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Parco to quit Millenia Walk after losing millions there
[SINGAPORE] Japanese mall and department store operator Parco will be vacating its 83,000-square foot premises at Millenia Walk late next month, after racking up losses over the years which run to millions of dollars.
The Business Times understands that its lease ends in March and that it is looking to continue operations in another mall, though this is likely to be on a smaller scale, with about 10,000 sq ft of space to accommodate its food, cafe and restaurant operations. These are largely located on the third level of the department store currently, said to be the only part of Parco that is doing well.
Pontiac Land Group, which owns and manages Millenia Walk, is in the midst of working out plans for the space that Parco will leave behind. It revealed that no other tenant was leaving apart from Parco.
Said Michael Su, CEO of Pontiac Land: "We will be taking Parco's departure as an opportunity to reposition and focus on a renovation and enhancement exercise. In Q2, we will unveil exciting plans for the mall."
Talk in the market is that Pontiac is considering converting the retail space for hotel use, as those it owns in the area, such as Conrad Centennial Singapore and the Ritz Carlton Millenia Singapore, have been performing well. The site Millenia Walk sits on is the same parcel of land that houses the Ritz Carlton and Conrad Centennial Singapore. It has been zoned for hotel use under the Master Plan 2008.
But Mr Su dismissed such talk, saying: "We view retail as a viable business and with Parco's departure, we are taking this opportunity to reposition our mall."
Parco's departure from Millenia Walk comes after it chalked up millions of dollars in losses after tax from continuing operations each year since it moved to the mall in 2010. In 2011, it incurred as much as $8.7 million in losses, filings with the Accounting and Corporate Regulatory Authority (Acra) showed. In 2012, it made a loss of $3.4 million.
Its performance over the past few years contrasts sharply to the time when it first started here in 1995. At that time, it managed what was known as the Parco Bugis Junction shopping complex and a department store at the mall.
Some market observers had predicted that it would not do well, but Parco Bugis Junction managed to register sales of $110 million in its first full year and more than $22 million in rental revenue.
Parco sold its stake in Bugis Junction in 2005, and was the appointed retail manager for The Central mall at Clarke Quay between 2006 and 2009.
The Singapore department store is fully owned by Parco Co Ltd, which has 19 stores in Japan, where it has built a strong reputation for creating successful, bustling shopping complexes out of the most unlikely locations.
Its store at Millenia Walk covers three floors; it includes popular ramen joints such as Keisuke Tokyo and Nantsuttei and restaurants such as Saboten, Tomi Sushi and Ma Maison, which are located on the top floor.
Parco is also involved in a fashion design incubator project called Parco next NEXT, where local designers undergo a structured training and mentorship programme and set up shop on the second floor of the department store.
This is a joint initiative between Parco and the Textile & Fashion Federation (Singapore) (TaFf), with support from government agency Spring Singapore.
But designers who have set up shop there complain that sales have been poor.
Said one designer, who declined to be named: "We are doing very badly. There are very few customers. It's practically a ghost town."
In response to BT's query on the Parco next NEXT programme, Spring Singapore said it was launched in 2010 and will "run to its fruition" till March this year.
Yeo Meow Ling, deputy director of lifestyle at Spring Singapore, said: "This incubator programme has successfully groomed 55 designers to date and met its objectives."
Going forward, Spring Singapore will continue to help local designers by leveraging on alternative or existing avenues, added Ms Yeo.
"New-to-market designers who are interested to start their own business can tap the ACE start-up grant. Designers who are keen to gain working experience in the fashion industry can go through TaFf to be matched with suitable local fashion companies.
"Spring Singapore will work with existing designers who remain committed to grow in the fashion industry both locally and internationally. Furthermore, designers can seek Spring's support to upgrade their business capabilities using Spring's Capability Development Grant (CDG)."