The rise of e-commerce, changing shopping habits, and a tough operating environment have all led to the demise of many retailers in Singapore. As more consumers switch to shopping online, traditional retailers who have been slow to adapt are seeing falling sales and closing stores.
Landlords will also see an erosion of their tenant base and arguably find themselves in a weaker bargaining position. So, what can landlords do?
Death isn’t on the cards, but consolidation is
It is not the death of brick-and-mortar, but the rise of e-commerce which has accentuated the trend of a two-tier market. Well-located and managed malls are able to attract the bulk of the footfalls and are thus positioned to hold and even raise rents to the detriment of poorer malls which have seen retailers leave in doves.
Due to the convenience brought about by e-commerce, the main reason to visit a mall is no longer to shop but have become a focal point of community gathering. Malls are no longer just a place to push out product offerings to the mass-market but must now be designed to pull consumers in via a strong retail consumer experience.
Being mediocre will no longer cut it, as consumers are now much more discerning and savvier about how they spend their cash and time.
From competitive to complimentary
Landlords are collaborating with leading e-commerce players to bridge the online-offline experience. For example, Capitaland, Singapore’s largest real estate company, has tied up with leading e-commerce Lazada Group by launching an ‘online mall’, aggregating the offerings of retailers in its Singapore malls on Lazada’s website and allowing shoppers to pick up their online purchases at click-and-collect lounges at some of their malls.
The reopening of Funan Mall, set for the 28th June, is set to become a key proving ground for these online/offline collaborations. We’ve already seen popular Singaporean e-commerce player Love, Bonito announce that its third physical store will be in the retail hub, and which will feature “customer touch points such as “instagrammable” spots, an express counter for e-commerce orders, and on-demand personal stylists” according to Singapore Business Review.
Alongside cornerstone collaborations with popular online players, Funan is pivoting to embrace an online/offline approach, boasting strong logistical capabilities such as a 24 hr click and collect drive-through and in-mall robots to pick up purchases from retail stores and consolidate them for convenient collection.
Partnerships with established online players are all very well, but a longer-term solution for landlords is still required. At the heart of any long-term solution has to be data. Advances in technology has created new avenues for data collection, through smart sensors and data analytics. Besides in-mall sensors, data can be gathered from rewards programmes or collaborations with e-commerce companies or existing retailers.
Funan Mall is a great example of this data-centric approach. The new mall will be powered by an ecosystem of sensors, data analytics and facial recognition tools to better understand consumer shopping habits and preferences.
Being able to collect such data would have multiple benefits for mall operators. These include:
• Longer consumer engagement: An ability to engage consumers long after they leave the mall
• Personalisation services: Malls can offer shoppers relevant and timely recommendations and create opportunities for cross-selling
• Increased leasing demand: Consumer data would also be highly sought after by retailers and would translate into higher leasing demand and tenant loyalty
• Optimal tenant mix and predictive analysis: Make quicker informed decisions based on detailed shopper demographic data. Being able to anticipate changes in shopper preferences quickly
• Stronger collaborations and valuable insights: In the digital age, data is worth its weight in gold. The combination of data collected from online and offline malls could lead to valuable insights. But the key is in being able to use and analyse data properly
• Capture online sales: Capture online sales that are completed within the mall, mitigating the showrooming effect and attributing sales correctly
The winners take all
The world of retail is changing, and retail landlords must adopt a more flexible mindset. This includes exploring new opportunities to collaborate with online trailblazers, but it also means investing in solutions that can help them better understand the consumers frequenting their retail spaces.
Consumers are only going to become more savvy and more digitally active. The onus is on landlords to offer unique experiences, sought after occupiers, and data-driven engagement, and in doing so survive the changing retail landscape.