Amid a deteriorating retail outlook, flagship stores seem to have struck a chord with retailers looking for a revival plan. But will this be enough?
SINGAPORE: The weak sentiment which continues to dog Singapore’s retail scene has paved the way for several retailers, both domestic and international, to opt for a downsize or head for the exit door.
However, the industry is also seeing a slew of new flagship store openings or expansions, a trend that may come as a surprise given the challenging retail environment brought about by multiple challenges such as an economic slowdown, as well as lacklustre consumer and tourist spending.
Since the start of the year, the likes of French sporting goods retailer Decathlon, Italian fashion house Valentino and German luxury leather goods maker Braun Buffel have launched brand-new flagship stores in Singapore, while French high-fashion label Hermès and Swiss watch manufacturer Patek Philippe reopened theirs following multi-month renovation works. The latter’s refurbished store, managed by SGX-listed watch retailer Cortina Watch, is four times larger than its previous space, making it Patek Philippe’s biggest flagship store in Southeast Asia.
And the latest to join the party is multi-brand beauty retail giant Sephora, which relocated and opened its flagship store along Orchard Road nearly three weeks ago. Footfall has been heavy at the sprawling store of 10,000 square feet situated at a prime position at ION Orchard’s basement 2, as witnessed by this reporter who visited it on four separate occasions. And shoppers that Channel NewsAsia spoke to mostly gave the revamped layout and added experiential retail elements the thumbs up.
Clearly satisfied with the reception thus far, the French brand said in an email interview that despite the tough retail sector, Sephora remained “committed to growing its presence in Singapore and Southeast Asia”.
In fact, its 11 stores across the island still see “healthy sales”, with the original flagship store at ION Orchard ground level being among Sephora’s top 10 stores globally in terms of revenue, said managing director for Southeast Asia Mathieu Sidokpohou.
TAKING ADVANTAGE OF OPPORTUNITIES IN DOWNTURN
Cushman & Wakefield’s research director Christine Li attributed the trend of flagship store openings to softening rents and the freeing up of previously hard-to-come-by retail spaces in Singapore – both outcomes of the ongoing retail downturn.
As “options for strategic locations” increased, retailers are seizing the opportunity to secure longer leases for larger spaces at lower rents, while attempting to improve efficiency by consolidating operations, added Euromonitor International’s analyst Jocelyn Cheung.
Decathlon, for instance, signed a 15-year lease for its 35,000-square-foot store at Viva Business Park in Chai Chee. Chief executive Bastien Grandgeorge told Channel NewsAsia that the sports retailer is in Singapore for the long haul, and aims to use the local market as a launchpad for the region.
“Singapore is already quite a mature market in terms of sports offerings, and has a very active market in terms of sport practice. This is a huge potential for our company,” said Mr Grandgeorge. “Central to Southeast Asia, Singapore is ideally located for us in terms of logistics for all our new projects to come… We do believe that succeeding in Singapore will be a great start for our activity around the region.”
The sprawling flagship store in Chai Chee is Decathlon’s first outlet in Singapore. Prior to that, consumers could only purchase sporting products from its e-commerce site. (Photo: Decathlon)
Meanwhile, US lingerie brand Victoria’s Secret and fashion label Michael Kors have also signed longer-than-usual leases of 10 and seven years, respectively, according to earlier reports. Both are due to open their first flagship stores at Mandarin Gallery on Orchard Road by the end of the year.
WILL IT BE THE WAY OUT FOR RETAILERS?
But with the headwinds in the retail sector unlikely to go away anytime soon, is this the saving grace for retailers?
Experts say flagship stores – megashops with attention-grabbing interior designs, and usually opened to much fanfare – can be a booster for brand presence and awareness.
“The sheer size allows these global brands to scale up their physical presence with impressive and expensive flagship stores that showcase who they are and what they have to offer,” Mr Samuel Tan, course manager of retail management at Temasek Polytechnic’s business school, said.
“Instead of just appealing to the usual shopping crowd, such retailers are often more elaborate with visual displays using props, materials, lighting and aesthetics to enhance their brand presence and showcase how they want their brand to be seen,” he added.
Take Braun Buffel’s flagship boutique at Marina Bay Sands. The 1,500-square-foot store is a departure from the established label’s staid and conservative image. Evidently more colourful and vibrant, the boutique featured Braun Buffel’s trademark leather extensively in the form of an Italian fine-grain leather wall and bespoke leather armchairs in the lounge area, alongside Oak hardwood flooring with Herringbone designs.
