The changing retail landscape
JOANNA CHEN looks at how the retail market has changed since the 1980s and what the future holds
THE retail scene in Singapore has undergone massive change since the 1980s when shopping centres were fewer and less differentiated. The 1990s to early 2000s saw rapid growth in the supply of retail space, especially in the suburbs. Between 2002 and 2009, we have seen transformations in landlord- tenant relationships, space reconfiguration in malls, the listing of real estate investment trusts (Reits), government policy changes, and more discerning consumers.
With new shopping malls springing up in the central area as well as the success of suburban malls, the retail sector has come into its own. Here's an insight into how Singapore's retail market has changed since the 1980s and what the future holds.
Late 1980s: Strata-titled, family-oriented malls
With only a few single-owner malls such as Parkway Parade and Goldhill Square (now United Square), shopping centres then were mostly strata-titled. As such, any refurbishment carried out was generally piecemeal and involved individual shops rather than the entire mall.
Most of the developers in the late 1980s focused on creating family-oriented shopping malls. Tenant mix usually comprised a few anchor tenants and shops that catered to the needs of the entire family.
Tenant mix of three prominent shopping malls (Wisma Atria, Marina Square, and Plaza Singapura) showed a considerable portion (28-52 per cent) of lettable area allocated to department stores. In Plaza Singapura, both Yaohan and OG Elite were anchor tenants occupying at least four floors in the development. Tokyu and Metro, on the other hand, were secured at the two strategic ends at the cross- shaped structure of Marina Square.
To attract the target customers that ranged from children to the elderly, these malls allocated at least 10 per cent of net lettable area to bookstores, electronic stores, and arts and crafts shops. Even though Wisma Atria had the largest percentage of fashion retailers, it also offered special features such as a large aquarium at the basement and a children's playground on the rooftop podium for a more family-friendly atmosphere.
1990s to early 2000s: Into the suburbs
Singapore's retail landscape saw tremendous growth between 1992 and 2002 when retail supply grew by more than 80 per cent.
In line with the Urban Redevelopment Authority's (URA) Concept Plan to have decentralised regional and sub-regional commercial hubs, a slew of suburban malls were built, giving consumers the option of being able to shop without going into Orchard Road.
The move by URA created micro markets which allowed retailers to expand their foothold into different regions. Such expansion was well-received by retailers and shoppers alike.
These suburban malls achieved high occupancy and attracted foreign retailers. Foreign department stores such as Seiyu opened in Lot One Shoppers' Mall. Both John Little and Marks & Spencer expanded in malls like White Sands Pasir Ris, and Yishun Northpoint.
New retail trends also surfaced during this period of change. Suburban malls interweaved shopping with entertainment, leisure, and education. Cineplexes and libraries could be found in malls such as Hougang Mall and Junction 8 to provide a more holistic experience for shoppers. Atriums were also created within the malls for entertainment and family activities.
Malls in Orchard Road and other downtown core areas offered the alternative of concept shopping where themes and niche marketing were carefully thought through and implemented, typical examples being The Heeren Shops and Funan DigitaLife Mall.
2002-2009: Retail transformation
From 2002 to 2009, there was a dramatic transformation in the retail landscape. The successful landlord-tenant relationships where the developer, major owner, major tenant, and even mall manager are related companies, as seen in Ngee Ann City, are rare. Most malls before 2002 followed the typical landlord (developer) and tenant (retailer) relationship.
However, with the listing of Reits in 2002, this relationship was transformed. The role of landlords could pass from developers to asset managers, while shoppers could also have vested interest in these malls as shareholders of listed Reits.
More importantly, the nature of Reits constantly challenges the asset managers to think out of the box to create better value for shareholders. This includes growth strategies to acquire properties and initiatives to enhance existing retail assets. This led to positive trickle-down effects for shopping malls here.
During this period, the configuration of the typical shopping mall also evolved. Government policy allowed creative use of space, as seen in malls like Bishan Junction 8 and Tiong Bahru Plaza in 2003.
Unit sizes of shops shrank due to the growing preference for smaller mini-anchor tenants such as Mango, Zara, etc. Such preferences are likely due to higher spending power and the increasingly affluent lifestyle of consumers.
There were also malls that comprised many small niche retailers to provide variety. A pioneer of this trend was Far East Plaza. In 2002, with the closure of department store Metro on the first level, Far East Organisation successfully put in place a variety of shops catering to the young and trendy.
2010 & beyond: The best is yet to be
With the continued success of suburban malls and the opening of new city malls like ION Orchard, 313@Somerset, and Orchard Central, Singapore's retail scene has grown colourful and vibrant. The success of the suburban malls is clearly demonstrated in the opening of Uniqlo's first flagship store in Tampines One. Orchard Road, the main shopping boulevard, has its own innovative architecture with malls such as Orchard Central and *Scape. The multi-sensory experience in ION Orchard has also taken the retail experience to a higher level.
So what lies ahead? The prospects are bright for the retail market. On the supply side, malls in Orchard Road near Cuscaden Road, Claymore Drive, and Angullia Park have potential for development. There will also be an upcoming wave of supply from both refurbished and new suburban malls. The former Katong Mall is undergoing a $60 million facelift to create a new shopping experience with a Peranakan theme. At the opposite end of Singapore, JCube (the former Jurong Entertainment Centre) offers an Olympic-sized ice-skating rink, a multiplex cinema, and retail offerings around the clock.
On the demand side, the many new shopping malls added in the central area have enhanced Singapore's status as the retail city of the East. Complemented by the vibrancy from the two integrated resorts, the city is likely to attract more tourists and shopping dollars.
There will be a rising tendency for locals to prefer hanging out at shopping malls, given the combination of smaller homes to relax in and a growing preference for eating out. With increased affluence, there will also be greater propensity for locals to spend on their favourite pastime - shopping.
Over the last 30 years, Singapore's retail landscape has grown increasingly vibrant. But this does not mean there isn't room to grow. With the synergy from exciting events such as Formula One and the bustling activity generated by the integrated resorts and Marina Bay, the best is yet to come.
The writer is an analyst with Knight Frank Consultancy & Research
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
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