SINGAPORE - With the disruption posed by e-commerce, retail malls in Singapore are rapidly evolving beyond mere sales to introduce experiential- and activity-based concepts to entice returning customers, said a new paper by real estate consultancy Edmund Tie.
While Singapore's GDP (gross domestic product) and household incomes have steadily recovered since the 2009 global financial crisis, rising at a compounded annual growth rate of over 4 per cent, retail and F&B (food and beverage) growth has not kept pace, with annual growth barely reaching 2 per cent over the same period, the report noted.
As such, to boost footfall, maintain high occupancy rates and shore up earnings, malls are adding communal spaces and non-retail components into their mix, with the aim of creating communities within their premises.
Ong Choon Fah, Edmund Tie's chief executive said: "Online commerce has given consumers an unprecedented luxury of choice and convenience through social shopping, peer-to-peer influence and round-the-clock access to vast repositories of information.
"In response to the changing landscape, landlords and retailers are giving customers reasons to visit over and over again. Physical retail is differentiating itself by furnishing experiences that their online counterparts can't offer, and integrating online-offline retailing by adopting an omni-channel approach."
Increasingly, malls are also featuring focal points - which may not even be retail in nature - around which people can gather, the report highlighted.
For instance, Funan Mall which reopened in June this year, offers a rooftop Urban Farm, rock-climbing facilities, and an indoor cycling track among other flagship brands. "From a nondescript lineup of IT stores, Funan has evolved far beyond a hangout for techies to become a vibrant space where shoppers, families and hobbyists can shop, eat and play," Edmund Tie said.
It added that Jewel Changi's iconic rain vortex, which is the world's tallest indoor waterfall, attracts huge crowds seeking "instagrammable moments", while its canopy park and hedge maze are attractions designed to encourage consumers to return to the mall.
Just last week, BT reported that an all-time high of 65.6 million travellers passed through Changi Airport in 2018, and Prime Minister Lee Hsien Loong said he is "confident" that the record will be broken again this year because of the new Jewel Changi Airport complex.
In addition, Edmund Tie said that pop-up retail, which originally served as testbeds for new products or e-businesses taking a leap into brick-and-mortar, is now fast gaining traction even among established brands, and offers another avenue through which physical retail can attract footfall.
Chua Wei Lin, Edmund Tie's executive director and regional head of business space said: "Defined by a continually changing mix of merchants and brands, pop-up retail gives malls the opportunity to offer additional options on top of their existing retail mix. Its ever-changing nature creates a sense of novelty and excitement that will attract shoppers."
Funan's Tree of Life, for example, is a centrepiece that comprises 20 retail pods, allowing both emerging and established brands to showcase a variety of products and services for limited periods before being refreshed, the report noted.
Added Ms Ong: "Notwithstanding geopolitical, macroeconomic and technological headwinds, physical retail remains highly relevant.
"In 2018, brick-and-mortar stores accounted for more than 90 per cent of retail sales, and the importance of physical retail is further corroborated by the fact that established online merchants - such as Taobao and Love, Bonito - have expanded into physical stores. Indeed, malls are now evolving to become the third place where people gather to relax and socialise."