Home FEATURED 2 Pills To Solve The Orchard Road Ills

2 Pills To Solve The Orchard Road Ills


IT IS no longer a surprise to see large clusters of vacant shops in malls all over Singapore.

The retail sales index has shown declines in 27 out of the past 39 months since January 2014. Weak retail sales has resulted in retailers racking up losses, with several high profile foreign brands shuttering their doors for good and leaving swathes of retail space vacant.

Retail Sales Index at Current Prices (Excluding Motor Vehicles) Y-o-Y Grouth

Shrinking retail market, Singapore
Year-on-year growth for the monthly retail sales index indicate a shrinking retail market. Source: SingStat.gov.sg, IPA

Data from the Urban Redevelopment Authority (URA) reveals that vacant retail space increased islandwide, from about 3.4 million sqft in early 2011 to 5.0 million sqft today.

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The situation is similarly grim in Singapore’s preeminent retail belt: Orchard Road.

Vacant retail space hit a high of 700,000 sqft, representing 9.3% of total lettable area, in 2Q 2016. While official data shows that vacant space dropped to 550,000 sqft in 1Q 2017, a walk through several malls reveals that the reduced vacancy is propped up by temporary “pop up” stores.

A shrinking jobs market, flat wage growth and a reduction of high rollers gaming in Singapore have a negative multiplier effect on the consumption levels of the luxury goods and services that are predominantly offered at Orchard Road.

Total vacant floor space and vacancy rtes in Orchard Planning Area

Lettable area in Orchard Road
Vacant lettable space in the Orchard planning area trended up until mid-2016 and then fell again. Source: URA, IPA

The poor retail performance of Orchard Road sparked calls from a high-level government committee, the Committee on the Future Economy (CFE), to improve the situation. The Committee recommended “that the private sector partner the Government to embark on bold moves to transform Orchard Road into a vibrant shopping and lifestyle destination with a signature street experience in a city garden.”

In addition, many opinion pieces, analyst reports and discussions over forum pages and social media offered suggestions on how Orchard Road might be transformed.

Top 5 suggestions to transform Orchard Road
1 Pedestrianise Orchard Road
2 Conduct more street level activities with cultural events, performances, shows, festivals, exhibitions
3 Leverage technology to improve customer-retailer relationships and enhance shopper experience
4 Provide a wider range of brands, products and services
5 Increase the number of dining and entertainment options

The top suggestion put forth involved a fully pedestrianised Orchard Road, such that more fashion, cultural and arts activities, and larger-scale street-level events can be held. Other popular suggestions recognised the need to embrace technology, such as indoor positioning systems, virtual and augmented reality, omni-channel touchpoints, etc. to improve retailer-customer interaction. Others urged retailers to provide a wider range of products, brands, services, dining and entertainment options.

However, no one addressed the root of the decline of Orchard Road — consumers are not leaving their homes to shop.

So what can a pedestrian-only street with a wider range of brands, products and F&B offerings do to help draw shoppers to Orchard Road? Most brands of products are available online and in the suburban malls. Our efficient delivery network also brings a wide range of cuisines straight to our dining tables at home.

What should we do with the abundant retail floor space in Orchard Road?

Fix #1 — Fix Out Of The Box

Let us unshackle ourselves from the concept of Orchard Road as a shopping mall. We propose that Orchard Road be recreated with a new identity where shopping and F&B play supporting roles to personal services: namely healthcare and education.

Healthcare facilities on Orchard Road. Eviled / Shutterstock.com
Repurpose Orchard Road to provide healthcare services. Eviled/Shutterstock.com

As a top priority, all existing area classified as retail could be given flexibility for a change of use to healthcare. Given the rapid increase in healthcare demand from the ageing mass affluent population in Singapore and in Asia, several malls in the Orchard Planning Area have already increased their floor area for healthcare services: Pacific Plaza, Lucky Plaza, Paragon, Wheelock Place and Shaw Centre.

About 1.5 million sqft, or 20% of the total lettable area of Orchard Road retail space, could be pre-approved to accommodate a wide range of primary care such as specialist clinics, medical diagnostics, cosmetics, traditional medicines, etc. and allied-care such as therapy and counselling, post-surgery rehabilitation services, nutrition consultants, physiology, etc..

The CFE could have noted that Singapore is not the only country facing an ageing population and most developed nations have greying populations and the demand for healthcare services is sure to grow.

The last available figure from the Singapore Tourism Board indicated that medical tourists spent almost S$1 billion in 2014. Against the stiff competition for medical tourists from India, Malaysia and Thailand, the increasing vacant space in Orchard Road presents us with a great opportunity to build on Singapore’s reputation for quality and safety in medical services and transform Orchard Road into a one-stop destination for the full range of primary and allied healthcare services.

Fix #2 — Learn Out Of The Box

To attract a wider range of visitors to Orchard Road, we propose a second layer of services to be added — education.

There is global awakening in the need for lifelong learning and we propose that Orchard Road be positioned to offer a full range of education services.

We envision another 20% of Orchard Road’s 7.5 million sqft of retail space be filled with education services such as enrichment and music classes, tuition centres for students undertaking formal education, playschools for infants and children, skills training centres for working adults, private education centres with formal certificate programmes, experiential learning providers, multi-modal online-offline symposium facilities, etc..

In fact, formal programmes involving retail, tourism, services and hospitality studies should cluster within Orchard Road as the learning experience is richer when learners are immersed in industry.

Creating classrooms along Orchard Road.
Education spaces to take up the empty spaces along Orchard Road. 29september/ Shutterstock.com

Services such as speech and language therapy and occupational therapy straddle both the medical and education fields and their co-existence could establish Orchard Road as a centre for innovation in therapy practices and skills training and education methodologies.

The initial costs of recreating Orchard Road to incorporate more healthcare and education services would probably fall somewhere between pedestrianising the entire road, and simply increasing the range of F&B offerings. However, the increased allocation of space for healthcare and education, while driving up competition, should bring about improvements in the quality of service and potential cost reductions.

The remaining 60% of Orchard Road’s nett lettable area will continue to house retail shops, F&B outlets and other services such as hairdressers and tailors. These traditional services will complement and support the healthcare hub taking the primary role, and the education hub, playing the secondary role in Orchard Road.

You might also want to read:

Is Orchard Road Too Pedestrian?

Should Orchard Road Traffic Be Stopped?

Bitter Medicine

The retail paradise of today is in cyberspace. Brick-and-mortar retail space on its own is fast becoming irrelevant in today’s world and hence, malls that primarily focus on attracting shoppers will go the way of the typewriter and the abacus. The convenience of e-commerce gives consumers fewer reasons to visit physical stores.

It is time that we shift our focus away from making Orchard Road a shopping centre. It needs to establish a new identity. Its retail space needs therapy. The medicine is in healthcare and education.

Ku Swee Yong is the CEO of International Property Advisor. His fourth book Weathering a Property Downturn is available in all good bookstores near you.

Main Image: PtrT / Shutterstock.com

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