The Al-Futtaim group plans to shutter at least 10 of its 125 Singapore retail stores as subdued retail spending and high overheads of staff and rent show no signs of improvement.
Dubai-based Al-Futtaim operates the Marks & Spencer, Royal Sporting House Group, Robinsons and John Little retail brands in Singapore, along with Inditex’s portfolio, including Zara, Massimo Dutti and Bershka.
Last March, the company’s then head of Asia business unit, Kesri Kapur, warned the retail sector – especially landlords – that they would need to “swallow the medicine which is a little bitter” and cull networks. At that time the company had just closed two John Little stores and one Marks & Spencer store in the city.
Now his successor, group CEO (Asia), Christophe Cann, has warned of even deeper cuts as Al-Futtaim shifts its Asia focus away from Singapore to less mature retail markets showing stronger signs of growth.
Al-Futtaim has about 850 stores across Asia and the company is profitable in the region – but not in Singapore, Cann told the Straits Times in an interview this week. Worse, while the company is in negotiations to bring other European brands into the region, it has little motivation to include Singapore in any regional roll-out.
“At the moment, for big players like us, there is no real incentive to bring new brands into the Singapore market. It’s a pity because that means we don’t rejuvenate the fashion scene here and customers are waiting for that,” he said.
“If we could get a bit of help from landlords to cross this difficult period, it will give me more incentive to go faster in getting new brands (and) investing,” Cann told the Straits Times.
Cann wants landlords to change the balance of flat rate rental and percentage of turnover more in favour of turnover to make stores more viable.
“If I can’t find deals with landlords, I am more interested to invest in Indonesia, Malaysia or Thailand,” he said.
This year, Al-Futtaim plans to launch Old Navy in Indonesia and Malaysia – and possibly in Singapore if he can secure favourable lease terms with a retail landlord.
The company is looking to expand many of its brands in Indonesia and Malaysia, to capitalise on fast growth and rising levels of disposable income. Vietnam is also on its radar.