Online to Orchard Road: why some Singapore e-retailers are opening physical shops amid the coronavirus pandemic
Even in an atypical year for retailers, Jay's business has taken an unusual trajectory. In August, as the economic fallout from the Covid-19 pandemic forced many businesses to fold, he launched Got Drip?, an online coffee business that also sold its beverages at a men's barbershop.
While other companies moved their operations online to cut overhead costs such as rent, the former sales director did the exact opposite. Early next year, Got Drip? is set to open a coffee bar in Geylang, a red-light district in eastern Singapore that has seen rapid gentrification in recent years.
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"It's all about the quality of the product. The best way of enjoying coffee is to have it fresh, and we believe that people will also want to go out and enjoy fresh coffee," he said. "Opening a physical store is a natural step towards building a commercially sustainable coffee brand."
Footfall in shopping malls and stores has plunged in the wake of the pandemic, forcing many retailers to pivot to e-commerce. But, like Jay, some online business owners in Singapore are bucking this trend by going the bricks-and-mortar route. Others, taking advantage of pandemic-induced lower rentals, are expanding their offline presence.
Robinsons closed its last two department stores in Singapore in October. Photo: Bloomberg alt=Robinsons closed its last two department stores in Singapore in October. Photo: Bloomberg
Their moves come even as the retail industry in Singapore is suffering heavy losses - the latest figures, for September, show a 10.8 per cent year-on-year drop in sales. The same month also saw 457 companies cease operations, the highest number in 10 months. Even established brands have not been spared.
In October, Robinsons - one of Singapore's oldest retailers, founded in 1858 - became a major casualty when it announced the closure of its last two department stores in the city state. The lights have also gone out at Hong Kong-based fashion chain Esprit, which shut all 12 of its stores here in April.
But taking their place are newer, nimbler e-retailers who are capitalising on their booming online presence. In September, as British fashion brands Topshop and Topman shut their last stores in Vivocity - Singapore's largest shopping mall - and moved operations online, popular local blogshop-turned-fashion-brand Love, Bonito launched its fourth outlet there. It will also be opening its flagship store at the ION Orchard mall in December.
And while Robinsons was saying goodbye with a closing-down sale at its Orchard Road store, Beyond The Vines, a fashion store that started digitally in 2015, opened its newest outlet down the road at Ngee Ann City.
Dr Lynda Wee, an adjunct associate professor at Nanyang Technological University's Nanyang Business School, said this approach was all about brand elevation.
"E-retailers appeal to shoppers who are digitally savvy. If they have the merchandise, marketing and brand, why not offer offline convenience to the same group of shoppers via bricks-and-mortar stores?" she said. "Going offline helps express the branding and build brand equity better through display and service."
OPPORTUNITY IN A CRISIS
For those who can afford it, there is a silver lining amid the pandemic - cheaper rent.
Statistics from the Urban Redevelopment Authority, Singapore's official city planner, show that rental prices for retail spaces have fallen throughout the year. In the year's third quarter, they declined 4.5 per cent from the previous quarter, following a fall of 3.5 per cent in the second quarter and a 2.3 per cent drop in the first. To date, rents have dropped nearly 10 per cent from last year.
For Jay of Got Drip?, this sped up his plans to set up a coffee bar. "The fallout from Covid-19 has caused rentals to be a bit soft, so ... it allowed us to move quicker than we thought we could," he said.
Professor Sing Tien Foo, director of the Institute of Real Estate and Urban Studies at the National University of Singapore (NUS), believes prices may soften even further - especially in prime shopping districts such as Orchard Road, which are heavily dependent on now-absent tourists.
Some e-retailers have seized the chance to move in. The Closet Lover, another local fashion brand that started as a blogshop in 2011, is one of the most recent arrivals in Orchard Road after opening its eighth and largest outlet in Ngee Ann City two weeks ago. It has stores in Malaysia and Cambodia as well.
Despite the brand's online origins, co-founder Bertilla Wong believes physical stores are still important. "Physical shopping offers instant gratification, especially in the Asian context. Shoppers still enjoy being able to try on their pieces, touch and feel the fabrics, and make an immediate purchase in person," she said.
Even with the disruption wrought by Covid-19 and overheads, she noted overall revenues had recovered faster than expected following the lifting of Singapore's "circuit-breaker" measures.
BRICKS-AND-MORTAR 2.0
With its wide range of options and easy price comparisons, online shopping offers unparalleled convenience - so physical stores can no longer simply serve as places to store and display products. Instead, they have to transform into immersive, interactive spaces.
"Human beings need interaction," said associate professor Tan Soo Jiuan of NUS Business School's marketing department. "If these shops are able to meet these interactive needs and make their concepts more exciting, people can then experience the whole consumption journey."
The Closet Lover's founders Bertilla and Brianna Wong at their newest outlet in Ngee Ann City. Photo: The Closet Lover alt=The Closet Lover's founders Bertilla and Brianna Wong at their newest outlet in Ngee Ann City. Photo: The Closet Lover
Retailers are aware of this new demand. The Closet Lover's latest outlet features a dedicated special events area - a small space with seating to facilitate personal interactions. It also factored in feedback from customers when it came to designing the 1,800 sq ft store, such as ensuring a more spacious area for browsing.
"As online shopping becomes the norm, we need to think of experiences that can delight our customers, and that's where our physical space can come in," Wong said. "It isn't just a shop any more, but an experimental space that is open to the imagination."
For biscuit shop Nasty Cookie, attention-grabbing aesthetics are key to providing a unique experience. Tiffany-blue walls and neon signs have become the signature look for its outlet at Funan Mall in the city centre and its flagship in the eastern Kaki Bukit area. They have turned into Instagram hotspots for customers.
Founder Regine Sum, who started Nasty Cookie in 2018 as an online business, opened the flagship outlet in October. A physical store allowed the brand to form deeper connections with customers as there were now two avenues for interactions, she said. Customers can engage with the brand online through their social media platforms such as TikTok and Instagram, in addition to having a good time at their stores.
"This promotes organic growth and puts us in good stead in this competitive industry. We are definitely keen to have more physical outlets," she said.
The good news is that Singaporeans still prefer in-store shopping and dining, according to a November report by commercial real estate services company JLL. Footfall in some malls has returned to 60 to 70 per cent of last year's levels, with figures in certain tenant sales rebounding to pre-pandemic levels.
It shows that despite the huge shift to e-commerce, bricks-and-mortar shops still have a future. "While going online can bring in strong revenues, I believe that physical retail and F&B outlets offer a tactile and communal experience," said Got Drip?'s Jay. "They are still a strong draw."
This article originally appeared on the South China Morning Post (SCMP).
Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.
