Can the retail industry pull out of the gloom and doom?

Walk into a mall on a Saturday afternoon and chances are, that darling outfit you’ve been eyeing has been snatched and there is a queue a mile long for the fitting room. Or you’re fighting for just a sliver of a second to step in and have a conversation with the tech expert on the latest wearable. He, on the other hand, remains distracted by five other customers just like yourself, all waiting to talk to him.

Now come back to the same mall again on a Wednesday afternoon. It is a different story. The mall is now a ghost town. This is no breaking news – we all know the retail marketing arena is and has over the years
been facing a challenging time. Rentals remain sky high and the competition is stiff with a dense number of brands in a single area.

While malls may seem packed on weekends, is it enough to cover for the vast emptiness of weekdays? Last year in Singapore, several iconic malls such as Funan DigitaLife Mall and Orchard Central found themselves in a need to revamp, presumably, in a bid to win back consumers.

CapitaLand Mall Trust Management Limited’s (CMTML) Funan DigitaLife, known to be an iconic mall for gadgets and all things digital, situated in one of Singapore’s busiest districts, said it would be morphing into an “experiential creative hub”.

Without explaining further, CMTML claimed the retail space would be used as a collaborative platform to connect retail, cultural, learning and business opportunities, and play a big part in the rejuvenation of the Civic District.

As for Orchard Central, Mavis Seow, chief operating officer of the retail business group at Far East Organization, owners of the mall, told Marketing the space would be reconfigured to include new escalators and walkways to “optimise accessibility and improve the shopping experience”.

There is no doubt the shopping experience today is no longer what it used to be, even just five years ago. All this, coupled with the boom of e-commerce, has led to retailers facing cut-throat competition.

The problem of declining footfalls is not confined to Singapore alone, but is a global phenomenon, explains Amy Kean, the regional strategy lead at Mindshare APAC. These days putting the customer first means something totally different than just a few years ago.

Where once it was about specialist skills, efficiency, remembering a customer’s regular purchase or even knowing their name, now the market is led by competitive value and offering that “wow” factor that so many shoppers are starting to demand.

There have also been a number of recent disruptors in the market seeking to redefine what the term shopping means in Singapore. Today, shoppers are placing a greater focus on the experience and added value rather than the straightforward transaction that many outlets offer. Hence, modern retail needs to be all about the experience.

Experiencing the space

In a dense and cluttered market such as Singapore, the correct usage of space and maximising the mall space is vital. “Modern retail needs to reflect the early conceptual showrooms introduced by IKEA and Apple, but on a smaller scale,” Kean says. She explains the concept of showrooming is starting to take off, but it’s still very early days.

The PACT space at Orchard Central is one such disrupter, with the store claiming to be responsible for changing the local landscape by  challenging and reinventing traditional notions of retail in Singapore. The PACT defines itself as a “destination emporium” and a network of spaces and cross-over interests rolled into one retail and F&B experience.

“Every single one of its retailers focuses first on customer experience and this model is set to
increase in Singapore over the next 24 months,” Kean says. Soon, she says, we will be seeing fashion
retailers with blow-dry bars, furniture stores with artisan coffee shops and even toy stores with tech-powered augmented reality games and shows.

“In an over-saturated market and an online ecosystem that thrives on value, it’s getting harder and harder for retailers to stand out and get regular custom – providing your customer with an extra personalised experience could be the difference between flash in the pan and long-term loyalty,” she says. Chris Martell, managing director of Geometry Global, says the role of a store has now evolved to a point where it needs to keep up with shopper expectations and behaviour.

And while one recipe may work for one retail area, it is important to note that all retail outlets should not have the same treatment. Even if it’s the same brand, there should be points of differentiation to ensure customers are visiting the other outlets as well.

Giving the example of Orchard Central, Martell explains the mall space has the opportunity of  improvement, seeing how architecturally, its corridors, sight lines and ceiling heights are more constricted than other malls.

“More open, fluid spaces attract the strolling shopper,” he says, adding that Orchard Central stores also tend to be more transactional with ample opportunities to improve on all fronts, including size, visual merchandising and staff and customer interaction.

