Shopping malls revamp amid onslaught from online retailers
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As the brick-versus-click-sales war intensifies, shopping malls in Singapore are plotting aggressive strategies to stay ahead in the game while they continue to battle falling tourist arrivals, the oversupply of retail space and growing competition for consumers’ attention.
Their renewed game plans include reshuffling the tenant mix, exploring more flexible leasing terms with tenants, revamping marketing campaigns and even forming alliances with online sales platforms — all of these aimed at getting consumers to shop more as they spend longer hours at their malls.
“Landlords are adjusting their marketing strategies and tenant mix and repositioning their properties towards offering more entertainment, services and food and beverage (F&B) outlets, aiming to remain relevant in the midst of shoppers taking to online shopping as well as changing consumer preferences,” said DBS Vickers analyst Derek Tan.
Mall operators are making more space for restaurants, cafes and bars as well as entertainment and services-oriented businesses, such as education, beauty and wellness, as these remain insulated from the online onslaught, while department stores and retailers that sell products such as books, toys and fashion continue to be hit by the surge in e-commerce.
Malls now allocate around 35 to 40 per cent of net lettable area to F&B, entertainment and services, compared with about 25 per cent around five years ago, Mr Tan noted.
““Over time, the way people shop will change … In the past, we did more conventional advertisements.”
The increased focus on F&B, entertainment as well as beauty and wellness is also demand-led, as young Singaporeans today are well-travelled and seek more in terms of enhancing their personal appeal and well-being.
“Singaporeans today are more sophisticated and want to explore more when it comes to F&B and beauty and healthcare. This is attracting new F&B players from Japan, South Korea, China, the United States and Europe to enter Singapore in a big way. Several Korean and Japanese cosmetic companies are also coming in,” said Mr Wilson Tan, chief executive of CapitaLand Mall Trust Management. He also emphasised the group’s strategic focus on necessity retail that defends it from disruptions in shopper traffic and volatility in sales revenue.
Besides the onslaught from online retailers offering low-cost shopping and free delivery services, a strong Singapore dollar has prompted Singaporeans to shop abroad as they travel for holidays, making it more challenging for mall owners to attract footfall.
“Over time, the way people shop will change … In the past, we did more conventional advertisements. As we move ahead, we see mobile and digital platforms becoming a lot more prevalent, and that is where we will be looking at, using new technology to bring people into the shopping malls,” Mr Tan said.
Malls are scurrying to identify ways to embrace new sales channels that allow traditional and online retailers to coexist and complement each other. Some are exploring the option of partnering with e-commerce players such as Qoo10.
Questions & Answers
Q.What specific strategies are shopping malls using to attract customers?
What specific strategies are shopping malls using to attract customers?
Malls are adjusting their tenant mix, offering more flexible leasing terms, revamping marketing, and forming alliances with online sales platforms. They aim to encourage longer stays and more spending by focusing on new offerings.
Q.How has the tenant mix in shopping malls changed in recent years?
How has the tenant mix in shopping malls changed in recent years?
Around five years ago, F&B, entertainment, and services accounted for about 25% of net lettable area. This has now increased to between 35% and 40%, reflecting a shift away from traditional retail.
Q.Which types of businesses are increasing their presence in shopping malls?
Which types of businesses are increasing their presence in shopping malls?
Malls are making more space for restaurants, cafes, bars, and entertainment and services-oriented businesses. These include education, beauty, and wellness outlets, as they are less affected by online competition.
Q.What role does technology play in the malls' future plans?
What role does technology play in the malls' future plans?
Malls anticipate mobile and digital platforms will become more prevalent for advertising. They plan to use new technology to attract visitors and explore partnerships with e-commerce players to integrate online and offline sales.