Retail Disruptors

As real estate rents increase and consumers flock to on-line shopping for cheaper and more convenient deals, brick-and-mortar stores are in a state of flux as they try to find their place in the evolving retail market.

29 Jul 2016

By Letty Lee

retail disruptors
It’s undisputed that the Retail environment is a challenging one. As real estate rents increase and consumers flock to on-line shopping for cheaper and more convenient deals, brick-and-mortar stores are in a state of flux as they try to find their place in the evolving retail market.

The e-commerce market is a growing business; in fact Google and Temasek Holdings’ Report 2016 state that the Singapore e-commerce market will be US$7.4 billion by 2025. Cheaper prices, free delivery and comprehensive return and exchange policies are making shopping online more convenient and attractive.

Brick-and-mortar stores will still be relevant, but need to evolve from just “a retail outlet” to be “a place to go”. Take Swedish furniture giant Ikea as an example – instead of being just a showroom, the Ikea site includes a warehouse for their goods, a grocer for household foods, a play-care facility for children and an on-site restaurant. It has transformed from being just a store into a place consumers can go to spend the day. Similarly, some malls create public spaces like open-air playgrounds, concert staging and water parks to entice shoppers to increase their dwelling times at the malls.

Landlords have also experimented with creating themed destinations to up the ante on “retail-tainment” Singapore’s Hello Kitty café, the DC superhero café, and Pokemon pop-up café mimic Japan’s themed restaurants, cafes and theme parks. Guests go to these cafes not just to eat, but to experience being in the world of their favourite characters and also to collect exclusive merchandise.

Brick-and-mortar stores are not the only ones that need to evolve in this challenging retail landscape. E-commerce sites increasingly need to sharpen their focus on the navigation, user interface and user experience on their sites. They also need to improve their distribution channels, as there still remains the gap of waiting for products to arrive as opposed to the instant gratification of receiving products immediately with in-store purchases.

Vendors seeking to stand out amongst the stiff competition, aim for faster and cheaper delivery options. Thus, these e-commerce sites have to up-scale their e-retailing platforms to factor in logistics, distribution chains and warehousing. Amazon has taken the lead in providing the best logistic distribution models in the USA, rivalling companies like FedEx and DHL, in addition to a robust sales platform.

Closer to home, logistic players like Singpost could be in a strong position to be a full serviced sales platform, leveraging their existing platform for procurement, inventory and delivery. On the flip side, retail landlords can too enter the logistic business and grow by offering an omni-channel experience.

A local example of a business that excels at omni-channel retailing is Decathlon, a French sporting firm which previously only had an online presence in Singapore. They recently set up a 35,000 sq ft store at the Viva Business Park (previously, Chai Chee Technopark). This large warehouse space also functions as a retail eXperience showroom – to encourage consumers to have more hands-on interaction. They also offer online shopping services including both delivery and a “click and collect” option. This type of model allows them to control all channels of their business, from procurement to warehousing to retail and delivery, effectively cutting out the middleman and in turn pass cost-savings to their clientele in the form of accessible product pricing.

Looking at how the favourite past time of Singaporeans is shopping, brick and mortar stores and shopping malls will forever be a large part of Singapore’s retail landscape. However it is undisputable that the form and function of physical stores will need to continually evolve in order to stay relevant in this day and age.

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