“These less-than-satisfactory traits push shoppers to seek out more engaging, experiential spaces,” Martell says. As for Funan DigitaLife, he is of the view that even though Funan is an old mall, the shoppers visiting Funan are usually there to “deal hunt”. “Funan’s weakness, however, is the growth
of online purchasing. Once lower prices can be found online, why bother walking around a mall
at all?” he questions.

No breathing space?
Singapore has long marketed itself as a prime shopping destination. According to the Singapore Tourism Board (STB) shopping is part and parcel to tourism receipts, comprising 17.5% of total tourism receipts in 2014.

In 2015, STB also launched a SG$20 million Golden Jubilee marketing campaign anchored
on shopping and supported by attractive fly, stay, eat and play deals to drive conversion and
spend. The same year, S Iswaran, the second minister for trade and industry, said the government would work closely with industry stakeholders to rejuvenate the area and “enliven and showcase the Singapore lifestyle and cultural precincts”.

“While offerings in Singapore’s retail arena are driven largely by market forces, we hope to see a more diversified retail scene that appeals to a wide range of visitors. From the marketing perspective, STB is profiling more Singapore designers and products to visitors as a point of differentiation to increase spend,” said Ranita Sundramoorthy, director of attractions, dining and retail at the Singapore Tourism Board.

She added that besides Orchard Road, which remains a top visitor attraction, more and more tourists are now exploring precincts with distinctive characters such Haji Lane and Dempsey Village. As such, STB’s marketing efforts are also geared towards enabling visitors to know more about such hidden gems.

Embracing the new

Still, despite the talk of data and the power it possesses, the single biggest challenge retail marketers in Singapore face today is a lack of data and understanding about their regular offline customers. Not enough is known about these consumers, their purchase habits, in-store journeys and what drives them to buy one brand over another in a store.

“Singapore has one of the most active commerce populations in the world, and online we have a wealth of insight about paths to purchase and baskets, as well as the social layer of brand love insight that social media offers. But it’s within the bricks and mortar stores where the real ignorance lies,” Kean

This is why recent innovations in retail have included the introduction of beacon technology.
This technology allows shop owners to interact with and learn about their offline shoppers, via their smartphones. In theory, beacons allow retailers to track what customers are doing in their store, who
they are, and what products they are likely to buy based on previous behaviours. The technology also allows retailers to send personalised push messages to each customer, prompting them to buy a product or informing them of a special offer.

However, despite sounding like the holy grail, there are currently a few restrictions to beacon technology. For example, customers must have the retail brand’s app downloaded and the bluetooth switched on and these restrictions can mean that retailers are only dealing with a fraction of consumers walking
through their stores.

Mindshare, via its own shopper data business arm Shop+, has to date experimented a huge amount with this technology – most notably with Nestlé and FairPrice, using iBeacons in-store, alongside the FairPrice app, to learn about the regular in-store journeys that customers were taking.

This has helped in mapping out shopping habits of consumers and serving relevant push notification messages to them via their phone, explains Kean.

“Given the relatively small amount of people that meet the requirements of having the app and Bluetooth turned on, it’s not necessarily the advertising itself that has the most value, instead it is the learnings you can get from essentially watching your customers every day and being able to start predicting their behaviours,” Kean says.

Once offline retailers begin to understand this, then the future of the landscape in Singapore will be a lot more informed, and relevant to the shopper. Regardless of its struggles, traditional retail is here to stay, says Mahesh Neelakantan, founder and CEO of specialist shopper marketing agency in Malaysia, Newton – The Activation Company (TAC).

“It may need to reinvent itself to integrate digital and data-driven marketing to improve delivery, efficiency and customer experience, but there will be clear spaces for both online and offline retail to exist,” he says.

Going forward, pop-up retail is an area that will become more mainstream with brands using it as part of their mix, he predicts. Echoing Kean’s views, he adds that areas such as beacon usage, mobile first and
mobile wallet and integrating digital technology to aid conversion and purchase, will no longer be a “nice to have”, but vital for any retail marketer.

Other recent challenges facing retail is the perception of online being cheaper than traditional retail. In some categories, especially luxury, fashion and consumer durables, people are browsing through brick and mortar stores for the “touch-and-feel” experience and human interaction, only to head online to get the cheaper deal.

“This temporary trend is largely owing to large online stores armed with VC money – buying market share at the expense of the traditional store. If the industry sees retail more as a brand rather than a channel – then the future is very bright,” he says.