The overall strong performance of the market for retail real estate in 2022 was due to the confidence of retail stores that their local market will be able to be able to sustain a growth after suffering the most severe covid-19 virus.
As per Sulian Tan-Wijaya executive director of lifestyle and retail of Savills Singapore, a handful of premium retail segments have profited the most from the rise in spending by consumers this year. She has been in top of retail property industry since 2008. She has been able to observe the shifts in trends across the lifestyle and retail industries.
“Luxury watches, fashions of luxury streetwear, athleisure and luxury watches are among the top shoppers this year. These segments performed extremely well in the initial two seasons of this pandemic (from 2020 to 2021] and are expected to grow strongly after markets opened up again [this year”,” she adds.
The top-end brands like Rolex, Chanel, Hermes and Louis Vuitton are largely inflationand recession-proof, claims Tan-Wijaya. She says that these groups of wealthy buyers “are not price sensitive unless they are buying at the entry level”.
A number of new flagship store openings brought the retail market to its peak this year. According to Tan-Wijaya the most notable and well-known ones are the ones that have unveiled stores with streetfronts on Orchard Road and Scotts Road. These are among the top retail areas located in the Central Area.
Tan-Wijaya identifies Korean streetwear brand MLB, Japanese brand SNKRDunk streetwear company Stussy and American clothing brand Carhartt as notable new-to-market brands in the year. “This is an example of street fashion that is taking the fashion industry in a storm, and occupying traditional retail spaces filled by established fashion houses,” she says.
In addition to the major streetwear apparel brands, a number of cosmetic brands such as Dior, The History of Whoo Su:m37, Dior and Guerlain have also launched new stores. A number of luxury stores, including Dior and Fendi have also undergone major changes this year. “These are a sign of the strong demand for luxury goods in these areas,” says Tan-Wijaya.
She also notes that between the years 2020-2021 numerous retailers closed their stores or decreased their number of stores as consumers’ spending fell. “However the luxury brands have generally did not follow this trend, either by increasing their store size or making remodels,” she says.
Prior to the safe management measures being gradually relaxed in 1Q2022 and 1Q2022, high-end boutiques such as Chanel, Louis Vuitton and Dior began to draw long queues of customers waiting to get into. “Customers waiting in line are mostly Gen Z who are looking for extravagantness for their personal style as well as their social status and desires,” says Tan-Wijaya.
Additionally, “revenge spending” on the part of a majority of customers who were mostly in their homes during the past two years contributed to this increase in demand for high-end products, she adds.
Despite the recessionary concerns that are threatening to erupt in 2023, high-end boutiques will remain the dominant choice for the ground floor and prime street-front areas in the most upscale shopping centers in Singapore. However, the next couple of years will see a myriad of retail concepts slowly replace spaces typically used by fast fashion companies Tan-Wijaya believes.
One example is the homegrown furniture retailer Castlery that purchased the 24,000 square feet of space located at Liat Towers that was previously occupied by fashion label Zara. Tan-Wijaya as well as Savills Singapore brokered this retail space agreement for Castlery.
The competition is expected to increase as more companies look to launch flagship locations in Singapore in the coming year. “These companies all would like their stores to have large Orchard Road frontage, which is extremely rare since the majority of established brands would prefer to lose such valuable spots in prime shopping districts,” says Tan-Wijaya.