SINGAPORE - The retail space built to showcase local designers in the heart of Orchard Road will be undergoing a change of management after operator Naiise decided to pull out early.

The Textile and Fashion Federation (TaFF) will take over the running of the 9,000 sq ft Design Orchard. TaFF operates the co-working and incubation spaces on the second and third floors of the building.

Naiise, the multi-label retailer which built up its name as the biggest platform for local designers in the country, had been appointed to curate and run the ground floor space at Design Orchard at least until January 2022.

But amid the current challenging economic climate, it will be will be stepping back to consolidate its business operations and focus on its namesake stores, the Singapore Tourism Board (STB) said on Tuesday (July 14).

Design Orchard, which features about 60 local brands, was launched in January last year as part of government plans to rejuvenate Orchard Road and boost up-and-coming local designers.

Naiise founder Dennis Tay told The Straits Times on Tuesday that the decision to exit the initiative and consolidate its operations was a result of the Covid-19 pandemic's impact to the economy and its business.

No fees were incurred in its early termination as operator of Design Orchard's retail showcase, he said, adding that the separation was amicable.

But Naiise's troubles pre-dated the pandemic. The Straits Times reported in January that some home-grown brands were pulling out of its eponymous online and physical stores after what they said were consistent payment delays. The firm later apologised, saying it had its own cash-flow issues due to its debtors paying up late.

Mr Tay said Naiise had met most of its targets for the first year of the Design Orchard's operation, helping to showcase more than 90 new-to-market and emerging local brands, as well as running a mentorship programme headlined by industry leaders.

Ms Ranita Sundra, STB's director for retail and dining, thanked Naiise for its efforts in curating the largest collection of local brands under one roof on Orchard Road.

"Our priority now is to facilitate a smooth transition for all brands, suppliers and employees at the showcase," said Ms Sundra.

The tourism board said that TaFF, a trade association, will leverage its domestic and regional network to create more opportunities for local brands. TaFF will manage the entire Design Orchard complex, except the rooftop event space, which is managed by JTC Corporation.

"As part of their plans for the retail showcase, they will enhance the existing mentorship programme and increase the number of open calls to widen the range of local brands and new products," said STB.

Consumers can also look forward to more events, such as exhibitions, workshops and themed trunk shows, it added.

Ms Toh Ziling, chief operating officer of three-year-old skincare brand RE:ERTH, said she was looking forward to TaFF bringing new energy and ideas to the retail showcase.

"I'm excited about their involvement because they are quite experienced with organising local and overseas pop-ups, and they know local brands and our challenges and needs quite intimately," she said.

RE:ERTH was one of the brands that pulled out of Naiise after experiencing payment delays, but Ms Toh said there have been no issues at Design Orchard, which has a separate finance team accountable to the STB. She said the brand's presence at the Orchard Road showcase has led to higher sales and several distributorship enquiries.

NAIISE TO REVERT TO ONLINE FOCUS

The pandemic compounded cash-flow woes for Naiise, which appears to have shut three brick-and-mortar stores here since January. Only its outlets at Jewel Changi Airport and Paya Lebar Quarter are currently listed on its website.

Some vendors told The Straits Times they have yet to receive full payment for sales made as far back as last year.

A spokesman for Freshly Pressed Socks, which ended its relationship with Naiise in January, said it received partial payment earlier this year but is still owed about $1,300.

Mr Tay said that physical store closures mandated by circuit breaker measures had placed a great strain on operating cash flow.

"Although prior to the pandemic we had started to address the outstanding payment issues, the pandemic was a major curveball we had not expected," he said.

In May, Naiise launched an e-commerce platform that pays vendors for sales instantly, and about 130 brands have been moved to the new system so far.

"This platform has helped us tremendously in terms of automating payments and operational flow," Mr Tay said.

Naiise, which began as an online store in 2013 before expanding into physical stores, looks to be weathering the storm by refocusing on its e-commerce business.

On his plan to address cash flow challenges, Mr Tay said: "We are now working on more in-depth restructuring initiatives, such as further cost reductions and pivoting to focus predominantly online."