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Friday, 1 July 2016

View on retail from the selling floor up

If you visit Plaza Singapura on level 3 at the new wing extension, you will see lots of empty shops. Now that 1st Market by Chef Wan is also closed, the whole stretch on the left side is all partitioned up.

Before you jump onto the bandwagon of press articles (and ya-lor ya-lor new media blog posts) pontificating its doom and gloom for retailers today - and the biggest reason is high rentals - let me ask you a few silly questions:

Dead spots (you got no weaknesses to improve?)

Have you looked at the old wing of Plaza Sing? Very crowded with lots of people huh? How about level 1 and 2 of the new wing? All tenanted. So what's with level 3?

One exits and another moves in (one happy; one sad)

At Harbour Front, our Howard Storage World was closed 2 years ago as the landlord would like to increase the rental by 20% when the lease expires. Guess what? Mothercare, our neighbouring store, expanded into our vacated spot and converted that location into a huge store for them!

If you are the landlord, was it "wrong" to increase the rental?

If you are Mothercare, would you be complaining on paying the increased rent for the new unit?

Bad developments (Who's the architect? Who's the developer?)

Visited Orchard Gateway anyone? How's the layout? Weird right?

This one even better! Come visit Alexandra Central Mall if you happen to visit IKEA Alexandra. It's just next door. You won't believe what you'll see at this Alexandra Central!!!

Only in China have I seen retail properties offered at "undeveloped" (毛坯) conditions... Is it any surprise this retail development is 1/2 empty?

If you are the retailers opposite Queensway Shopping Centre, would you be celebrating your dumb luck?

New kid on the block (must try harder to gain attention)

What's the difference between Mandarin Gallery with established players like Paragon, Ngee Ann City, Ion Orchard; etc?

Can you remember a special reason why you should make a visit there to Mandarin Gallery?

Would you allow a new colleague come and overtake your position in the company just like that?

They have to earn it right?

Competent retail property management (people matters)

Anyone remembers Bugis + before its present look? Who took over and turned it around?

Same for Chinatown Point. Have you stepped into the old configuration especially the round about wing? Now? Big difference right?

How about JCube at Jurong East? With newer and sexier new retail developments like Jems and Westgate Mall, did JCube roll-over and blame the economy? Or did the property management did a great job reinventing and repositioning JCube?

You are not the centre of the universe (entitlement thinking be gone!)

Far East Shopping Centre holds a special place in my memory. My first retail job was at Metro Orchard (present day DFS) opposite. I see the press and some websites jumping the gun on its current "decline"...  

Well, isn't it typical? As if people and competence don't matter.

Just because we open a retail shop, or develop a retail property, it does not mean we are "entitled" to succeed.

While we may have our SMART goals and "what can go wrong?" plans to succeed, others have their counter-plans to make sure we don't succeed. This is called competition.

So yes, if a retail store shutters its doors, or a retail development fails to live up to its business plan, its so easy to blame it on the economy, internet buying, shift to suburban retailing, and so on.

How come you don't hear retailers saying, "I fxxked up?"

No. Orchard Road is not losing its buzz.

On the contrary, I find it a fabulous shopping experience! We can hold our own against Ginza of Tokyo and Paris' Champs Elysees.

Just as long we let the free market weeds out the poorly prepared and rewards the competent.

P.S.  Some readers may realise, as much as I'm sharing my retailing viewpoints, I am also metaphorically writing on my investing and trading philosophies too... 



  1. 人家抓老鼠都来不及了,没多少人陪你抓心境。
    Anyway, I enjoyed this post! Thanks for sharing, reminded me of many of my observations. 不愧是你的circle of competence, can make good use of it investing.

    I noticed that some people have a weird thinking that shopping malls are supposed to be like a welfare organization that caters to their needs, rather than income driven. A funny incident recently about a certain mall that opened with Times instead of Popular bookstore inside - complaints and requests by concerned parents on Facebook were pretty entertaining to read. Center of the universe thinking?

    1. Kevin,


      There are all kinds of interesting people in our midst.

      It never amazes me there are some investors out there who actually believe just by owning a few shares they are "owners" of that company!?

      Creating shareholder value? Sorry hor, when a CEO says that, he meant the majority shareholder that hired him.

      I know my place - I'm a freeloader.

      I focus on what I can control - if I don't like the management, I get out.

      Why buy a dog and do the barking yourself?

