What's keeping shoppers away from retail malls in Singapore?

Nothing says more about the state of Singapore's retail industry than stretches of shuttered shops and hoarding in otherwise upscale malls in the heart of the downtown shopping belt. The situation may not seem as dire in shopping centres in the heartlands, although the buzz is more around food and beverage joints, or from commuter traffic to and from the trains.

Yet, the poor retail sentiment is no recent phenomenon; the industry has been in the doldrums for some years, driven by a host of factors.

For a while now, high rents, especially in the prime Orchard Road area, and manpower issues have made running a shop downtown a bit of a challenge.

The drop in footfall of late - amid weak consumer and economic sentiment, and strong competition from various sources - have turned maintaining a brick-and-mortar retail business into perhaps something of a feat for only those with strong holding power, both financial and mental. Hence the rise in retail vacancy rates in the downtown malls of late.

For the small enterprise retailer in town - and even for some of the mid-size chains - there is enormous competition. If it's fortunate enough not to have another retailer plying the same or similar products two units away or on the floor above, there surely is tussle for the retail dollar from malls in the suburbs, many of which boast more or less the same mix of common brands and products.

And not least, shoppers have gone online - sourcing not only from the likes of Amazon for products not available in Singapore, but in fact buying and selling, even bartering, via local websites.

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A paradigm shift in shopping is underway, which calls for a change in tack by retailers and mall operators in response.

It's clear that online and mobile "stores" mark the trend, and entrepreneurs who are still keen to retain a brick-and-mortar presence would likely add an online arm, or in fact build the business around the e-store. The physical shop would serve as the place where customers can go browse and touch samples, and then collect the wares bought online.

Indeed, various brands are already into this so-called "omni-channel" retailing - which incidentally was already prevalent back in the pre-Internet decades, in the form of catalogue and mail order shopping, popularised by pioneers such as American clothing companies L L Bean and Lands' End.

On their part, property developers and mall operators, particularly the real estate investment trusts (Reits), must do their bit to enhance the retail experience in their mall and make it a recurring destination for customers.

While the suburban malls generally cater to the heartland masses and all in the family, others, including some of the upmarket ones downtown, are targeted at particular segments - shoppers for high-end designer brands, or outdoor/sports gear, for instance - which gives scope for special activities to draw in the traffic.

Yet, it may not be all doom and gloom for the retail sector. A recent JLL study of the world's top luxury retail destinations sees Singapore among seven Asia-Pacific cities in the top 10 - in terms of highest presence of luxury retailers, Singapore is behind Hong Kong, Tokyo and Shanghai, but ahead of Beijing, Osaka and Taipei.

The fundamentals that draw the high-end big brands - an affluent city with a growing middle class; a cosmopolitan market with flows of visitors - are fairly intact. But the soft economic outlook and weak sentiment are keeping shoppers, including tourists, away.

This article was first published on May 13, 2016.
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