Slew of new openings and new brands in retail sector amid ‘revenge’ consumer spending
By Timothy Tay
/ EdgeProp Singapore |
In 2022, several new-to-market brands and established retailers grew their footprint in tandem with retail spending. (Picture: Albert Chua/The Edge Singapore)
SINGAPORE (EDGEPROP) - This year marks a rebound in sentiment in retail real estate as retailers and lifestyle brands capitalise on a recovery in consumer footfall across prime and suburban retail locations.
This was due to an extensive easing of safe management measures (SMM) from March this year, as more consumers returned to shopping malls, F&B outlets and commercial areas. The cap on social groups was raised from five to 10, while capacity limits in malls and standalone stores were largely lifted.
“Building on the removal of mobility restrictions at the end of 1Q2022, prime rents of retail space bottomed out in 2Q2022. Rents then moved upwards moderately in the following quarter across all regions in Singapore, with the average island-wide gross rental increasing 1.5% q-o-q to $25.60 psf per month,” says Ethan Hsu, head, retail, at Knight Frank Singapore.
He says that the jump in retail spending was driven by employees returning to the workplace, as well as a continuing inflow of overseas tourists.
Flagship store openings in Orchard Road
As a result, some of the most prominent retail leasing transactions based on size this year were for new flagship stores along the prime Orchard Road shopping belt.
Japanese furniture & décor home store Nitori marked its first foray into the local market this year by opening its flagship store, Courts Nojima The Heeren, in March. The retailer occupies the entire 31,360 sq ft fourth floor of the mall.
Sportswear brand Puma also opened its flagship store in Southeast Asia at 313@Somerset in July. The retailer took over the 7,100 sq ft space that was vacated by fast fashion retailer Forever 21.
In September, Singapore furniture brand Castlery took up the 24,000 sq ft, two-storey space at Liat Towers which had previously been occupied by fashion brand Zara.
The rebound in market sentiment and easing of SMM throughout the year also encouraged many new-to-market brands to launch stores in Singapore.
French boutique Guerlain opened its first beauty pop-up concept store in Ion Orchard in April, before launching its first standalone flagship boutique store in Raffles City in November.
Japanese-based sneaker and apparel retailer SNKRDunk opened its first store in Singapore at Mandarin Gallery in October. (Picture: Samuel Isaac Chua/The Edge Singapore)
Japanese-based sneaker and apparel retailer SNKRDunk opened its first store in Singapore at Mandarin Gallery in October, a positive indication of consumer demand in the flourishing niche sneaker market in Singapore.
New concept stores capitalised on the return of shoppers. Paris Baguette x teatre opened in Raffles City in June; it is Paris Baguette’s first retail-café concept in Singapore. “This demonstrates the increasing integration of various complementary offerings within the same retail space, such as simultaneous F&B and retail uses,” says Lam Chern Woon, head of research and consulting, Edmund Tie.
A handful of online brands also broke ground to open their first physical stores. Fashion brands Kydra and Young Hungry Free, already established online local retailers, opened their first physical stores in Ngee Ann City and Funan respectively.
The slew of new store openings and expansions along Orchard Road and Marina Bay Sands shows a recovery in retailers’ confidence in these areas, says Sulian Tan-Wijaya, executive director, retail & lifestyle, at Savills Singapore. “Although the pace of rental recovery remained moderate this year, the new openings helped to support the prime rental growth along Orchard Road this year, which is expected to increase by around 3% y-o-y.”
Even the heartlands saw some expansion, with Japanese casual wear Uniqlo opening a new store at 51@ AMK in March. Japanese retailer Daiso launched stores in Jurong Point, Nex and Ang Mo Kio Central.
“The median prices of transacted retail spaces have been on an incline since 1Q2022, especially the strata retail market. The reopening of the retail sector, with the limits on gathering size and operating hours removed, spurred renewed interest in these retail space that were largely overlooked during the pandemic,” says Hsu.
