shopping at Orchard Road.

Last year, online spending here exceeded $1 billion. It was up 13 per cent year on year, based on data from market research firm Euromonitor International.

That is only a fraction of the whopping $30 billion in total store-based sales here last year.

But here is the catch - store-based sales have been flat.

Shuttered

The TNPS team visited 21 malls along Singapore's famed retail strip in the middle of the day over the last two weeks.

There were few shoppers within the malls and some of the shops were even shuttered, while others were undergoing renovation for new tenants.

Some experts say the stretch is crowded with malls, many with repeat brands.

For instance, there are four Zara stores along the 2.2km stretch of Orchard Road from Liat Towers to 313@Somerset.

With three new mega malls added since 2009, another 1.8 million sq ft of new retail space had been added, making it 8 million sq ft of retail space available along Orchard Road.

This is equivalent to about 103 football fields.

With competition from the Internet and "cannibalism" within the physical realm, Orchard Road will need to keep reinventing itself to keep its spot as one of the world's most popular shopping enclaves.

This article was first published on July 12, 2015.
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