Retail industry sees a wave of launches and new brands amid “revenge” consumer spending

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Over 400 stores will be spread across four retail levels of The Exchange TRX

This year has seen a rise in consumer confidence in retail real estate, as retailers and lifestyle brands profit from the increase in foot traffic throughout suburban and prime retail areas.

This was the result of the massive relaxation of safe control measures (SMM) beginning in March of this year, when more people went back to centers, F&B stores and other commercial zones. The social group limit was increased by five percent to 10 while the limits on capacity in malls and standalone shops were also removed.

“Building upon the lifting of mobility restrictions at end of 1Q2022, the prime retail space rents bottomed out in the 2nd quarter of 2022. The rents increased moderately during the subsequent quarter across every region in Singapore and the average island-wide gross rent rising 1.5% q-o-q to $25.60 per sq ft per month.” states Ethan Hsu, head, retail of Knight Frank Singapore.

He believes that the surge in retail sales was caused by the return of employees back to work in addition to the constant flow of overseas tourists.

Flagship stores are opening at Orchard Road

In the end, the top leases for retail that were based on size included new flagship stores in the popular Orchard Road shopping belt.

Japanese furniture and decor home store Nitori made its first venture into the market by launching their flagship location, Courts Nojima The Heeren in March. The store covers the entire 31,360 square feet fourth level of mall.

Brand Puma is a sportswear manufacturer. Puma also launched their flagship shop within Southeast Asia at 313@Somerset in July. The store purchased the 7,100 square feet of space that was left vacant by Fast fashion retailer Forever 21.

The month of September was when Singapore furniture manufacturer Castlery was the first to take over the 24,000 square feet two-storey building in Liat Towers which had previously been occupied by fashion company Zara.

The rise in the sentiment of the market and the slowing in SMM during the entire year led to a surge of brand new to market brands start retail stores within Singapore.

French boutique Guerlain launched its first concept store pop-up in Ion Orchard in April, prior to launching its first flagship boutique at Raffles City, in the month of November.

The Japanese-based retailer of apparel and sneakers SNKRDunk launched its first shop located in Singapore located at Mandarin Gallery on October 1st. which is a good sign of consumer demand in the booming niche market for sneakers in Singapore.

The new concept stores capitalized on the popularity of shoppers returning. Paris Baguette x teatre opened in Raffles City in June. it’s the first Paris Baguette concept of a retail cafe in Singapore. “This is a sign of the growing integration of various complementary services within the same space, including the simultaneous F&B and retail functions,” says Lam Chern Woon who is the head of research and consultancy, Edmund Tie.

A few online brands have also opened their very first retail stores. The fashion brands Kydra as well as Young Hungry Free, already established local online retailers launched its first retail stores physically at Ngee Ann City and Funan respectively.

The number of store openings and expanded stores in Orchard Road and Marina Bay Sands indicates a rise in retail stores’ faith in these regions according to Sulian Tan-Wijaya who is executive director of retail & lifestyle for Savills Singapore. “Although the rate of rent growth remained slow during the year however, these latest openings contributed to the primary growth in rental activity on Orchard Road this year, which is expected to grow approximately 3% over the course of the year.”

The heartlands too saw growth as well, with Japanese casual clothing retailer Uniqlo opening a brand new shop at 51@AMK in March. Japanese retailer Daiso has opened outlets located in Jurong Point, Nex and Ang Mo Kio Central.

“The median prices of transactions in retail spaces have been rising since the beginning of the year, particularly in that of the market for strata. The opening of retail stores as well as the limitations on the size of gatherings and operating hours being removed, has prompted a renewed interest in the retail spaces that were mostly neglected during the pandemic,” says Hsu.

Wellness and personalisation

Despite the fact that their prices have increased however, luxury retailers performed extremely well throughout the pandemic , and increased their sales throughout 2022, according to Tan-Wijaya.

“Brands such as Louis Vuitton, Gucci, Chanel, Hermes, Dior and Balenciaga always see lines outside the Orchard Road and Marina Bay Sands stores. Rolex prices have soared because of the worldwide shortage, and remain significantly higher than pre-pandemic levels despite recent price reductions,” she says.

The experience of the post-pandemic has changed the way consumers spend their money as well, according to Lam. “Wellness is now more valued in the current endemic period and lifestyle brands like wellness and beauty as well as furniture and home brandsare stepping up their game to meet the demands of their customers by offering more customized choices.”

One retailer offering more customized choices for customers is the leading cosmetics retailer Sephora. Sephora launched its first Asian-based “Store for the Future” in Raffles City in September. The store offers more personalized experiences , such as consultations for hair and dry-styling services for hair.

Castlery’s flagship store located in Liat Towers offers consultation service to customers. It also has digital kiosks for customers to shop and compare more effectively.

“Strong commitments to real estate space are evident this year. Retailers with luxury brands have opened new shops or renovated existing stores to make shopping more enjoyable. We’ve also witnessed significant expansions from lifestyle brands, as well as new to market brand names,” says Lam.

He anticipates premium lifestyle and luxury brands to continue to propel new retail establishments over the next year. Saint Laurent is expected to launch in Paragon and Dior Beauty is set to open in Raffles City.

The growth of shopping online was amplified during lockdowns via live-streaming as well as social media platforms like TikTok and Instagram Lam. Lam. “This has caused more retailers to invest in making their shopping experience more enjoyable with the use of omnichannel strategies as well as rolling out an enhanced click-and-collect option,” he says.

The retail market has seen a rise in pop-up stores workshops, personalisation and workshop services in addition to other new strategies employed by retailers. Brand collaboration is a different method being explored on the market in India.

