If you are following the retail scene in Orchard, there are a couple of developments that are raising eyebrows lately.

First, The Straits Times ran two articles on how malls in town areas are seeing more empty shop spaces and fewer shoppers.

Second, Singapore witnessed the closure of local fashion label Raoul's last boutique here.

Third, Uniqlo announced recently that it would open a flagship store - its biggest outlet - at Orchard Central.

And lastly, it was reported in March that Ngee Ann City and Takashimaya are embroiled in a legal dispute over rental issues. Ngee Ann City wanted to reduce the amount of space its anchor tenant, Takashimaya, occupies as well as to increase the rent from $8.78 per square foot (psf) to $19.83 psf.

So how is everything at our prized shopping strip?

High rents, neighbourhood malls and online shopping - killers of Orchard's retail scene?

Just take a look at a sampling of comments following from the ST articles:

Reading through most of the comments, one gets the sense that neighbourhood malls are sufficient to meet Singaporeans' shopping demands.

This means that there is hardly any reason for them to visit Orchard Road to purchase the same things.

Additionally, you can see that many people are complaining about how most malls seem to be offering the same mix of shops. Many lament that high rentals mean only the big players can survive, and that results in the lack of variety that may come from smaller shops with shallower pockets.

Consumers who want variety can now turn to online shopping. The internet offers a plethora of options especially when it comes to clothing and electronics. Online retailers also pass on rental savings to consumers. How can brick and mortar shops compete with that?

Pedestrian Night was a perfect test case of how lacklustre shopping in Orchard is at the moment

In February, Channel NewsAsia reported on the uncertain future of the Pedestrian Night on Orchard Road initiative where parts of Orchard Road was closed for events such as runway shows, mass tennis and yoga, etc.

The report noted that although the events drew over 50,000 people to Orchard Road, which is twice the average footfall on weekends, it did not translate into increased sales.

Pedestrian Night may have succeeded in bringing people to Orchard Road, but perhaps retailers should reflect on why no one wanted to part with their money despite the increased footfall.

Great Singapore Sale (GSS) also affected in 2014 & 2015

GSS, the traditional lifesaving event for tourist dollars and Singaporean shopping dollars, had taken hits in the last two years too.

In 2014, it was reported in Bloomberg that shopping in Singapore during the GSS was not that exciting for Chinese tourists due to several factors — strengthening exchange rate, a sales tax Chinese tourists do not encounter in neighbouring Hong Kong, and rising labour costs.

It also attributed the decline in retail dollars spent to the rise in revenue for the hotel and gaming industry. Simply put, more money is spent on hotel stays and casino gaming, which makes for lesser spend on shopping.

Last year, MasterCard released its cardholders' spending statistics for the 2015 GSS period.

$1.412 billion was spent by local MasterCard holders in 2015, down from 2014's $1.461 billion. However,  $303.5 million was spent online by Singapore cardholders in Singapore during the GSS, a 5.6 per cent increase from 2014.

In the same MasterCard report, we learned that four out of five top-spending tourists preferred to spend on food more than buying stuff:

The future of Orchard retail

With neighbourhood malls already offering many things consumers want, Orchard Road has to up its game in providing niche/specialty products and services that cannot be found elsewhere.

However, their prices must also remain competitive, because the massive wave of online blog shops and online retail behemoths like Amazon and Taobao will surely be able to offer extremely attractive prices and alternatives.

Related article:

Online shopping will kill off many retailers in Singapore, but that is a good thing.

Top image from Karl Baron

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