The jump in retail spending this year was driven by employees returning to the workplace, as well as a continuing inflow of overseas tourists. (Picture: Albert Chua/The Edge Singapore)
Consumers prioritise wellness and personalisation
Despite increasing their prices, luxury retailers performed very well throughout the pandemic and continued to see growth throughout 2022, says Tan-Wijaya.
“Brands like Louis Vuitton, Gucci, Chanel, Hermes, Dior and Balenciaga consistently see queues outside their Orchard Road and Marina Bay Sands stores. Rolex prices have skyrocketed due to worldwide shortage and are still much higher than pre-pandemic levels despite recent price declines,” she says.
The post-pandemic experience has also shifted some consumer spending patterns, says Lam. “Wellness is increasingly valued in the current endemic era and lifestyle brands — such as beauty and wellness, as well as home and furnishing brands — are upping their game to meet the needs of consumers by providing more tailored options.”
One retailer introducing more tailored options for consumers is leading beauty retailer Sephora. It launched its first Asia-based “Store of the Future” in Raffles City in September. The store provides more individualised experiences such as hair consultations and dry-styling hair services.
Castlery’s flagship store in Liat Towers offers consultation service to consumers and features digital stations for customers to compare and shop more efficiently.
“Strong real estate space commitments have been witnessed this year. Luxury retail brands have opened new outlets or renovated existing outlets to enhance the shopping experience. We have also seen notable expansions by lifestyle brands, including new-to-market brands,” says Lam.
Upmarket retailers and retail locations such as Ion Orchard performed very well throughout the pandemic and continued to see growth throughout 2022. (Picture: Samuel Isaac Chua/The Edge Singapore)
He expects luxury retail and lifestyle brands to continue to drive new retail openings next year. Saint Laurent is expected to open in Paragon, while Dior Beauty is set to launch in Raffles City.
The continued prevalence of online shopping was boosted during lockdowns through live-streaming and social media channels like TikTok and Instagram, says Lam. “This has led more retailers to double down on enhancing their in-store experience with omnichannel strategies and rolling out a more robust click-and-collect service,” he says.
This year, the retail scene has seen more pop-up stores, workshops and personalisation services, among other innovative strategies by retailers. Collaboration between brands is another strategy being tested in the local market.
Tan-Wijaya says: “While we don’t see major luxury brands opening new stores, many of them have undergone major expansions and extensive renovations to better serve their growing customer base. Luxury customers are getting younger, and brands are splurging to create memorable shopping experiences for this demographic.”
Strong focus on fitness
Besides the strong showing by fashion and lifestyle retailers this year, fitness operators and entertainment providers were another segment that tried to capitalise on the rebound in consumer spending.
In some cases, fitness operators took over the space previously occupied by F&B and consumer retail stores. Anytime Fitness at Orchard Gateway opened in 1Q2022, replacing Outback Steakhouse. Meanwhile, Boulder Movement replaced The Bespoke Club, a tailor shop, and Nom Nom Plush, a toy and souvenir shop, at Suntec City.
Although the retail space demand coming from this segment did not contribute a significant portion of total retail space demand this year, “fitness operators and entertainment providers can draw recurring crowd traffic and landlords are dedicating spaces for them to operate”, says Lam.
However, athleisure and fitness brands increased their retail footprint significantly this year, says Knight Frank’s Hsu. He points to brands like Adidas, Nike, Puma and Lululemon setting up flagship or new concept stores in prime downtown locations.
“The pandemic has pushed many people to engage in healthier as well as outdoor activities, increasing the demand for activewear, exercising equipment and camping tools,” says Hsu.
Demand for more retail space from this segment is expected to be sustained into 2023 given the popularity of fitness and wellness, coupled with the attractive integration of entertainment and socialisation concepts, says Edmund Tie’s Lam.
Retail refresh pays off
Some landlords and asset owners who took the opportunity to refresh their retail properties in 2020 and 2021 saw a return on their investments this year, as more consumers returned to brick-and-mortar shops.
“Retail property owners who took the effort to spruce up their retail spaces during the pandemic will see the payoff in the next few years, as consumers gravitate towards refreshing and engaging retail experiences. This will lead to improved dwell time and conversion rates,” says Hsu.
