At a time when e-commerce is vying for shoppers’ attention, retail landlords and tenants have realised that surviving this disruption means offering more than mere products. Enter experiential retail – a trend where retailers are dedicating features in their stores to curate personalised experiences for consumers.
Although the shift started recently, it is already evolving rapidly. Many landlords are making experiential retail a permanent feature of their malls, observes CBRE in a report released on Aug 20. In Singapore, when CapitaLand’s Funan mall reopened in June after a three-year revamp, it was described as a “social retail space for discovery, learning and shopping” by Chris Chong, managing director of retail at CapitaLand Singapore, in a press release.
To that end, retailers in Funan have taken care to introduce unique experiences alongside their offerings. Nikon opened its first standalone outlet and flagship experience hub in the mall, which also hosts the Nikon School that runs photography tutorials by professionals. Love Bonito has called its third and flagship store a “retail playground”, which features an Augmented Reality walkway, photo-worthy spots such as an infinity mirror room, and personal stylists on demand.
The effort by retailers to inject fun and entertainment into their offerings is a response to the growing consumer demand for it. Between 2018 and 2030, experience-based retail spending in Asia Pacific is expected to hit US$825 billion ($1.14 trillion), says research firm Euromonitor.
Starbucks is among the brands riding the wave. It has rolled out Starbucks Reserve, which is the firm’s commitment to change the coffee-house experience to “something surprising and multi-sensory”. It has touted Starbucks Reserve as its “selection of the rarest, most extraordinary coffee Starbucks has to offer”. In Shanghai, the Starbucks Reserve Roastery spans 30,000 sq ft, and features three coffee bars, inhouse roasting, a tea bar and augmented reality elements designed by Alibaba.
A host of specialised entertainment-based retailers have also sprouted up to cater to consumer needs. The largest occupiers in terms of floor area are indoor entertainment centres, of which CBRE attributes growth in Asia Pacific to an increase in disposable income, the preference for indoor entertainment and the availability of diversified gaming and entertainment tech.
Such leading operators in Asia Pacific include Legoland Discovery Centres, which now operate in Shanghai, Shenyang, Osaka, Tokyo, Beijing and Melbourne. Discovery Centres are smaller, indoor versions of Legoland theme parks occupying 40,000 to 60,000 sq ft. These centres feature Lego models of local landmarks, educational displays explaining how Lego bricks are manufactured, brick building classes, and 4-D movie theatres.
The focus has also been on children. Edutainment centre KidZania provides an environment for children to role-play as adults in various careers within a scaled-down replica of a real city, while learning important behavioural and social skills like decision-making, teamwork and money management. The chain operates in malls in Jakarta, Delhi NCR, Mumbai, Koshien, Tokyo, Busan, Seoul, Kuala Lumpur, Manila, Singapore and Bangkok, and has plans to launch in Surabaya and Nagoya next year.
Techbob Discovery Centre, which recently opened in Repulse Bay, Hong Kong, helps kids to improve collaboration, questioning, problem-solving and critical thinking skills through fun games and activities.
Game arcades, which enjoyed the limelight in the late 1990s, have slowly crept back into the spotlight. “Today’s arcades provide immersive virtual reality experiences through custom-built rides and props that include motion features, force feedback and sensors,” says CBRE. This is an experience which computer and mobile games fail to provide.
In Gangnam, Seoul, VR Station occupies 43,056 sq ft across four storeys, featuring virtual reality games by Japanese firm Bandai Namco Entertainment. Facilities include a 4-D cinema and interactive tech that allows players to communicate via a headset. Games include those in first-person shooting, racing, fishing, biking, surfing and flying formats.
Movie theatres are not exempt, and have further fortified their presence in malls with new service concepts. The AMC cinema in Pacific Place, Hong Kong, includes a VIP house called “The Oval Office”, offering a private lounge with free-flow light refreshments, high-quality cooked food to order, premium adjustable leather recliners, and servers who deliver food directly to customers’ seats at the press of a button. In Singapore’s Funan, Golden Village has dedicated halls featuring leatherette seats with lumbar cushioning and a USB charging port. Movie-goers who opt for the premium halls also get to pre-order food and drinks prior to the film via a mobile app.
While some gyms have typically established their presence in malls, Japanese chain SpoCha (short for Sports Challenge) has added a fun twist to exercising. Part of Japan-based Round1 amusement arcade group, it offers a variety of indoor activities such as basketball, table tennis, rollerblading, dodgeball, archery and futsal, charging a flat fee for entry to a single large-sized location of around 50,000 sq ft.
Amid fierce e-commerce competition, Singapore has seen continual consolidation in the retail sector in 1H2019. In the face of this, will changing the focus to “retailtainment” be key? CBRE believes that “although such tenants may require longer lease terms and lack the capacity to pay high rents, they have a critical role to play in attracting and retaining consumers in this new era of retail experience”.
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