CapitaLand Mall Trust’s Retail Experiments May Reveal the Future of Singapore Malls

CapitaLand Mall Trust (SGX: C38U), a real estate investment trust with a focus on malls in Singapore, has been experimenting with new retail concepts. Some of its learnings might reveal the future of retail.

In early 2015, CapitaLand Mall Trust revealed that shopper traffic had been falling at the mall JCube. This was in part due to newer and better shopping experiences at other nearby malls. This prompted the real estate investment trust to re-calibrate the concept at JCube with a focus on the younger generation.

A learning lesson

Wilson Tan, the chief executive of CapitaLand Mall Trust’s manager, shared some of the learnings from the experience in a recent earnings presentation:

“I will be very, very succinct on trying to share one point. We expected that the young will buy commercial products just like everybody else. Even though we created an environment that allows the young to buy, we found that the young were not buying. And that’s something that we have learnt.”

Tan also acknowledged that the younger generation prefers online channels when purchasing items:

“And there is no denying that the young interacts with the market place in a different manner. The O2O [online-to-offline or offline-to-online] that you talk about, the eCommerce, so that’s the aspect.”

This could prove to be a challenge for traditional brick and mortar retailers. Loo Leong Thye, the chief executive of Singapore-based IT products retailer Challenger Technologies Limited (SGX: 573), had recently described the advantages of online retail in Singapore:

“Today, we don’t have the physical constraints of a brick-and-mortar store because we can list an ever-growing range of products that a customer can buy anytime, anywhere. In the coming months, will see more improvements in order to better serve our members.” is Challenger Technologies’ online portal.

How now, brown cow?

What can CapitaLand Mall Trust do to attract shoppers to its malls? Tan further elaborated on what his team had learnt from their attempt at engaging younger shoppers:

“But we also found that the young were driven by experience. And food is an experience. So, towards the end of last year, we recrafted the F&B [food and beverage] scene and we brought in F&B that would truly cater to the young. It certainly endorses the way we went in and re-curate the F&B scene.”

The changes appear to have the desired effect. Tan said:

“And what we then see is the young came back, stayed in JCube and that’s when we start to see improvement in terms of traffic and also expenditure.”

It will be interesting to observe how brick and mortar retailers adapt themselves in a changing operating environment that we find ourselves in today. Owning up to the reality of new consumer behaviour in the marketplace may be the first step to take, as CapitaLand Mall Trust has done.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.