Orchard Road is in trouble. Retailers pay sky high rents for the promise of high traffic. Orchard Road is still crowded, if the number of sweaty bodies pushing past you on any given weekend is anything to go by, so that should mean retailers are earning tons of money from these people, right?
Not really, apparently. The problem is that many of the people on Orchard Road are there only to eat, and not to spend money on shopping like they once were. Retail businesses are struggling to earn enough to pay the rent, hence the slew of empty units at certain malls on the shopping belt.
So what can retailers do to survive, given the changes in Singaporeans’ consumption habits? Here are some suggestions.
One big reason why Singaporeans aren’t spending as much as they used to on Orchard Road is the fact that many people now do their shopping online, which makes a lot of sense since not only do you not have to deal with crowds and public transport, but you often also pay less since online retailers have lower operating costs than brick and mortar stores.
Many big retailers like Uniqlo and Topshop now offer online shopping options in addition to their brick and mortar stores. Shoppers often show up at their stores to browse or try on new items, but when they’ve made up their minds to make a purchase, they prefer to just do it online instead of taking the trouble to make a second trip down to the store.
Even the government is now trying to encourage retailers to start offering e-commerce options so they don’t crash and burn.
Given the relatively low costs of maintaining an online store on a platform like Shopify (at least relative to the cost of running a real live shop), virtually every retail business needs to be online. Some may discover it is actually more profitable to operate entirely online, while others may find that continuing to maintain a brick and mortar presence in addition to providing an online shopping option helps the business stay visible.
Organise in-store events and workshops
While Singaporeans aren’t spending as much at retail outlets as before, thanks to the power of internet publicity more and more are leaving their homes to attend events or participate in activities. Barely five seconds goes by before someone on your Facebook page signals that they’re “interested” in some event.
Stores need to take a leaf from Lululemon’s Atletica’s book. The retailer has become somewhat known for their in-store events that give customers a reason to haul themselves down to their stores. Lululemon, otherwise known as a retailer of overpriced yoga attire, organises free yoga and dance classes. Attendees have to register for the classes, which then forces them to enter the stores and get tempted to buy $100 lycra pants.
Introduce an F&B element to the premises
Despite the fact that Singaporeans’ retail spending is falling, we’re still eating out very, very often. And that’s not confined to meals at hawker centres, either. Dining out is one of Singaporeans’ main social activities, and in 2013 Singaporeans spent an average of 252 USD per month eating out.
For some retail businesses, introducing an F&B element to the premises could help to stimulate business. Of course, this easier said than done, as approval needs to be sought from the landlord in order to do so, and serving food on the premises might require the business to move to a different unit or premises.
However, there is some evidence to show that introducing an F&B element can encourage retailers to visit and spend money.
Every Singaporean has probably gone to Ikea at least once in their lives just to eat their Swedish meatballs, and subsequently left with unplanned purchases. MUJI recently jumped on the bandwagon and opened a Café&Meal outlet at Raffles City. Indie retailer Cat Socrates, located at Bras Basah Complex, operates a tiny in-store cafe, and it’s pretty hard to resist picking up a hand-sewn tote or retro pin on the way out.
What’s your favourite retail store in Singapore and why do you like it so much? Tell us in the comments!