Naiise exits Design Orchard, cuts headcount, operating costs

Singapore

FOLLOWING a series of cost-cutting measures which have included layoffs, design retailer Naiise is now withdrawing prematurely as the operator of Design Orchard's retail showcase, with the Textile and Fashion Federation (TaFF) set to take over the role on Aug 1.

The Singapore Tourism Board (STB) announced this in a statement on Tuesday, noting that Naiise was leaving Design Orchard to "consolidate" its business operations and focus on its namesake online and brick-and-mortar stores amid the current economic climate.

It was supposed to run the retail showcase on the ground floor space until at least January 2022, The Straits Times (ST) reported.

Meanwhile, TaFF has been running the fashion-centric co-working and incubation spaces on the second and third floors.

Launched in January 2019, Design Orchard along the Orchard Road shopping belt is a multi-agency project to develop new and emerging homegrown talents in the fashion and lifestyle sectors.

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Ranita Sundra, STB's retail and dining director, said the tourism board's priority now is to facilitate a smooth transition for all brands, suppliers and employees in the retail space. TaFF's plans for the retail showcase includes enhancing the existing mentorship programme and increasing the number of open calls to widen the range of local brands and new products.

Naiise founder Dennis Tay told ST that no fees were incurred as a result of the company's early termination at Design Orchard, and that the separation was amicable.

In the STB statement, Mr Tay was quoted as saying that Naiise's departure from Design Orchard was meant to "better position" the company to recover from the impact of the novel coronavirus pandemic.

Before this move, Naiise had already slashed its headcount and implemented other cost-cutting measures, The Business Times (BT) has learnt.

Naiise wrote in an e-mail sent to vendors early this month and seen by BT: "Prior to Covid-19, we undertook initiatives to restructure our business in order to remain viable. This includes reducing headcount by approximately 50 per cent, cutting operating expenses by 20-30 per cent, and discontinuing our offline stores when leases ended."

In Singapore, it operates a store at Jewel Changi Airport and a pop-up store in Paya Lebar Quarter. The company also has an office and a retail shop in Kuala Lumpur, Malaysia. This is down from the six brick-and-mortar stores it had in Singapore and Malaysia as at January this year.

In the e-mail, Naiise said that although its cost-cutting initiatives resulted in "massive" cost savings, they were unfortunately not enough to address the shortfall in cash flow arising from the store closures during Singapore's "circuit breaker", which began in April and shuttered non-essential businesses across the country.

For instance, projected revenues have yet to materialise at Naiise's biggest project - building the duplex unit in Jewel Changi Airport - which began last year, the company said in the e-mail to vendors. The stores at Jewel and Paya Lebar Quarter both saw their revenues fall to zero during the circuit breaker.

But problems at Naiise had surfaced even before the coronavirus hit.

In January, BT reported that years of repeated late payments had led to several brands removing some or all of their products from its shelves in Singapore and Malaysia. Frustrated vendors told BT that they were each owed amounts ranging from hundreds of dollars to five-digit figures from their goods sold at Naiise.

The firm later apologised, citing a "tight cash flow situation" due to unexpected delays in payments due to it.

BT also reported last month that Amanda Eng, the wife of Mr Tay, had stepped down from her role as chief marketing and buying officer at Naiise to join e-commerce platform Shopee.

Asked about the payment delays, Naiise told BT in June that the company had built a "self-served marketplace business model" that was launched on its website Naiise.com. The new model enables sellers to receive their earnings instantly once a customer makes a successful online purchase on the website.

As at end-June, the Singapore-headquartered company managed some 600 brands in Singapore and internationally.