Funan shutdown: Retail sector woes?

CapitaLand Mall Trust Management Limited (CMTML) will be redeveloping Funan Digital Life mall into an integrated development. This new development, it claims, will be an “experiential creative hub.”According to the group, the space will now be used to engage the community to incubate new ideas and enable shoppers to “enjoy retail in a technology-enabled environment.” Going forward, CMTML hopes to use the space as a collaborative platform to connect retail, cultural, learning and business opportunities, and play a big part in the rejuvenation of the Civic District.The mall is expected to close in the third quarter of next year, with redevelopment works commencing soon after and taking about three years. Leading up to the closure, the mall has also lined up a suite of events and promotions.  Shoppers can enjoy Funan’s Chinese New Year promotion in January and February, an electronic and gaming expo in March and a mega sale in April.  The mall is also planning to participate in the Great Singapore Sale and also run the iconic Funan Anime Matsuri next June.Jacqueline Lee, head, Investment and Asset Management, CapitaLand Mall Trust Management Limited said in a statement to Marketing:"We are working closely with our tenants to facilitate a seamless transition, which includes identifying spaces in other CapitaLand Malls for them to consider relocating to."These include Plaza Singapura, the destination mall for families and friends centrally located on Orchard Road; and Bugis+, the entertainment and leisure extension of the bustling Bugis Junction mall that is directly connected to Bugis MRT station. Other possibilities include our cluster of CapitaLand malls – Westgate, JCube and IMM Building – in Jurong Gateway, Singapore’s up-and-coming largest regional centre.She explained that with the closure, there will be revamp of the space to serve future generation of local shoppers and tourists.Wilson Tan, CEO of CMTML, said the new building on the Funan site will be an “aspirational lifestyle destination that will enthrall shoppers and retailers.”“CapitaLand Mall Trust is constantly looking for ways to ensure our malls remain relevant to shoppers and retailers, as well as to maximise the value of our assets for our unit holders’ benefit. Given its excellent location and the strong potential for an integrated development on this site, we believe that the redevelopment of Funan DigitaLife Mall will create the greatest value for our unitholders,” Tan added.However, what the concrete plans are for the space is yet to be clearly defined. CMTML said in a statement that will “continue to refine the concept” for the new integrated development and share further details in due course.What is however immensely clear is that the retail arena is in a desperate need for a revamp. It comes as no surprise that many brands have over the years been shutting their retail stores as rental rates keep rocketing and retail spaces turn into ghost towns. This problem, is not isolated to Funan alone but the retail industry as a while.(Read also: Should fashion brands forget about retail altogether? )One such retailer which has faced this issue first hand is one of the largest IT products and services provider in Singapore, Challenger Technologies.CEO of the company, Loo Leong Thye, said “When we first listed on SGX in 2004, our Funan store contributed to 60% of our total group revenue. As of Q3 of 2015, this number is only 20% of our total group revenue."However, because Funan’s redevelopment had been in the works for over seven years ago, the retailer had adequate time to plan for its store's future. Today, the closure has propelled the group to make a greater push towards a digital retail ecosystem and advance software development initiatives for continued growth.“The idea of a destination specialist shopping mall is not as relevant as being able to provide a wider range of products for customers to browse on-the-go,” Loo said. Online, the company can stock 10 times more products online than at its megastore in Funan, creating a mega mall effect for customers to browse and transact on their mobile devices.Apart from restarting its retail e-commerce engine in 2014 with a mobile-first revamp coming in early 2016, the Challenger Group also announced its foray into a digital lifestyle ecosystem by establishing Challenge Ventures Pte Ltd (“CVPL”) in the third quarter of 2015. CVPL invests in digital businesses and services.But this is not to say Challenger will abandon ship on its retail strategy altogether.“Our retail strategy has always been and will continue to see us expanding at suitable locations with reasonable rentals,” Loo said. Moreover, in the last seven years, tourists and customers have also begun shopping at Challenger's conveniently situated stores in the heartland malls due to the proximity convenience.What is much needed for retailer's today, said Loo, is to go in a direction where consumers already are."Our physical retail stores will evolve to become more experiential, with our brand partners having better concepts to showcase their products’ capabilities. They will complement our online store, which will serve customers at their own time - not dictated by a mall’s operating hours. With our mobile-first revamp coming in early 2016, more Challenger customers will switch to shopping with us online.”(Photo courtesy: Wiki Commons)