Blurring the Lines of Retail

2020 has undoubtedly been a very bumpy ride for the retail sector. The good news is that Singapore residents — unable to travel overseas — have acted as a substitute for international travelers and have spent more disposable income than ever before. Although the retail environment will remain challenging in the absence of international tourism in the short term, we expect the brick and mortar retail sector to continue flourishing in Singapore moving forward.

“It is important to remember that retail is very cyclical, the industry will see some brands struggle, and even disappear, while others will continue to strive and grow.”

Brick and Mortar retail still very much matters, but will continue its transformation journey

In the long run, we believe brick-and-mortar retail will remain relevant and is here to stay, especially for global retailers. However, what will continue to change is the delivery format, and the evolving experience to consumers. We have seen a rapid take-up of large prime retail footprint just over the past couple of months. The three former Robinsons were taken over very quickly by major retailers for their concept stores such as Decathlon at Orchard Point, IKEA at JEM or more recently BHG at Raffles City.

2021 is going to be the year of the consolidation of the retail sector. It is important to remember that retail is very cyclical, the industry will see some brand struggle, and even disappear, while others will continue to strive and grow. This could actually be a good thing and an opportunity for landlords to refresh their tenant mix, review their anchor strategy, and revisit their positioning in the market.

Retail properties transforming into exciting lifestyle destinations

Retail properties are moving away from "traditional" shopping as they become exciting lifestyle destinations. This was true before COVID-19, and will continue to hold true accelerate even post-COVID19. Jewel Changi Airport, for example, provides both entertainment and different attractions. Many shopping malls and retail properties are looking at alternative formats — developing a unique positioning in the market which allows them to maintain their competitive edge.

"Malls are places to learn, work and play, not just to shop."

Landlords need to identify their key occupiers, implement a curated retail tenancy and trade mixed strategies in their property. The anchor tenants will offer a differentiated experience to shoppers and visitors, and landlords will need to provide incentives to attract them to their properties.

Read more: Singapore retail malls maintain investor attraction

“As we navigate the 'phy-gital' retail era, strategies such as omni-channel retailing (Shopee, Lazada) have managed to bridge the gap between the physical and the digital, becoming increasingly important.”

Bridging the gap between physical and digital retail

E-commerce has increased significantly over the past couple of years and is competing directly with brick-and-mortar retailers. As we navigate the "phy-gital " retail era, strategies such as omnichannel retailing (Shopee, Lazada) have managed to bridge the gap between the physical and the digital, becoming increasingly important.

Shopping mall operators are now also creating their own platforms. This is a game-changer. A great example will be the E-CapitaMall and Capital Eat platforms allowing CapitaLand's tenants to benefit from the digital space. We also see "The Click & Collect" options becoming available in-store and even within shopping malls to benefit the multiple tenants. Shopping mall operators will have a much more significant role to play in that omni-channel retail strategy.

Decathlon provides a "Click & Collect" service, which allows customers to place an order online and collect their order in-store within 7 days.

Shopping mall operators should also take the opportunity to re-think their role in the entire e-commerce chain. For example, shopping malls may become more of fulfillment centres and last-mile delivery hubs for e-commerce, like what we see happening across North America.

This might lead to the conversion of some older shopping centres and the re-adjustment of physical configurations for the others.

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