Hong Kong’s retail slump is being mirrored in its longtime rival for the title of Asia’s shoppers’ paradise, and for similar reasons.
Empty storefronts in Singapore’s prime shopping district are becoming a more common sight, Bloomberg reports.
Vacancies in the Orchard Road area, a magnet for tourists lured by malls and Japanese department stores such as Takashimaya, have risen to a five-year high. Across the island, they’ve soared to the highest since 2009.
As economies around the region struggle with sluggish growth and consumers rein in spending, property brokers are expecting more retailers to scale back and close shop.
And while rents have slumped from a peak in 2014, they haven’t fallen nearly enough to convince some brands to stay.
Singaporeans are among the most tech-savvy shoppers in Asia, with a greater percentage turning to online shopping than in Hong Kong and Malaysia.
“Retail is changing because of e-commerce, and malls will need to reposition themselves to cater for the future,” John Lim, chief executive at ARA Asset Management, which owns malls in Singapore, Hong Kong and Malaysia, is quoted as saying.
Malls will need to remodel to focus more on food-and-beverage outlets, entertainment, services and banking, and less on fashion and consumer products, he said. Some of the biggest retailers are fleeing.
Al-Futtaim Group, the distributor in the city state of major brands including Marks & Spencer and Zara, plans to shutter at least 10 stores in Singapore this year even as the conglomerate expands its footprint in cheaper Asian markets like Malaysia and Indonesia.
British brand New Look and French menswear chain Celio plan to close shops in the second half of the year, with more tenants expected to follow suit, property brokerage Cushman & Wakefield Inc. said.
“After careful review, we’ve decided that Singapore does not have the same potential to be one of our key markets,” New Look said in an e-mailed response to queries from Bloomberg News.
Like Hong Kong, Singapore is reeling from the impact of China’s slowing economy and fewer flashy purchases by visitors from mainland China.
“Chinese tourists coming to Singapore are looking for experiences rather than goods,” Christine Li, director of research at Cushman & Wakefield in Singapore, is quoted as saying.
“In today’s globalized world, where one can almost find the same brand everywhere, differentiation becomes the key ingredient for a successful retail scene, but regrettably, it is lacking in Singapore.”
