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Business Advice

Staying fresh for shoppers

Department stores are constantly reinventing themselves to stay relevant.
The Sunday Times - November 4, 2012
By: Cheryl Faith Wee
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Staying fresh for shoppers -- PHOTO: DIOS VINCOY JR FOR THE SUNDAY TIMES

Several grand dames of retail are celebrating big birthdays this year: 40-year-old Isetan, 50-year-old OG and 80-year-old Tangs.

They are three of about eight department store chains here, once considered the "queens" of the retail scene by retail experts because they were the first few stores to open along the Orchard Road shopping belt, selling everything from fashion to household goods to toys.

But with the influx of new shopping malls and growing competition from more retail options, are the queens of retail being unseated? Experts that SundayLife! spoke to say that department stores here are losing their shine with shoppers in their early 20s to early 30s, who prefer to visit trendy standalone boutiques in shopping malls.

Dr Prem Shamdasani, 53, associate professor of marketing at the National University Of Singapore's business school, says: "In the good old days, there were not so many fashion brands around and department stores catered to everyone. Now, they are stuck between mid-range and high-end fashion brands. They may be perceived as 'fuddy-duddy' and attract an older crowd."

He adds: "There is still a place for them in the retail scene but they must re-invent themselves."

Department stores have traditionally been the anchor tenants of shopping malls, such as Takashimaya at Ngee Ann City and Metro at Paragon. But Mr Samuel Tan, 51, course manager for the diploma in retail management at Temasek Polytechnic's School of Business, observes that in recent years, less space is being offered to department stores as anchor tenants. This happened at newer malls such as 313 Somerset and Ion Orchard.

Now, shopping malls are leasing substantial retail space to leading high-street brands such as Topshop and Forever 21. For example, Uniqlo opened its biggest Singapore store here, a two-storey, 20,000 sq ft outlet, at Bugis+ earlier this year. It is the mall's anchor tenant.

But department stores here are striving to prove they are still trendy and relevant.

Next year, retail group Robinsons will open a new 150,000 sq ft flagship store at The Heeren. It will move out of Centrepoint after nearly three decades there, when its lease runs out in 2014.

Department stores Robinsons, John Little, Metro and BHG declined to comment for this story.

Another department store striving to liven up its image is Tangs. The privately-owned company saw a total group turnover of $154 million for financial year 2011, a 2.5 per cent decrease from the previous year.

Earlier this year, Tangs launched a $45-million major revamp of its Orchard Road store, which will take place in three phases to be completed by 2015.

The first phase, to be completed by Christmas, will see a new beauty hall on the first level with brands housed in mini-shops instead of counters.

The seventh floor of the department store, previously occupied by administrative offices, will offer beauty services such as spas. Other new additions are food and beverage outlets on every level, an extended homeware department and new international brands such as luxury beauty brand Tom Ford Beauty .

Tangs chief executive Foo Tiang Sooi, 59, says: "Tangs' new look will see us transformed to be relevant again. Department stores cannot be general merchandise stores any longer. We are competing with shopping malls and everyone else, and have to be a lot clearer in what we stand for. We are not as big as the malls and recognise that they can have everything under the sun. But we can provide an intimate environment by curating the brands targeted at our loyalty customer base."

Earlier this year, Isetan also renovated its cosmetics and womenswear departments by giving some counters a facelift and introducing new fashion brands such as British label Vivienne Westwood and New York label Jill Stuart.

Department store chain OG recently held a contest where students from Raffles College of Higher Education dressed up mannequins with apparel and accessories from the store in line with themes such as "young & trendy" and "party wear".

OG spokesman Sally Tang, who is in her 50s, says: "We are strong in the older, mature women category, but we want to tell people that they can come to us for style and fresh looks too. After all, we sell wearable clothes that fit anybody on the street."

One advantage that department stores have over shopping malls is their loyalty card programme says retail expert Lynda Wee, an adjunct associate professor in retailing at Nanyang Technological University's Nanyang Business School, who is in her 40s. She adds: "Department stores know what their loyalty card members want and are able to target and create services for them. It is harder for malls to do so because they have such a wide range of tenants."

Tangs' loyalty programme, which includes the Tangs Fashion Lifestyle Card and the Citi Tangs Platinum Visa Card, consists of about half a million customers. Among other perks, they get up to 12 per cent rebates off purchases and invitations to sales previews. A select group from the loyalty programme will also gain access to an exclusive lounge when Level 7 of Tangs opens next year.

Last year, these customers, cutting across all walks of life, contributed to about 50 per cent of the company's revenue, up from 40 per cent about six years ago.

Other department stores such as Isetan and Takashimaya Department Store also have strong loyalty programmes. According to Isetan's sales promotion manager James Che, 50, loyalty card members make up close to half of the company's sales. Last year, Isetan saw a turnover of about $365 million, up from about $334 million in 2010.

Mr Che says: "In light of the challenges faced in the retail industry, our key focus remains on constantly engaging customers and continuing to build up customer loyalty through store promotions like closed-door sales four times a year."

The Takashimaya loyalty card member base has also seen a 40 per cent increase in the last two years. The department store's sales have seen a 23 per cent increase since 2007. Its card members get benefits such as discounts at exclusive sales and bonus point redemptions.

Engineer Jeffrey Toh, 34, signed up for the OCBC Robinsons Visa Platinum Card about three years ago. He also has the Citi Tangs Platinium Visa Card.

He says: "I got them primarily because they offer a lot of good deals and discounts."

Others such as accounts executive Natasha Loh, 24, also like the convenience. She usually goes to Robinsons at Raffles City for cosmetics.

She says: "Instead of going to five different shops, it is a one-stop shop for my supply of beauty products. I have noticed it is trying to bring in more new brands so it is not true that department stores are old-fashioned."

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