The store design overhaul at the Singapore flagship store, which comes alongside the 129-year-old label’s venture into new segments, is part of the brand’s strategy to keep up with changing trends, owner and managing director Christiane Brunk told Channel NewsAsia in an interview in April.
The store at Marina Bay Sands is the first in the world to roll out Braun Buffel’s brand new design concept. (Photo: Tang See Kit)
Flagship stores, armed with a wider variety of products consolidated in one location and increasingly centered upon a “showroom” concept where shoppers enjoy unique in-store experiences, also serve as the latest strategy for brick-and-mortar retailers in their battle against e-commerce.
Euromonitor’s Ms Cheung said: ” Online marketplaces appeal to customers for their one-stop shopping experiences. Thus, retailers are trying to incorporate modern technologies in (an) attempt to win over customers… Flagship stores magnify their retail positioning through extensive showcases of products, fun and interactive in-store concepts under one roof.”
At Sephora, cosmetics brand Make Up For Ever’s “sushi bar” counter, which features a conveyor belt for shoppers to pick up makeup items in bento boxes, is an example of an “innovative physical store display” that e-commerce players would find it hard to replicate, Ms Cheung said.
Make Up For Ever’s “Sushi bar” counter complete with “bento boxes” of makeup. (Photo: Tang See Kit)
Also going big on experience is Decathlon which offers testing zones for its sports equipment and pick-up stations for customers to collect their online purchases.
“We believe that in order to create a very long-term confidence and loyalty, the sport experience must start directly in our stores. That is why we aim to rent and present to our customers the largest experience zone in stores… to allow everyone to test and enjoy our products, or just to discover a new sport before a purchase,” Mr Grandgeorge said. ” You do not come just for shopping, you come to enjoy a sports experience.”
Still, it is not entirely a foolproof strategy.
Mr Tan noted that costs could be a “long-term liability”, especially amid tricky retail conditions. “The store needs to meet the bottom-line and not just function as a museum. While the location attracts a higher flow of traffic, there must be a strong reason to entice shoppers to spend.”
Expectations and interests among customers for new and exciting concepts also mean that flagship stores may feel the heat to refresh their offerings frequently so as to remain attractive, he added. By doing so, more costs may be incurred over the long run.
WHO’S NEXT ON THE LIST?
Despite that, observers say the flurry of swanky new flagship store openings will likely be here to stay for the time being.
Apart from Victoria’s Secret and Michael Kors, Japanese casual wear brand Uniqlo is also due to unveil a massive store by the end of the year. Singapore could also be home to Apple’s first Southeast Asia flagship store at the Knightsbridge mall in Orchard Road, even though the US tech giant has thus far declined to confirm the store’s opening date.
According to Cushman & Wakefield’s Ms Li, retailers will likely be more generous “in terms of fitting out the new flagship stores and space taken” and continue to veer towards a “showroom-style” concept.
Uniqlo, for instance, has said it would offer a “new shopping experience” when its three-storey store spanning 2,700 square feet opens on Sep 2. Apart from boasting the most extensive product line-up in the region, the store will also be equipped with “innovative, high-tech displays”, according to a press release dated March.
Another Japanese lifestyle brand Muji, which recently opened its tenth outlet equipped with a cafe at Raffles City, also announced earlier this year that a flagship store is in the works.
In July, Muji launched its second Cafe&Meal Muji in Singapore. Besides offering new items on the menu, the new outlet is much bigger than its first cafe at Paragon. (Photo: Muji Singapore)
Responding to a query from Channel NewsAsia, general manager of Muji Singapore Jasmine Sng confirmed that the flagship store will likely open its doors by the third quarter of 2017. Prior to that, its Ion Orchard outlet will reopen on Sep 22 following a near two-month facelift.
Even as Muji recognises the “tough and competitive” retail climate in Singapore, it will continue its expansion plans in the city-state. In fact, the opening sales performance of its latest outlet at Raffles City was “relatively positive”, Ms Sng wrote in an email response.
“Muji will continue to expand in Singapore, and will focus on developing large size stores. We will likely have a large flagship store by the third quarter of 2017 (and) may bring in more categories of products such as Found Muji, Muji Books and Muji Infill.”
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