I recently visited a major shopping mall in the north.
I’m sure readers know which one i’m talking about.
And maybe you visit the mall frequently too. I mean, it’s really convenient living near to one. Where else would you have fresh groceries, essential services, and great food options all in one place. I can’t be the only one that feels this way.
Despite all this commotion about E-commerce breaking the camel’s back, many Singaporeans still choose to spend their weekends in shopping malls, or at least visit one every week to stockpile their necessities. Perhaps this is why retail REITs in Singapore are so popular.
It’s easy to look at the crowds and invest in the trend, but have you ever thought about the current disruption of retail? In reality, the signs are all around us. Food delivery platforms, E-commerce/online stores, and Omni-channel retail, these are all inclinations which undeniably affect the business model of malls.
Will the pandemic be the finishing stroke for shopping malls? We definitely don’t think so. The rest of the article details out the reasons why we think shopping malls will still be relevant in the near future.
The biggest bad guy would definitely be E-commerce. And for good reason; explosive year-on-year revenue growth and site visits clearly shows the allure of E-commerce. The benefits vary across different products, while consumers enjoy comparing reviews and prices for higher value items, they can also enjoy the convenience of having their daily groceries delivered to their homes.
Many people i know also read reviews and conduct their own research online before committing to their purchases, thus leveling the playing field for many similar products. Because E-commerce never sleeps, potential customers can always shop as and when they wish.
But E-commerce has it’s negatives too; waiting times for delivery can be exceedingly long, and the actual product might be vastly different from what consumers see online. Furthermore, there is no customer experience to speak of; you simply search for the item you want, complete the transaction, and wait for the item to be delivered.
This is where brands which maintain retail stores can shine. Serving as physical conduits, retail stores allow customers to walk in, touch and feel an item, and undergo the experiential branding and customer service which sets them apart from other nondescript brands. At the end of the day, customers can simply purchase the item they like and take it home without waiting.
In the near future, E-commerce channels and retail stores are likely to coexist together as part of a brand’s retail strategy, enabling brands to engage and transact with consumers on their preferred terms. Retail brands which understand their customers and products thoroughly, will be able to capitalize on E-commerce to grow their business.
You likely would have heard of the word “Omni-Channel Retail”, but what is it exactly? While Single and Multi-channel retail is defined as selling products through a single (such as online-only) or multiple sales channels, Omni-channel retail is a multichannel approach to sales that focuses on providing a seamless customer experience whether the client is shopping from a mobile device, a laptop or in a physical store.
Omni-Channel retail enhances a brand’s retail strategy by providing better customer experiences, while also collecting data and gaining insights to demand trends and well-received products. A better customer experience also tend to result in stronger brand loyalty as well, creating more advocates for the brand.
At the moment, only a few brands in Singapore such as Uniqlo, Ikea, and Decathlon can call themselves truly Omni-channel. The vast majority of brands still work on a multi-channel approach. One can deduce there is still much room for Omni-channel retail to develop in Singapore.
They are everywhere; riding on footpaths, next to vehicles on roads, even traversing HDBs and condominiums. An ongoing transposition since 2012, delivery platforms have become a handy means of ordering meals without having to head down to the restaurant or food stall itself.
With the increased reliance on food delivery, consumer spending on such platforms is expected to display consistent growth. This bodes well for restaurants and other F&B vendors in shopping malls as delivery platforms expand the reach of their customer base, allowing differentiated restaurants to serve more customers than they usually would.
However, delivery platforms also have their issues too. From restaurant to table, the delivery supply chain which the package undergoes is fraught with friction, especially at the last mile as drivers negotiate traffic situations and condominium security to deliver the customer’s cravings.
Presently, the government is looking into ways to alleviate last mile delivery. Initiatives such as a nationwide delivery locker network, and central collection points are under trial and could likely be incorporated into urban planning in the future.
The Main Dish
Even the curation of stores in shopping malls is starting to change. Mall operators are prioritizing F&B options as they increase the amount of time a consumer spends in a store or mall, known as dwell time, which increases the value for other tenants.
While shopping malls used to allocate 10-15% of their NLA to food, the number has now risen to more than 30% of total NLA instead, to serve as traffic generators for the mall’s other tenants.
The other contenders are experienced based businesses and recreational/community facilities. More and more shopping malls are allocating greater proportions of their NLA to such enterprises as they can’t be replicated by E-commerce and enhance the consumer’s overall experience as well.
Innovative mall concepts such as the Medical mall and I.T mall are also gaining popularity by focusing on specific consumer segments to drive interest and necessity.
Do we still call it a Mall?
The mall of the future will be a destination that feeds the functional requirements of our lives as well as our need to be social. REITs which can capitalize on the opportunity to reinvigorate the shopping environment will undoubtedly be those who succeed in the long term.
Our humble opinion is that retail malls in Singapore still have a important part to play in the social ecosystem, and are unlikely to turn irrelevant anytime soon, if at all.