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Online shopping in Singapore is bleak, even after Amazon Inc launches its premium service in mid-2006. The island's shopping malls are striving to keep it that way.
With some of its largest shopping center operators reporting lower rents and rising employment rates, homeowners, like those in Asia and the United States, are being forced to reposition themselves. They make room for yoga studios, boxing gyms and climbing walls – as well as expanding options for catering and drinks – to ensure people come to eat. and have fun and, hopefully, stay for shopping.
Centers around the world have been trying similar stunts in recent years – often unsuccessfully – but in Singapore, where it's often joking that shopping is the national sport, they have an advantage.
The penetration of online shopping is behind Slovakia and Greece in the city, which puts it relatively low for developed economies. According to Euromonitor, it accounted for 5.7% of total sales last year, compared with 2.1% in 2012. The government is also considering a tax on e-commerce imports from 2020.
There are early warning signs of success of the campaign – at least in terms of increased traffic. At VivoCity, one of the largest shopping centers on the island, visitor numbers increased by 3.1% in the six months from September 30 to September 30, 2006, when its owner, Mapletree Commercial Trust, added an arcade – with a ring of bumper cars. Yet, real purchases have declined slightly.
In other shopping centers, visitors can spend a day taking a cooking class or participating in a free yoga session. At CapitaLand & # 39; s Clarke Quay, you can sip margaritas while playing mini indoor golf. The soon-to-be-opened Funan shopping mall in CapitaLand will include an ABC cooking studio, where people can sign up for breadmaking classes or wagashi confectionery classes, traditional Japanese sweets.
CapitaLand Mall Trust's customer traffic, which has a portfolio of 15 centers, declined 1.8% compared to the nine months to September compared to the previous year, while tenant sales increased per sqm increased by 0.5% over the same period.
"Although the current market share of online sales is low, its pace of growth will only accelerate when tomorrow's consumers arrive on the market," said CapitaLand CEO Lee Chee Koon. at a ceremony marking the launch of the new Funan Center. "Physical companies must go beyond the passive selling of products and services to generate quality retail experiences and emotional connections."
Amazon was launched last July and almost immediately suffered delivery delays, an expensive snafu in a market where the nearest store is just minutes away from most locals. Singapore rivals Hong Kong for the largest per capita retail space in Asia. In the third quarter, Amazon ranked third among online shopping applications on the Apple Store among active users, behind rival companies such as Qoo10, data compiled by the iPrice group.
Shopping centers that can not effectively integrate the activity-based tenants are likely to fall behind, both in terms of attendance and retail rents, according to Cushman & Wakefield. The millennial generation, in particular, is a target of non-trading companies.
But while the plethora of new activities has helped drive traffic, the rise has not been translated into real money. Shopping center rents fell 18% from last year, and job openings increased from September to September to 7.6%, according to data from the Urban Redevelopment Authority.
And with about 803,000 square feet of commercial space coming online over the next 15 months, rents will remain under pressure, said JLL Research Director Tay Huey Ying in Singapore. "Until traditional retail stores are able to convert pedestrian traffic into in-store purchases, rentals should remain moderate."
BLOOMBERG
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