Asian shoppers in Singapore and Malaysia are a fashion savvy bunch. Every year we see international brands entering the local shopping scene despite the market’s sky high costs, only to exit the markets shortly after.
Recently fashion and beauty brands such as Kate Spade Saturday, River Island and FANCL, all have moved out of the Singapore market. And the problem is not just confined to international players – smaller local players have also been hit.
Most recently well known local fashion brand M)phosis (pronounced emphasis) has decided to pull out its retail stores across the region.
A report in The Straits Times said the brand which has been around for more than two decades is closing more than 10 outlets across Singapore, Malaysia, Philippines, Indonesia and Vietnam. Only its stores in China will remain open. The article also quoted the brand’s director Hensley Teh saying the company is having “severe cash flow situation” and isn’t able to continue despite wanting to.
Marketing has reached out to M)phosis for a comment.
However the closure of the popular home grown brand is not unexpected. For many smaller players, traditional retail can be problematic.
While M)phosis has been around in the market since 1994, Charlie Cookson, senior strategist of Landor said this should be a warning for new starters in the market.
“Especially in markets like Singapore which have such high rental prices, cash-flow is always an issue for fledgling enterprises. Having thousands of dollars of rental overheads leaving your bank account each month can push some over the edge,” Cookson said. In many cases, the traditional retail model simply reduces the agility of new brands and their potential to innovate as much of their cash flow goes into rental.
Cookson questioned the need for retail spaces overall.
“There are also many online channels available to new businesses now that I would question the need for a physical presence. Luxury brands tend to need a physical presence, but for more mass offerings the cost savings of not having a store can be huge. It would freeing up cash to market the brand to create awareness,” Cookson added.
Jorge Rodriguez, director, Influential Brands however disagreed with the point. Having a physical presence, he said, is a must to showcase your products and to let customers have the vital “touch-and-feel experience”.
“It is not about having hundreds of store but a handful of well-placed stores with the right visibility to showcase your products. Many shopping malls manage to get a good tenant mix to ensure a good footfall across different levels but some are still in development and only first floor enjoys the crowd,” said Rodriquez.
Working with a tight budget
Whether you have a tight budget or cash to spare, more and more retailers have understood the joy of pop-up store concepts. Not only does this save cost but are pretty much ubiquitous now with even traditional mall businesses offering spaces for pop-up businesses in an effort to remain fresh and relevant.
Zalora has been one of the e-commerce fashion players who have fully utilised this concept. Bigger brands such as Hublot , Moet & Chandon and Magnum have also had their own versions of the pop up stores.
Read also: Pop up stores on the rise
“New retailers can leverage this to their advantage and offer a kind of symbiotic relationship with more traditional retail businesses,” said Cookson. Also the mobility of these stores can enable them to reach a wider consumer base and up their brand awareness.
Tight budget or not, Rodriguez says that retail stores cannot miss out on having an online presence. He advises retailers to take the opportunity to engage customers in the physical store but ultimately buy in their e-commerce platform.
“Having them in the store is the perfect time to engage them and ensure they know how to find you online and buy from you. It is not anymore about cannibalising your existing business but covering and ensuring they can find you anytime,” said Rodriguez.