Malls are rapidly evolving beyond a transactional model to embrace community building through experiential and activity-based retail concepts, according to a new study.
The Edmund Tie insight paper The Rise of Experiential and Activity-based Retail details new findings as landlords and retailers come to terms with the disruption in the industry posed by e-commerce.
While Singapore’s GDP and household incomes have steadily recovered since the 2009 global financial crisis, rising at a compounded annual growth rate of more than 4 per cent, retail and F&B growth has not kept pace, with annual growth barely reaching 2 per cent over the same period.
In a bid to boost footfall, maintain high occupancy rates and shore up tenant sales and operating profits, malls are adding communal spaces and non-retail components into their mix, with the aim of creating communities within their premises.
“Online commerce has given consumers an unprecedented luxury of choice and convenience through social shopping, peer-to-peer influence and round-the-clock access to vast repositories of information,” said Edmund Tie’s CEO Ong Choon Fah. “In response to the changing landscape, landlords and retailers are giving customers reasons to visit over and over again. Physical retail is differentiating itself by furnishing experiences that their online counterparts can’t offer, and integrating online-offline retailing by adopting an omnichannel approach.”
Increasingly, malls are featuring focal points – which may not even be retail in nature – around which people can gather. The recently reopened Funan Mall, for example, offers a publicly accessible rooftop Urban Farm, rock-climbing facilities, a futsal court and even an indoor cycling track on top of its F&B outlets and flagship brands. From a nondescript lineup of IT stores, Funan has evolved far beyond a hangout for techies to become a space where shoppers, families and hobbyists can shop, eat and play.
“Defined by a continually changing mix of merchants and brands, pop-up retail gives malls the opportunity to offer additional options on top of their existing retail mix,” said Edmund Tie’s executive director and regional head of business space Chua Wei Lin. “Its ever-changing nature creates a sense of novelty and excitement that will attract shoppers.”
“Notwithstanding geopolitical, macroeconomic and technological headwinds, physical retail remains highly relevant,” added Ong. “In 2018, brick-and-mortar stores accounted for more than 90 per cent of retail sales, and the importance of physical retail is further corroborated by the fact that established online merchants – such as Taobao and Love, Bonito – have expanded into physical stores. Indeed, malls are now evolving to become the third place where people gather to relax and socialise.”