By Christine Li, Head of Research for Cushman & Wakefield Singapore
Singapore’s retail market is facing one of its most challenging times since 2014.
Urban Redevelopment Authority’s retail rental index for the first quarter of this year is into its ninth quarter of consecutive decline. Islandwide vacancy stock reached 5 million sq ft or 7.7%, which is equivalent to the size of about five VivoCities (the largest shopping mall in Singapore). The slightly more upbeat tourist arrivals and spending last year have offered little reprieve to retailers, as many remain unprepared for the new disruption from demographic change and the advent of new technologies that are set to shake up the retail business in the coming decade.
Millennials are digital natives, who grew up alongside the technology boom. This enables them to be smart shoppers who are empowered by their digital knowledge to search more extensively and compare prices to ensure that they get the best value for their dollar spent. Millennials in particular, are demanding consumers who expect more selectivity, personalisation and customisation in their products and services.
New technologies are also set to vastly transform consumers’ shopping experience. With the use of technology, information is easily available just a click away. Online retailers and pop-up stores offer a wide variety of goods, often at lower prices.
So what are the emerging retail trends of a future shopping mall? How should retailers adapt to the paradigm shift?
With the traditional mode of cultivating customer relationship via physical stores being disrupted, we have highlighted several trends that will drive the mall of the 21st century:
- Predictive Commerce: Technology can be used to gain insights into shoppers’ behaviour, allowing for predictive retail to happen anywhere in the purchasing process
- The Airbnb of Retail: Similar to Airbnb, online platforms can now allow both landlords and merchants to list and rent short term retail space respectively
- Food and Experience Community: Pop-up vendors, food trucks, and speciality food stores could displace the traditional notion of a food court by evolving as a community gathering place
- Imaginary Retail Store: Virtual (VR) and augmented reality (AR) have the potential to change how retail stores are defined as they could bridge the gap between online and the physical world by bringing them into a single integrated platform
- E-Commerce Giants and Crowdfunding Sites as New Tenants: The retail storefront scene will not be limited to simply conventional retailers. In the context of retail space, e-commerce giants have the financial capacity to open a mega showroom, stocking all kinds of merchandise under one roof. 2016 saw Kickstarter, a crowdfunding platform for creative projects making it into Singapore’s retail brick and mortar scene
- Omni-channel: With 68% of the shoppers expecting a seamless omnichannel experience, we saw more retailers such as Challenger, Sephora embracing omni-channel strategies which have paid off.
With these trends making, breaking and shaping the retail outlook of Singapore, retailers who are brave enough to test the waters in these new horizons and invest in the right strategies will be best positioned to capture a greater share of consumers’ wallets.
Chart: URA Rental Index for Private Sector Retail Space in Central Region
Source: URA, Cushman & Wakefield Research
Christine Li is the Head of Research for Cushman & Wakefield Singapore. Her team has recently published “Unveiling The 21st Century Mall”, a retail report that highlights how we envision a retail establishment will look like in the near future. Download the report here.