Retail has always been a vibrant industry for Singapore, and it’s well-known that our sunny island is a shoppers’ paradise.
But of late, the retail world has been shaken up by the closure and exit of several prominent brands.
Apparel retailers Topshop and Esprit (SEHK: 0330) closed their last outlets in Singapore in September and April last year, respectively.
Sportslink, home-grown sporting goods and apparel brand that started in 1983, closed its final store in July. At its peak, it had 30 stores around the island.
And of course, one of the storied names in retail, Robinsons Department Store, closed its doors two days ago after an illustrious 162-year run.
If you’re wondering if these closures signal the death knell for brick-and-mortar retail, you might want to think again.
Although e-commerce and online shopping have boomed in recent years and have accelerated due to the COVID-19 pandemic, physical retail still has its place.
Frasers Centrepoint Trust (SGX: J69U), in its latest Annual Report 2020, highlights several broad market trends in retail.
Let’s take a look at three of these trends that should persist in 2021 and beyond.
Omnichannel retail marries the best of the physical and online worlds.
In a nutshell, omnichannel brands have both an online presence (i.e. website and e-commerce page) and a brick-and-mortar store.
For those who believe that an online-only presence is the best way to go during this crisis, research in 2018 by the International Council of Shopping Centres shows that this is not necessarily the case.
In its report titled “The Halo Effect: How Bricks Impact Clicks”, the halo effect was mentioned as an important factor in determining online visits by customers.
The halo effect describes a tendency for an impression created in one area to influence people’s opinions in another area.
Retail brands who open new physical stores have experienced a significant jump in online sales.
The report also found that nearly 75% of multichannel retailers are more profitable than their pure-play (i.e. physical-only or online-only) counterparts.
Top brands such as Nike (NYSE: NKE) have also adopted an omnichannel approach to boost sales, and the company has advocated a “phygital” (i.e. physical + digital) marketing campaign to push for better sales and brand recognition.
In short, omnichannel is the way forward for retailers who want to leave a deeper impression on millennials.
Embracing this new channel also allows the brand to provide a holistic retail experience for its customers, thus making them more loyal over time.
Localisation refers to shopping centres acting as community hubs that connect the local populace to their community.
Heartland shopping malls have the opportunity to connect better with their surrounding population and can offer merchandise or services tailored specifically for the region.
Singapore has malls such as Kallang Wave Mall that caters to sporting enthusiasts.
The presence of a rock-climbing wall and numerous sporting apparel and goods shops are a testament to this.
Activities and events could also be held within shopping centres that allow residents to interact and mingle, thus fostering stronger community bonds.
Finally, suburban shopping centres can act as last-mile fulfilment hubs for e-commerce, as they act as central locations within densely-population districts.
The third retail trend is that of experiential retail, a novel concept of introducing experiences to customers rather than a focus on products and services.
Malls should incorporate elements of experiential retail to attract the customer to visit.
These include experience-focused tenants in the leisure and entertainment space that allow customers to interact and obtain a fresh, exciting experience.
For instance, Marina Square, a mall owned by UOL Group Limited (SGX: U14), has tenants Kidztopia and NERF Action Xperience.
The former is an indoor children’s playground where families can meet, mingle and allow their kids to enjoy a fun-filled and adventurous experience.
The latter attraction, operated by homegrown events and exhibitions company Kingsmen Creatives Ltd (SGX: 5MZ), allows individuals and teams to interact with one another through games and obstacles courses.
Funan, a new mall opened by CapitaLand Limited (SGX: C31) in June 2019, features an urban farm, rock-climbing facilities and an indoor cycling track.
As more malls are built or undergo renovation and refurbishment, we should see experiential elements gaining in prominence as a way to attract higher footfall.
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Disclaimer: Royston Yang owns shares in Nike.