Tan-Wijaya adds: “While we don’t see big fashion brands opening up new shops, a lot of them have had massive expansions and major changes to better serve their expanding customers. Customers who are affluent are becoming younger and brands are investing to provide memorable shopping experiences for the younger generation.”

A strong focus on fitness

Apart from the impressive showing of the fashion and lifestyle stores last year, fitness companies and entertainment companies were another segment trying to capitalize on the rise in spending by consumers.

In some instances fitness companies have occupied the space that was previously used by F&B and retail stores for consumers. Anytime Fitness at Orchard Gateway was opened in the 1Q2022, which replaced Outback Steakhouse. In the meantime, Boulder Movement replaced The Bespoke Club as an artisan shop, as well as Nom Nom Plush, a souvenir and toy shop located in Suntec City.

Even though the retail space demand that comes from this sector was not a large part of the overall retail space demands in the past year “fitness providers and entertainment providers are able to draw regular that is why landlords are creating areas for them to operate” Lam adds. Lam.

But, athleisure and fitness brands have expanded their retail footprint in the last year, according to the Knight Frank’s Hsu. He highlights brands like Adidas, Nike, Puma and Lululemon opening flagship stores or concept stores in central locations.

“The pandemic has forced many people to participate in healthy as well as outdoor activities, which has increased the demand for activewear equipment for exercise and camping equipment,” says Hsu.

The demand for retail space in this market is expected to continue until 2023, due to the increasing rising popularity of wellness and fitness and the appealing integration of social and entertainment concepts, according to Edmund Tie’s Lam.

Retail refresh pay off

A few asset owners and landlords who decided to revamp the retail properties in 2021 and 2020 realized a profit from their investment this year since more customers have returned to brick and mortar shops.

“Retail property owners who took the time to clean up their stores during the outbreak will experience benefit in the coming years as customers move toward engaging and refreshing shopping experiences. This will result in improved rate of conversion and dwell time,” says Hsu.

“Refreshed malls usually saw increased visitors this year, as renewal and repositioning strategies like a refresh of tenant mix as well as the enhancement of assets to increase the vibrancy of the area, were successful,” says Lam.

The new tenants’ mix also came in time due to the changes in consumers’ purchasing habits, which has helped numerous retail properties to attract and target customers again, he says.

A few malls which were reopened at the right time to take advantage of the increase in foot traffic included I12 Katong, Palais Renaissance and Raffles City. “Tapping the growing demand for premium items, the revitalization of Raffles City are expected to bring in a variety of luxury international brands and experiential strategies to offer shoppers with a seamless experience customers,” says Hsu. New tenants that will be coming to Raffles City are Italian luxurious company Acqua di Parma, which will launch their first store in the city in Southeast Asia, and a recently revamped Chanel boutique.

On the other hand Wisma Atria and Shaw House are currently in the middle of a revamp, and the *Scape At Orchard and CQ@Clarke Qay are scheduled to revamps in 2023.

Retailing has dramatically changed over the last few years, according to Hsu. “Department shops have lost dominance of malls, and have been replaced by more diverse lifestyle stores that cater to a wide range of families.”

Companies like Daiso, Don Don Donki, Decathlon and Muji are excellent examples of the way that themed stores are fast establishing their dominance in malls and are able to draw a broad range of shoppers, says Hsu. He says that “demand for these stores will be driving growth plans for these important players in Singapore in the coming years”.

New retail space to launch in 2023.

The majority of the newly developed retail in the next three years is anticipated to become available in 2023, based on the data of Edmund Tie. In the next year, 619,632 square feet of net lettable space is available for lease, equivalent to around 47% of the retail space from 2023 to 2025.

Malls set to begin operations in 2023 will include The Woodleigh Mall (208,000 sq feet) along with The One Holland Village Shops (145,310 sq feet). In November 2022 One Holland Village Shops has a lease commitment of more than% and has 37 tenants signing leases that were committed or leases that are awaiting the finalization.

“The need for retail space in 2023 is likely to increase with brighter outlooks for the growth of the retail industry. The supply-demand dynamic are expected to be balanced in the coming calendar year.” claims Lam.

Lam adds that both coming IOI Central, which has retail components of around 30000 sq ft and the planned Guoco Midtown, which will provide 50,000 sq ft of retail space and will be watched closely over the next several months. The performance of these mixed-use developments will impact the concept of work-live-play in the downtown areas they are located in Lam says. Lam.

In 2024, 374,290 sq feet of net lettable space is expected to hit the market. This is equivalent to the 28% of the anticipated retail pipeline. Properties included in this group comprise Pasir Ris Mall (288,100 sq feet) along with Labrador Tower (26,372 sq ft).

The anticipated new supply of retail in 2025 will be sourced via in the Punggol Digital District (172,598 sq feet) along with Canninghill Square (90,417 sq ft). The remainder of 25% of the pipeline for supply.

In 2023, the HTML0 era is set to face challenges.

Brick-and-mortar shops are adding interactive elements that allow customers to interact via multiple sensory experiences that will be a perfect complement to existing digital platforms, claims Hsu.

“This means that landlords as well as asset managers should put more emphasis on anchor tenants who can create the shopping experiences required by mall owners to be relevant in a constantly changing retail market,” he says.

The retail industry is aware of the fact that shopping online became more popular during the outbreak and the past two years saw a number of small businesses shut down while large fast fashion brands increased their presence, according to Tan-Wijaya.

Furthermore, risks like inflationary pressures can are threatening the stability of markets. Therefore, retailers must continue to look for improvement in their value propositions and to improve their the platforms for users, says Hsu. “This will not only allow them to differentiate their offerings for consumers however, it will also make sure that they are ready to protect themselves against the risks of external events.”