the changing composition of singaporean shopping centres, 2009-2014: a preliminary analysis

The Changing Composition of Singaporean Shopping Centres, 2009-2014:

a preliminary analysis

Dr Keri Davies

Presentation at AAG Annual Conference, San Francisco, March 2016

• Small island with significant economic and population growth

• Climate favours enclosed shopping centres• nearly all developed over last 30 years

• Retained elements of British/ colonial regulatory practices• so the move from independents/ mom and

pop stores has been controlled to a degree

Singapore’s Retail Sector

Population Growth, 1961-2012

1990 forecast:3.5 M by 2030

Actual

1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 20110

5000

10000

15000

20000

25000

30000

35000

40000

45000

Number of Retail Stores & Retail Turnover, Singapore, 1973-2012

Number of Shops Retail Turnover

1992 planned retail hierarchy

By 2008 Central Area is still dominant – although larger than just Orchard Road

Revised Concept Plan 2013

Three main forms of shopping centre:

• early examples established in the Central Area e.g. Lucky Plaza, Peninsula Plaza– primarily strata malls– common to have 5+ floors– in recent years several have been ‘colonised’ by various guest worker communities

The Market in Singapore

Strata Centres

Three main forms of shopping centre:

• ‘managed’ centres– your basic, average type of shopping centre– but many are still likely to have several floors– many of these on Orchard Road but found in other areas around Central Area and elsewhere

– and a higher percentage of service uses than most European and US centres

The Market in Singapore

New Centres - VivoCity

New Centres - Velocity

J-Cube: shopping or leisure?

Three main forms of shopping centre:

• ‘MRT’ centres

– often smaller centres– much more about convenience or day-to-day shopping

– have a core or common set of retail and service use

The Market in Singapore

Yishun MRT, 1993

MRT Growth – Chicken or Egg?2012

MRT Growth – Chicken or Egg?2012Malls over or near MRT stations, 2014

Since mid-2000s the sector has also felt the influence of REITs• welcomed because they have been trying to deal with a perception of ‘clone malls’ (Competition Commission, 2008; UBS, 2014)

• reworked/ revived fabric to differentiate centres• some worries about shorter time horizons

– but has to deal with the influence of CapitaMall, the retail REIT arm of state-linked CapitaLand

The Market in Singapore

• They have also been reaching out actively to attract new retailers to the market– US, European, Australian, Korean, Chinese and

Japanese– local niche retailers have less experience and may have

less influence but can be helped by REITs and their contacts e.g. BreadTalk

– some internet retailers are opening physical stores e.g. kissjane, Zalora but a small part of business

• REITs have brought in more new retailers but there is also a higher rate of ‘churn’ e.g. Lowrys Farm, Vince Camuto

Influence of REITs

In 2009, a survey of 103 malls (Davies, 2012) found:• 12,985 units, of which 424 were empty and 3,054 were in

non-retail uses• 2012 paper based on this data found that there was:

– a high level of similarity between malls located at MRT sites regardless of management type• convenience shopping, duplication of common stores

– a lack of similarity amongst malls in other locations• partly due to importance of strata malls• ‘clone’ effect often limited to just one or two floors; even

managed malls had a high proportion of other uses

Ownership & retail differentiation

Resurvey in late 2014 to look at longer-term impact

By October 2014 several malls were being redeveloped (e.g Eastpoint, Suntec) or had been taken out of general use (e.g. The Heeren), eventually 65 malls in sample:

2009 2014Number of units 8,729 8,947

Increase is part redevelopment, part measurement ‘error’ due to size and complexity of some malls

Sample sizes: 2009-14

Malls surveyed:Orchard D2D3FringeOCR

28 malls

• Despite the construction of a relatively large number of shopping centres since 2009, occupancy rates remain high– some of this is due to the use of pop-up shops– some of it is due to the conversion of retail to other uses

• changing shopping habits, including increased internet usage, have had an effect

• REITs and centre management practices are also having an effect

Some significant changes in just 5 years

Over the 5 years the mix of retailers has been changed overall

International Retailers +127 unitsRegional Retailers + 96 unitsSingaporean Chains +289 unitsIndependent Retailers -592 unitsOther Uses -106 unitsEmpty Units 69 units

Mix of retailers

Services RetailWinners Banks & Loans, Bars,

Beauty & Hairdressers, Dance, Education, Fortune Tellers, Keys & Shoe Repairs, Laundry, Offices, Pools, Restaurants, Tattoo Parlours

Cosmetics, Discounters, Food, Health, Home Furnishings, Luggage, Phones, Religious, Shoes, Supermarkets, Wigs, Wine

Neutral Gyms, Picture framing Department stores, Musical Instruments, Stationery

Losers Games Halls, Internet Gaming, Medical, Money changers, Photo processing

Adult, Art & Antiques, AV (Films & Music), Bags, Books, Cards & Gifts, Clothing, Collectibles, Comics, Crafts, Electrical & Appliances, Florists, Jewellery, News, Pens, Watches

Change by Format and Location, 2009-2014 (Percent)

Int Reg Sing Indep Other Empty

-60

-40

-20

0

20

40

60

80

100

Orchard

Downtown Core

Rest of Central

Fringe

OCR

Orchard Downtown Core Rest of Central Fringe OCR

Orchard D2 D3 Fringe OCR

-20

-10

0

10

20

30

40

MgdMRT

StrataMGD-R

MRT-R

Mgd MRT Strata MGD-R MRT-R

Change by management and location 2009-14 (Percent)

In just 5 years there have been significant changes in many of the shopping centres being studied

Next stage is to try to establish if this is down more to external forces or to the influence of the different management styles, particularly the effect of REITs on the centres that they control

Conclusions

Competition Commission of Singapore (2008) Market Study on Retail Mall Rental Space in Singapore. Summary Study and CCS’ Views. Competition Commission of Singapore: Singapore, October.

Credit Suisse (2011) Singapore Retail REITs. Asia Pacific/ Singapore Equity Research, 14th March. Hong Kong: Credit Suisse.

Davies, K. (2012) ‘The Composition of Singaporean Shopping Centres’, International Review of Retail, Distribution and Consumer Research, 22 (3), pp. 261-275

Fatt, J.P.T. (2001) ‘Retailing in MRT malls in Singapore: Implications for entrepreneurs,’ Asia Pacific Journal of Marketing and Logistics, 13(4), 19-42.

Henderson, J.C., Chee, L., Mun, C.N. and Lee, C. (2011) ‘Shopping, tourism and retailing in Singapore,’ Managing Leisure, 16 (1), 36-48.

Ibrahim, M.F. and Peng, L.F. (2005) ‘The development of Neighbourhood centres in Singapore: From Traditional to Cluster Shopping,’ Pacific Rim Property Research Journal, 11 (4), 373-392.

Sim, L-L., Yu, S-M. And Malone-Lee, L-C. (2002) ‘Re-examining the retail hierarchy in Singapore. Are the town centres and neighbourhood centres sustainable?’ Town Planning Review, 73 (1), 63-81.

References