_Singapore: Rising consumer expectations propelling more new retail experiences

Rising business costs and manpower shortages continue to plague the Singapore retail market. However, with an improvement in overall retail sales and increasing visitor arrivals this year, retailers would be able to tackle these challenges with renewed optimism. Overall retail sales grew by 3.8% y-o-y in August 2017, the highest increase since April 2017. Total visitor arrivals rose by 5.2% y-o-y for the same month. As a reflection of gradual improvement in demand for prime retail spaces, island-wide prime retail rents in Q3 2017 also saw 0.3% q-o-q increase, attributed mainly to the higher rents of prime retail spaces along Orchard Road.

Exhibit 1: Average Gross Rents of Prime Retail Spaces, Q3 2017

Source: Knight Frank Research

* Prime spaces refer to rental-yielding units between 350 and 1,500 sq ft with the best frontage, connectivity, footfall and accessibility in a mall which are typically ground level of a retail mall and/or the basement level of a retail mall that is linked to a MRT or bus station.

With the increasing expectations of locals and tourists alike for better customer service and experiential retail concepts, retailers and landlords should leverage on technology to create new retail concepts and strengthen its customer service to win and retain customers. For example, City of Tomorrow at CityLink Mall created a retail space where consumers can discover thematic concepts and zones, with carefully curated brands that fit into each area through interactive displays and games. Also, Korean eyewear brand Gentle Monster’s flagship store at Ion Orchard will play host to various art installations that help conceptualise its full eyewear collection to its customers.

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