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Mustafa Centre

Mustafa to cut its retail space by a quarter by February 2017

Mustafa recently revealed that it would be moving out of its iconic Serangoon Plaza branch by 1 February 2017 after being the space for nearly three decades.

Its iconic Serangoon Plaza branch will be demolished next month, following a redevelopment of the property into one called Centrium Square. It has been reported that none of its existing tenants, including Mustafa, will be retained.

In a statement to Today, MMS managing director Mustaq Ahmad explained that the Serangoon Plaza branch would be consolidated with the main store at Mustafa Centre. This means that retail space would be down by about 25%.

Meanwhile, the company is also currently redeploying its staff to the main branch at Syed Alwi Road. According to the news source, currently more than 10% of Mustafa’s total staff is positioned in the Serangoon Plaza store. The retailer also put hiring to a halt in anticipation of the retail space shrink.

Ahmad told Today that the business is still “doing well” from tourist footfall despite the current sentiment on retail decline. Marketing has reached out to Mustafa Singapore for additional comment.

While avid Mustafa shoppers might be heartbroken upon hearing the news of it downsizing, retail players such as Suresh Dalai say this might be a golden ticket opportunity. Dalai who has worked previously with retailers such as Levi Strauss and Ermenegildo Zegna, said the space reduction may provide Mustafa an opportunity to be a better retailer.

“Retailers often carry many items that actually do not sell, make the space less shoppable for consumers, and create more pain for store staff as they have to daily manage the unproductive stock. This actually hurts sales, profit, and staff morale,” Dalai said, adding:

If Mustafa is able to take the opportunity to better curate the product offer and make the remaining space more shopper-friendly, it could be a win for the brand.

Andrew Crombie, CEO at Fitch, Southeast and North Asia, agreed that there is a potential “silver lining” for Mustafa in that it now has no option but to reconsider its strategy in the light of the changing retail environment in Singapore.

“This decision would have been a hard one to take had it not been taken for them,” Crombie explained. He added the forced closure is likely to hurt Mustafa in the short term as they are losing a significant footprint at a well-established address. These sales, he added, will not just shift back to the Little India store immediately.

Despite being known for its iconic location and size, Lawrence Chong, CEO of Consulus, does not think the institution will be hampered by the shrinking of its retail space. He added that in terms of business model and rebranding, Mustafa has already struck gold.

“Mustafa has had a good run in terms of brand recall and popularity and in encapsulating strong brand loyalty,” he said. The mega-mall has also been known to have grown in popularity through word of mouth both in local and international markets.

If going forward the brand is to undertake major rebranding, it might face the same issues others have faced over the years as a result of being too polished, he said. Some examples he cited include the commercialisation of Chinatown and the transformation of Sheng Shiong which resulted in the brand being less differentiated from its competitors.

“The only thing the brand should be worrying about is potential disaster from a building collapse or the overcrowding of customers with a now smaller space,” Chong said.

He explained that other malls usually capitalise on other retail brands to drive traffic and have maintained business by being a place of convenience for consumers. This is unlike Mustafa, he says, as consumers go to the store due to an association with the brand name and because of the huge variety of products it carries rather than convenience.

He added that in terms of architecture, branding and shopping experience, Mustafa will need to retain its unique nature to give the brand character.

Agreeing with Chong is Fitch’s Crombie, who added:

“Mustafa is a brand both rich in experience and unique in its offer. It stands quite distinct from the highly polished, ‘cookie-cutter’ retail experiences found in other malls in Singapore. It’s a place locals bring visitors for a real taste of Singapore, yet a destination for locals themselves.”

He added Mustafa is one of the few shopping destinations in Singapore with a story to tell and it simply needs to update the facilities, but keep its authentic flavour.

The closure will allow Mustafa to adjust to the new retail situation and allow them to look at how it can take advantage of the shift to suburban centres for replenishment and low involvement shopping. This is especially from Singaporeans, whilst retaining and enhancing the Mustafa Centre as a destination for tourists and locals seeking a 24/7 one-stop shopping event.

“The Serangoon property had placed them in between, but a lot has changed in Singapore retail since they opened there in the mid-80’s and now they can better define clear suburban and central Mustafa offers – a hub and spoke strategy,” Crombie said.

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