THE retail industry has been grappling with challenges on multiple fronts over the last decade, such as manpower shortages, competition from e-commerce and a plateau in retail dynamism.

The Covid-19 pandemic and its accompanying safety and border restrictions have inevitably shaken the retail industry. Malls located in the central region have faced the brunt of the impact while suburban malls, on the other hand, are more resilient. Trends that were already under way for the retail sector have been accelerated and landlords are reconfiguring their trade mix to keep the malls appealing to shoppers.

Over the last decade, the footprint of food and beverage (F&B) and sport & fitness retailers have risen noticeably, egged on by an increase in placemaking efforts, social media usage and more emphasis on wellness.

On the other hand, the rising adoption of e-commerce has led to a reduction of footprint of department stores, supermarkets and leisure and entertainment outlets.

Tomorrow's retail

The retail mall of tomorrow will see greater collaboration between stakeholders.

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From June 1, 2021, a set of guidelines termed the Fair Tenancy Framework Code of Conduct for Leasing of Retail Premises came into effect. This set of guidelines serve to assist landlords and tenants of qualifying premises to reach a fair and balanced position in lease negotiations, according greater protection to retail tenants. Parties are encouraged to abide by the leasing principles for key tenancy terms as provided under the code. While the code is not binding, major landlords have committed to abide by the code of conduct.

The landlords are APM Property Management, CapitaLand, City Developments, Frasers Property Retail, Keppel Land, Mercatus Co-operative Limited, UOL Group, SPH Reit, JTC Corporation and the Housing & Development Board.

The Fair Tenancy Committee has also advocated the code to be legislated and to ensure compliance. The government has also expressed its support and will be working with the industry for such possible legislation.

The Great Singapore Sale 2021 (GSS) has also taken an omni-channel approach this year, a partnership between the Singapore Retailers Association and Lazada, enabling retailers to leverage the ease of accessibility of applications and online platforms. This opportunity has assisted selected retailers to start on their e-commerce journey.

E-commerce struts on

The wheels of e-commerce are set in motion. Coupled with changing consumer tastes and behaviour, owners will seek to curate their trade mix and occupiers would want to market their products and services in ways that are appealing to consumers.

Pre-Covid, the online share of retail sales was relatively moderate; 5.0 per cent in 2018 and 5.8 per cent in 2019. Catalysed by the circuit breaker lockdown, online retail sales share grew to an average of 12.7 per cent in 2020 and 12.2 per cent in the first half of 2021.

With the implementation of dine-in restrictions for the F&B sector, the online share of F&B sales also shot up during the Circuit Breaker in 2020 and Phase 2 (Heightened Alert) in 2021. More retailers are opting for an omni-channel approach, jumping onto the bandwagon of marketing and selling their goods online. On the other hand, their physical retail store concurrently serves as a "look and feel" touchpoint and as a click-and-collect point for customers.

E-commerce platforms have also successfully gained a large following due to the usability of the applications and vouchers being offered during special events (for example, Shopee 11.11 sales, Lazada Great Singapore Sale 2021). Certain retailers may be looking to decrease their retail footprint due to the hybrid model of online and offline sales, especially when consumer behaviour shows a permanent shift towards online shopping.

Demand for prime retail spaces remains firm. For example, the space vacated by Robinsons at The Heeren was taken up by Courts while One Assembly, a collaboration between CapitaLand and BHG Singapore, has shifted to the other former Robinsons outlet at Raffles City.

Smart retailing

Retailers are creating more dynamic digital tools to increase the level of consumer engagement by giving customers a memorable store experience.

Moving forward, more could follow suit to attract a larger customer base. For example, high end Japanese beauty brand SK II, opened its Future X Smart Store at Singapore Changi Airport in 2019. The store features smart product scans to compliment the Skincare GPS to locate items at the store and a digital interface called the Discovery Bar for customers to gain a deeper understanding of the product offerings.

Livestream retail

The next fad in retail features livestream shopping, where viewers are able to watch the livestream and shop online concurrently. Retailers also employ tactics such as releasing coupons during livestreaming to entice viewers to continue watching the session and make their online purchases.

This trend has been further entrenched during the pandemic as it enables users to shop online and engage with the live streamer through posting comments and receiving live replies. As live streaming provides the personalised touch for viewers on a larger scale, a wider range of consumers can be reached. With more brands utilising social media platforms (Instagram Live and Facebook Live), consumers are able to view the products first hand before purchasing the products either online or from the physical store.

Hybrid model

Co-working operators could also be more active at retail malls, supported by demand for flexible working spaces in an uncertain economic climate, catering to the new hybrid work paradigm and the rise of the gig economy.

With more co-working venues located at retail malls, there is also a wider range of food and retail offerings to cater directly to the needs of the tenants. For example, JustCo opened a co-working space at Marina Square (60,000 sq ft) in 2018, Spaces by IWG opened at One Raffles Place (35,000 sq ft) in 2019 and JustCo expanded at The Centrepoint (60,000 sq ft) in 2020.

Conclusion

Owners need to continue to re-imagine their malls and find their niche in terms of capturing the local market, especially in hard-hit tourist shopping spots. It is pertinent to be future-proof and to curate a more resilient trade mix. As more international brands enter Singapore, a wider range of options in terms of both quality and quantity is now being offered to customers. With more competition from these international brands, existing retailers will have to be increasingly innovative in order to retain and attract more consumers.

With brands embracing digitalisation and investing in retail innovation, we believe that physical retailing is not dead, so long as retailers are coming up with innovative ways to create a memorable experience for consumers. With the rise of multi-channels approach such as smart retailing and live streaming, consumers are able to experience fresh ways to enjoy their shopping experience.

Additionally, with the challenging retail climate right now, we expect more pop-up stores or concept stores to emerge where retailers and landlords can test their ideas with the market.

Co-retailing could be poised to take off in a more meaningful fashion. After all, even with the rapid rise of e-commerce, physical retailing is still very much ingrained and pertinent in our daily lives. As social creatures, we still need places as avenues for socialisation and human interaction - for example, the discovery of new shops in town could spark interesting conversations and adventures.

The last decade has seen major shifts in retail trends and trade mix. Looking ahead, we expect further tweaks to future-proof malls due to the accentuated need for socialisation and collaboration.

The push towards F&B and more co-working spaces will likely continue although the F&B landscape will also see more delivery and self- pickup extensions of the business model. The industry will continue to innovate with new forms of digital marketing and it is vital that landlords and tenants partner together to navigate the challenges ahead.

• The commentary is taken from a paper written by EDMUND TIE & Co on Singapore's retail sector