Business Times - 05 Jun 2009
Retailers here have a wider range of malls to choose from as malls look inward, convinced that local brands now offer better quality and global appeal, report CHEAH UI-HOON and MELISSA LWEE
THREE years ago, Singapore toymaker Play Imaginative created a cult toy called Trexi. Now, the company is expanding its cult footprint with a designer toy shop - carrying the latest and uber-exclusive toys such as Play To-Fu and Tokidoki, original printed T-shirts, fashion accessories and stationery.
Its 600-square-foot store in Illuma is the company's debut as a retail space, the result of some serious courting by mall operators eager to 'talent spot' unique local retailers to help give themselves an edge over other malls.
'Local retailers are starting to get their due attention even though there's a lot of emphasis on international brands,' notes Jacky Teo, one of Play Imaginative's three founders. 'We opened a 600-sq-ft store at Illuma and will open another one in Ion Orchard. We hope to open another two to three more if the rental is right.'
As new malls come into play and older ones battle to maintain their own appeal, the drive for the perfect retail mix has gotten a lot more urgent. In addition to scouting for foreign brands, malls are also looking inward, especially as local brands now offer better quality and international appeal. As a result, local retailers are benefiting - they have a wider range of malls to choose from, and with rental prices dropping, operators now have to appeal to their needs as well as come up with novel ways to attract the consumer.
The fact is there is now a lot of retail space to fill. First, there are the new malls such as Ion Orchard, Orchard Central, 313@Somerset and Mandarin Gallery along Orchard Road, which will add a total of 1.8 million square feet of net retail space in the prime Orchard Road shopping belt from now until mid-2010. This is a whopping 40 per cent increase from the current stock of 4.5 million sq ft, according to property consultancy Knight Frank's figures.
Then there are the existing malls which are determined not to be overshadowed by their new and flashier counterparts. To top it off, there are new malls outside the Orchard Road belt which are in equally prominent locations such as Marina Bay Sands and Illuma.
It's this confluence of factors that could lead to an exciting retail scene by year-end, even if retail sales are still on the decline.
It's a situation that is proving to be advantageous for local retailers who don't have to worry about being squeezed out by international brands. In fact, local labels which have grown over the past few years report that the proliferation of new retail space is good news for them.
In fact, there may not be a better time than now for local retailers to strike out with new concepts.
'It's time to innovate and try out new ideas,' declares Elim Chew of 77th Street enthusiastically. The founder of the 21-year-old brand which popularised funky streetwear is ready to roll out new concepts in the company's bid to expand its streetwear empire.
With new mall space opening, the company has to keep reinventing itself and plans are on the drawing board to segment the different tastes in streetwear fashion, she says.
Spin-offs from 77th Street's core business include a new to market concept called Manchu which caters to the cosmopolitan man. Manchu will be in Orchard Central. 77th Street itself will be in Ion Orchard where it'll introduce classy upmarket streetwear instead of grunge. 'We'll carry international labels in our shop there, like Gothix, Gothic Princess, X-TOMIC, No Boundary and so on,' she notes.
The new malls have been quite proactive in courting local retailers, notes the people behind niche shops such as Front Row (which carries several cult labels) and The Running Lab, both concepts which are homegrown.
'We've been approached by several malls along Orchard Road, yes, but the problem is finding the right space for our concept and our target clientele,' says Front Row's Ann Kositchotitana. 'We've been growing our brand for more than three years now, and we want to stick to our vision of being a concept store that offers a certain experience,' she adds.
After being courted by several malls as well, Walter Tan of Outdoor Venture Pte Ltd which specialises in outdoor and sports products, decided on Ion Orchard based on the fact that it has a 'super prime location' and 'unique architectural design'.
Its specialist running store The Running Lab opened its second outlet at Tampines One, while The North Face brand it carries will have its standalone boutique at Ion Orchard.
Realistic asking prices for rent is key to expanding in the Orchard Road area, says Kelly Yeo, owner of vintage store Deja Vu. Deja Vu recently opened a second outlet at Millenia Walk, focusing on designer vintage.
