Singapore’s retail environment has been weakened by the slowing economy and slack labour market hitting consumer buying power, according to Savills World Research.
After a 2.7 per cent year-on-year dip in July, retail sales fell at a sharper rate of 7.3 per cent in August, says its Singapore Retail Sector Briefing. This marks a full year of decline in retail sales.
Prime monthly rents on Orchard Road held firm at S$29.90 (US$20.93) a sqft from the preceding quarter, while suburban monthly rents slid 2 per cent quarter-on-quarter to S$28 a sqft for the third quarter.
Island-wide vacancies reached a record high of 8.4 per cent, from 7.8 per cent in the previous quarter. Vacancies in the downtown core planning area rose by 1.6 points to 13.3 per cent for the quarter, more than the 1 point for suburban areas which now have vacancies of 7 per cent.
Surprisingly, says the report, Orchard Road vacancy levels dipped 1.2 points to 8 per cent – the lowest this year.
Following an 11.1 per cent fall in July, the F&B segment slipped 10.9 per cent in August, making a full two years of negative growth. Likewise, the pace of decline for the watches and jewellery sector doubled to 15.5 and 21.8 per cent in July and August respectively.
The dip in retail spending coincides with the drop in tourist arrivals, which in August registered 1.5 million after a 6.8 per cent rise in July to 1.6 million. This drop was mainly driven by the fall in tourists travelling from Indonesia, Malaysia and Australia.
Meanwhile, businesses continue to wind up, leaving malls vacant, says the report, citing gym chain California Fitness being forced to exit the market because of cashflow issues.
Notwithstanding the tough retail climate, some retailers expanded in the third quarter. Japanese lifestyle brand Muji unveiled its tenth Singapore outlet in July, together with its second Cafe & Meal Muji at Raffles City. In September, Muji reopened its Ion Orchard store after a month of renovations. During its closure, Muji had a pop-up store right outside.
Savills says the retail landscape in the Orchard Road area is slowly changing, with more local fashion brands appearing. Home-grown womenswear label Beyond The Vines moved from a pop-up store to Mandarin Gallery in June, where jewellery designer Choo Yilin opened a boutique in July, her second after Joo Chiat.
Multi-concept shop K+, by Kinetic Singapore, upgraded from a pop-up store to a permanent shop in Scotts Square. Womenswear brand Yacht 21 expanded its multi-label store at Plaza Singapura and opened a shop at Wheelock Place in September and October respectively.
International brands also took the opportunity to take up larger spaces. HP Singapore opened its flagship store at Marina Square in July, Japanese lifestyle retailer Uniqlo unveiled its first global flagship store over three levels in Orchard Central in September, while the same month Michael Kors opened a two-storey flagship store at Mandarin Gallery.
Other brands also seized the chance to establish themselves. US labels Marc Jacobs and OffWhite opened stores at The Paragon and 268 Orchard Road respectively in August, while British designer Anya Hindmarch launched her first standalone store in Singapore at Takashimaya Department Store in Orchard Road. French beauty chain Sephora relocated its flagship store at Ion Orchard in July.
F&B retailers were also active in the third quarter. Japan Food Town opened its first store in Wisma Atria in August. After a revamp, Marks and Spencer reopened its flagship store at Wheelock Place in September, including a 60-seat cafe.
Meanwhile, landlords introduced more lifestyle and entertainment elements to keep malls occupied. GuavaLabs established a fitness studio at Mandarin Gallery in July, while karaoke chain Ganso Manekineko launched its seventh outlet and flagship at Orchard Cineleisure in August.
At the end of the quarter, Sengkang’s Compass One mall reopened after 11 months of upgrading works in which it raised the F&B component to 33 per cent from 20 per cent.
With the closure of Funan DigitaLife Mall and Park Mall in September for a commercial redevelopment project, tenants such as Kith Cafe and furniture retailer Xtra relocated to Marina Square, and The Bear Knows moved to The Centrepoint in Orchard Road.