Magazines Archives - 2009 September

Mall initiatives help retailers prepare for eventual upturn
Story 5 - Focus

Ten months into the recession and things are starting to look up for retailers in Singapore. According to the latest retail sales index released last month by the Singapore Department of Statistics, July 2009 saw an 8.2% dip in retail sales over the same period last year, by far the smallest drop in the past three months. Despite the negative growth, new malls continue to come on stream this year, with the July launch of Orchard Central and Ion Orchard in the city’s main shopping district while a third mall, 313@somerset, is set to open before year-end.

The new centres bring with them a slew of retail brands that are appearing in the city-state for the first time such as TM Lewin from the UK and beauty retailer Yamano. Others are opening their flagship stores, such as Forever 21 with its four-storey unit and Zara, which will be setting up a three-storey shop at 313@somerset.

No longer reeling from the effects of the downturn, retailers are beginning to take a more upbeat approach.

Jeremy Lim, regional general manager of luxury watch group Cortina Watch Holdings Ltd, observes that the retail scene here is “more vibrant, given [the] new mall openings along Orchard Road and the soon-to-open integrated resorts (IRs)”. He also notes that the opening of flagship stores by various brands and the “influx of new, emerging” labels bring a “different ambience” to the retail market here.

Lim reveals that despite the slowdown, Cortina has this year staged two outlet launches — both at Ion Orchard — as well as ventured into Taiwan with a new multi-brand shop-in-shop boutique in Taipei.

The company’s decision to open new stores or revamp existing ones, he states, depends more on the strategic view of the business, which explains why “plans made prior to the economic slowdown will [still] be executed”, albeit at a slower pace than in thriving times.

But until the economy fully recovers, local mall developers are taking matters into their own hands with new programmes and initiatives to not only help retailers tide over the current recession, but also prepare for the eventual upturn.

Australia-based developer Lend Lease Retail Pte Ltd, which owns the upcoming 313@somerset mall, is all ready to up the ante on customer relations and services with the recent unveiling of its new training-and-career centre.

“This is a time when our customers are spoilt [for] choice, and the rejuvenation of Orchard Road has certainly launched this precinct back into the spotlight as one of the world’s leading retail hubs,” declares Michael Kenderes, development director at Lend Lease. However, he points out: “Every retail scene needs that injection of new spaces and concepts. Singapore shoppers are more demanding now and see the mall as something that goes beyond the functional purpose.”

In addition, while the economy is showing signs of recovery, “companies across industries are still talking about downsizing, cost-cutting and streamlining, as retailers are increasingly discerning with their dollars and looking to cut costs in many ways”, Kenderes observes.

Kenderes says that, with new developments coming up across the island-state, a “greater emphasis on delivering quality retail service” has prompted the group to open a training centre to provide its mall tenants with “free, accredited service and retail training for all [their] retail employees”. This, he maintains, will ensure that mall customers get to enjoy optimal service standards, a factor which, the company states, has been singled out by a “large majority of Singaporeans ... as a key component of what they want to find in a shopping mall”.

Lend Lease is also offering retail and customer-service training to the general public, Kenderes adds, particularly those seeking a career change and who need to boost their retail knowledge, or the currently unemployed who wish to enter the retail sector.

Speaking from experience, Anthony Yip, director of retail business group at locally-based Far East Organization, Orchard Central’s developer, says that “cash flow and capital management are key factors in ensuring the viability of retail start-ups”. He explains: “By easing cash-flow needs, retailers will be able to invest further in the business to get a strong foothold in the market to further expand the business.”

In line with this, the group launched its Rental Space For Equity (RSFE) programme last July to encourage the entry of new brands and retailers in a move to enhance the business ecosystem in the Singapore retail market. “The programme gives budding retail entrepreneurs a head start in establishing their new business ventures or [ enables] existing retailers to expand their operations,” Yip explains, asserting that this will not only lower the entry barrier but also fuel diversity on the retail scene.

He says that the launch of the RSFE is not linked to the economic climate but is a case of this being “the right time” to tie up the industry initiative with the company’s extensive portfolio of malls across the city centre and suburbs.

“We have allocated up to 5% of rental space in six of our malls for the RSFE. Selected tenants under the programme will sign a two- or three-year lease. During this time, they will issue redeemable, convertible, cumulative, preference shares (RCCPS) in lieu of the monthly base rent, payable up to a cap of 49% of their paid-up capital, or S$500,000 (US$349,940) — whichever is lower,” the business executive elaborates.

Mall developers are not alone in trying to resuscitate the retail scene here. Parco Singapore Pte Ltd, the local subsidiary of Japan’s Parco department store group, has also established its own initiative to introduce new designers to the retail market. Dubbed the Fashion Incubator, the project unveiled last June sees Parco working with established designers to “mentor” a select group of local talents looking to launch their labels onto the Singapore fashion scene.

The programme, supported by national enterprise board SPRING Singapore, is jointly organised by the Textile and Fashion Federation of Singapore.

Over the next 18 months, 25 local designers will launch exclusive lines that will be sold at Parco’s newest outlet, which will open at Millenia Walk next March.

Meanwhile, says Kenderes, apart from providing service training, “mall owners can work together with retailers on maximising foot traffic and enhancing the overall shopping experience by organising mall-level initiatives that go beyond the usual seasonal promotions”.

Orchard Central, according to Yip, is already enjoying a S$5-million advertising and promotion budget for this half of the year alone to help pull in the crowd. In addition to the publicity spend, the mall will host “music performances” and other shows, as well as work with tenants to create special promotions for shoppers, he adds.

“What also excites us is the future ahead ... with our new neighbours in the Somerset Road area, comprising Orchard Central, the upcoming 313@ somerset, and OCBC hotel and retail development Mandarin Gallery, as well as current ones such as The Centrepoint and Heeren, [offering] shoppers 1.2 million sqf of shopping and dining options, making the precinct in the heart of Orchard Road an energetic, major shopping-and-lifestyle destination for tourists and locals,” Yip says.

Lim of Cortina Watch also suggests that mall owners “waive charges on promotional spaces” to encourage retailers in “their efforts to conduct business in a more creative and interactive way, such as [via] launches and exhibitions”.

New initiatives are a “definite welcome in difficult times”, but for retailers to succeed, they “need to study and understand the characteristics and directions of each mall so as to select the one that best befits the strategic direction of the company”, he says.

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