“Refreshed malls typically witnessed increased footfall this year as their rejuvenation and repositioning strategies, such as a refresh of tenant mix and asset enhancement to enhance vibrancy, paid off,” says Lam.
The refreshed tenant mix was also timely given the change in consumer shopping preferences, and this helped many retail properties target and attract shoppers again, he adds.
A refreshed retail line-up at Raffles City this year saw new offerings like Paris Baguette x teatre and Sephora’s “Store of the Future”. (Picture: Albert Chua/The Edge Singapore)
Some malls that reopened in time to capture the rebound in shopping footfall were i12 Katong, Palais Renaissance and Raffles City. “Tapping the demand for luxury products, the rejuvenation plans for Raffles City are expected to inject a slate of international luxury brands as well as experiential concepts to provide a more seamless journey for shoppers,” says Hsu. New tenants coming into Raffles City include Italian luxury brand Acqua di Parma, which will open its first flagship store for Southeast Asia, and a newly renovated Chanel boutique.
On the other hand, Wisma Atria and Shaw House are currently in the midst of their revamp, while *Scape at Orchard and CQ@Clarke Quay are scheduled for refresh in 2023.
The retail landscape has already rapidly evolved over the past few years, says Hsu. “Department stores have lost their dominance in malls, giving way to more diverse themed lifestyle stores catering to a broad range of households.”
Players such as Daiso, Don Don Donki, Decathlon and Muji are prime examples of how themed stores are quickly establishing pre-eminence in malls with the ability to attract a wide spectrum of consumers, says Hsu. He adds that “demand for such stores will drive the expansion plans of these key players in Singapore over the next few years”.
Bulk of new retail space launching in 2023
The bulk of new retail real estate space over the next three years is expected to come onto the market in 2023, according to data from Edmund Tie. Next year, about 619,632 sq ft of net lettable area will be available for lease, representing about 47% of the new retail space between 2023 and 2025.
Upcoming malls that will open in 2023 include The Woodleigh Mall (208,000 sq ft) and One Holland Village Shops (145,310 sq ft). As of November 2022, One Holland Village Shops has achieved a leasing commitment of over 75%, with 37 retail tenants either having signed committed leases or having leases pending final execution.
“The demand for retail space in 2023 is expected to continue to strengthen with brightening prospects of the recovery of the retail sector. The supply-demand dynamics is expected to be balanced for next year,” says Lam.
He adds that both the upcoming IOI Central, which has a retail component of 30,000 sq ft, as well as the upcoming Guoco Midtown, which will add about 50,000 sq ft of retail space, will be closely watched in the coming months. The success of these two mixed-use developments will influence the work-live-play vision of their respective downtown districts, says Lam.
In 2024, a total of 374,290 sq ft of net lettable area is projected to come onto the market, and this translates to about 28% of the projected retail pipeline. Properties in this batch include Pasir Ris Mall (288,100 sq ft) and Labrador Tower (26,372 sq ft).
The expected new retail supply in 2025 will come from the Punggol Digital District (172,598 sq ft) and Canninghill Square (90,417 sq ft). This represents the remaining 25% of the supply pipeline.
Challenges loom in 2023
Brick-and-mortar stores are stepping up experiential elements to engage consumers through multiple sensory touchpoints which will complement existing digital platforms, says Hsu.
“This means that landlords and asset managers need to place greater importance on the types of anchor tenants that can curate the experiences necessary for mall owners to remain relevant in an ever-changing retail landscape,” he says.
Retailers are aware that online shopping became more entrenched during the pandemic, and the last two years saw many small retailers shuttered while some major fast fashion brands consolidated their footprint, says Tan-Wijaya.
In addition, uncertainties such as inflationary pressures threaten market stability. Thus, retailers should continue to seek value enhancements and improve user platforms, says Hsu. “This will not only help to differentiate their consumer offerings, but also ensure that they are prepared to shelter against external volatilities.”
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