'When the new malls first started marketing, they weren't realistic as to the kind of prices to be asking for in a recession. Small retailers like us were quick to realise that things weren't good on the retail front,' she says.
But even though rents have come down, there's still high demand for ground-floor space in Singapore's central shopping stretch. Azimuth Watch Company - the first local watch brand with Swiss watch manufacturing - is going to open a store at Mandarin Gallery later this year 'because tourists will still be attracted to the city centre to find newest trends and brands', says co-founder Alvin Lye, adding that the company is also considering taking up retail space at Marina Bay Sands.
How malls differentiate themselves
With the upcoming new malls, the local retail landscape will undeniably be more exciting, notes Helen Khoo, executive director of Wing Tai Retail which manages a portfolio of 18 brands. 'However, it's important for the malls to position themselves strongly, otherwise the 'repetitiveness' of the shopping and entertainment experience along Orchard Road will eventually cannibalise business,' she says.
That said, the new malls on the bloc are certainly ready for the challenge with each stating what kind of market niches they've carved out for themselves. Mandarin Gallery (MG), which is slated to open in early October later this year, for example, is keen to target the 'younger rich'.
'This group is comfortable with themselves and need not be togged in luxury brands' apparel and accessories all the time, though they have the means to do so,' says Patrina Tan, senior vice-president of retail, marketing & leasing for Overseas Union Enterprise Limited. It's chosen tenants that are a mix of unique local and international brands such as A.i. by Ashley Isham (Isham's diffusion line), TriBecca, Y3 and Huit.
Over at Ion Orchard, hand-picked local brands are clustered into various zones to make for a more compelling destination. For example, popular local jewellery brands are grouped at Ion Orchard's Jewellery Street at B2 of the mall which, according to the mall operator, will see 200,000 commuters daily.
Budding entrepreneurs will also get a dedicated space at Orchard Central, themed as 'The Ramp'. Taking it beyond the trolley cart retail concept, Orchard Central has designed more than 30 shops on Levels 5 and 6 which can be used as a launch pad for new entrepreneurs and their business ideas.
The new lifestyle concepts the mall has created together with local designers and retailers include UrbanWrite by Popular bookstore - a flagship concept retailing designer stationery and unique gifts.
Art is also a differentiator these days, with Ion Orchard dedicated 5,600 sq ft of space to it. Orchard Central in the meantime has bragging rights over having the largest number of art installations in a commercial development, costing some $9 million.
Despite facing strong competition from its newer counterparts, existing malls in the market remain surprisingly unfazed and instead welcome the addition.
'The new malls on Orchard Road, including the recent $40 million rejuvenation of the street's pedestrian walkway by the STB, will enhance Orchard Road's attractiveness as a world-class shopping destination,' says Kevin Chee, senior vice-president, asset management of YTL Pacific Star, manager of Starhill Global REIT that runs Wisma Atria. 'Wisma Atria's positioning as a fashionista mall has complemented Ngee Ann City well, as it will with Ion Orchard.'
It adds that on top of strengthening its position by offering some of the best international high-street brands, some other local chains such as Charles & Keith and Lee Hwa Diamond Gallery pull their own weight as well.
The operators behind Palais Renaissance are likewise unworried, as the mall has been positioned as an exclusive shopping destination.
Says City Developments Limited's deputy general manager (marketing & leasing) Corinne Yap: 'Palais has always differentiated itself by being the quintessential luxury boutique mall, serving a strong following of astute individuals who loathe jostling with the masses.'
77th Street's Elim Chew calls this a 'heart-thumpingly exhilarating' time, adding that perhaps malls should also move away from the traditional landlord role to work on partnership terms with retailers.
Profit sharing and joint promotions are some of the suggestions she's thrown up to lower cost of doing business in Singapore. Rent is the killer, agrees many retailers.
So perhaps this downturn will see some important changes being made to the local retail scene - as retailers such as 77th Street and Play Imaginative prepare themselves to be in the right place to ride the next wave when the economy takes an upturn.