Orchard Road is struggling

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QUIET: Far East Plaza (pictured) and Lucky Plaza both had about 100 shops shuttered out of 480 and 700 shops respectively. Last year, online spending here exceeded $1 billion. It was up 13 per cent year on year.


PHOTO: THE NEW PAPER

Published on Jul 13, 2015
Online shopping taking toll on Orchard Road?


JUDITH TAN and CHIN YONG CHANG


IT IS after work on Thursday and shoppers should be streaming into malls like The Centrepoint and 313@Somerset.

But it is a quiet evening.

Orchard Road is set to reveal a new look, with $40 million worth of refurbishments and enhancements to infrastructure.

But an article in the Japanese publication Nikkei Asian Review last month said Orchard Road is struggling.

In a Straits Times report in March, Metro Holdings, which opened a new department store in The Centrepoint in the final quarter of last year, said a "disappointing level of sales resulted in losses being incurred by the new store".

According to the report, department store operator Isetan Singapore had earlier reported a net loss of $3.1 million for the year ended Dec 31, on the back of higher rents and slower sales.

Stores have closed and Orchard Gateway, one of the newest malls in the area, is struggling to gain traction with customers despite opening to much fanfare only a year ago.

Experts offer many reasons as to what has happened, among them online shopping and the habits of the smartphone generation.

Take business school student Peter Lim, 22, who is graduating this year and joining the workforce soon.

Wanting to make an impression, he has been eyeing a pair of Oxfords since April.

So he popped into a retailer at Ngee Ann City last month to suss out the shoes, confirm his size and yes, the price.The shoes cost $269.

He walked out, saying he would "think about it", then went online and bought the same pair for about $160 - saving about $110.

Apart from shoes, Mr Lim buys his clothes, magazines and books online.

"It is more convenient. I don't have to deal with parking, transport or jostling with hordes of people," he says.

Perfumes such as Giorgio Armani Code Luna Eau Sensuelle Eau De Toilette for women costs $50 less online than at the store.

Even branded bags and dresses can go for between 15 and 50 per cent less online, compared to prices at brick-and-mortar shops.

A confluence of easy access to the Internet, broadband speeds and smart devices have contributed to fewer people shopping in Orchard Road.

Last year, online spending here exceeded $1 billion. It was up 13 per cent year on year, based on data from market research firm Euromonitor International.

That is only a fraction of the whopping $30 billion in total store-based sales here last year.

But here is the catch - store-based sales have been flat.

Some experts point out that the Orchard Road stretch is crowded with malls, many with the same brands.

For instance, there are four Zara stores along the 2.2km stretch of Orchard Road from Liat Towers to 313@Somerset.

The New Paper team visited 21 malls along Singapore's famed retail strip in the middle of the day over the last two weeks.

There were few shoppers within the malls and some of the shops were even shuttered, while others were undergoing renovation for new tenants.

Shaw Centre has about 30 shops shuttered out of its 80 spaces.

Far East Plaza and Lucky Plaza both had about 100 shops shuttered, out of 480 and 700 shops respectively.

Of the nearly 3,000 shops and services at the 21 malls The New Paper visited, 430 or about 15 per cent were closed.

But some stakeholders - like SPH Reit, Frasers Centrepoint and Far East Organization - say the spaces are closed for renovation as new shops are moving in.

Eric Tong, assistant director of the retail business group at Far East Organization, explains that shops closing or leaving are "natural expiries in the retail market, as in all sectors".

He says that in anticipation of retail trends and changes in consumer taste, the group is planning the reconfiguration and remixing of some of these spaces to bring in new concepts.

The group recently transformed the upper levels of Orchard Central to offer shoppers an array of restaurants, cafes and food outlets.

Mr Tong says human traffic is high at the basement and ground levels of malls with direct access to MRT stations.

"Footfall at Orchard Central has increased with the improved connectivity between 313@Somerset, Orchard Gateway and Orchard Central, coupled with our own promotions.

"We have also received positive feedback from tenants and shoppers about our marketing programmes."

THE NEW PAPER
Additional reporting by Khairiyah Amirah Md Ramthan


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