    2. hahahaha... I remembered 2-3 yrs when I mentioned to a young very popular blogger that it's better to accelerate earnings n expose more when young, he n some other bloggers said I can be the CEO busy working n enduring all the stress while he and the rest of the younger share investors can shake leg see the stock appreciate n collect dividends while I suffer.

      I start to worry for Singapore since then!

    3. Rolf,

      Perfectly OK if that young blogger owns more than 15% of the company; can even ask for a seat on the board to earn the "free" Director's fees ;)

      But if we just own 100 shares... Well, guess some need to "ah Q" a bit to feel better as young salaried man with 30-40 more years of corporate life ahead of him...

      But then, I not much better...

      I'm a freeloader, man-whore, piss on the sidewalk.

      Better poke myself first!

    4. hahahaha if he can own >15% of the company (using his own ability), I seriously think he will not be blogging here anymore or at least that often! And i am sure he will not make this kind of statement anymore.

      Sometimes the thinking of a person can allow us to tell at which stage he is also! :-)

  2. SMOL 哥哥

    Please give Kang Tao directly. Catch no ball. 有钱大家赚. Invest in good companies at fair value and not lousy companies at cheap value? Which companies? In Orchard Road? Let me know, from my house, i only need to walk about 4 hours to reach.

    1. Frugal Daddy,

      Please hor, guy and guy don't use 哥哥 - 哥 will do ;)

      You are at the wrong watering hole if you want "kang tao"...

      Here its for dragons and snakes to 笑谈风云。

  3. Very enlightening post SMOL. I agree, when things go belly up, the easiest way out is to point finger. Has been the case since Eden's time.

  4. Smol,
    MY observation:
    The malls in general is indeed getting quietier. Of course some well-run heartland malls are still packed, but if my weekends outings are anything to go by, including F&B outlets, it is quietier.

    But u are right, are all tenants then suffering, obviously not.

    As a consumer, I am happier as I dun like crowds.

    As a landlords, as long as there are ready tenants, I dun really care about their business as long as the rent is not structured in GTO

    As a tenant, do I prefer the market to be weaker so that I can save on costs or I prefer a brisk retail scene so I can sell better?

    It depends on the tenants' products and its targeted audience...

    Thanks for your enlightening post. So much dots to connect. Tenants should perhaps think more about product appeal first, then find the right platform to "sell"

    The products imo, is the tougher part of the equation.....


    Ok, now no more investing hidden message, I am also thinking about why some retail management is good.

    The more I think about it, the more I think it's a moat that cannot be replicated unless one has deep pockets.

    What works for capitaland managed malls-
    1) constant AEI and new looks (easy part)
    2) constant programmes that pull crowds (easy part)
    3) selective retail mix sometimes with a theme (tough)

    It is easy to see which mall is open for all. Come and bid, B1 is F&B, I dun care what tenants u are...

    It is obvious in all capitalmalls, u see 1 or more anchor tenants, follow by popular and comprehensive services. Telcos, F&B, docs, tuition centers all rolled into one. The theme can be more centered towards education or healthcare, but u find "almost everything"

    The newer players, u go to the mall, it's quite obvious there is no much thoughts going into the tenancy mix ... Whoa every shops fashion huh, and all the same same type of clothes

    1. Sillyinvestor,

      "Wah kali gong" is not my writing style ;)

      Let me tease you a bit.

      On one side you say as a landlord you don't care what your tenants do.

      Then you noticed Capitalmalls have a "formula"; whereas the newer players have no thoughts on the tenancy mix...

      The "tough" part is the competitive advantage ;)

      If easy, anyone and everyone can do it - and that's easily neutralised ;)

      The soft skills go BEFORE tenant mix.

      Right at the very beginning where you work with the architect to design the floor plans - store layouts, traffic flows, location of lifts, toilets, escalators, lightings, music, floorings, and a whole lot of other "stuffs".

      Advanced ones even have computer modelling to simulate customer flows and to test emergency exits.

      Some of our older shopping developments are death traps in an emergency.

      So like frequent business travellers do when checking in a hotel, we quickly make a mental note on the emergency exits. I find myself doing that when I enter these older shopping centres...

      There is a whole lot of science involved in designing a retail development.

      Although I've never been to university to study retail or retail property development, working at Metro, Robinsons, and IKEA have taught me how to evaluate our stores within, and how to review the shopping centre's property management without :)

    2. Hmm... U say soft skills before tenancy mix, u agree.

      I wonder aloud why is capitalmalls always able to be get "household names" tenants. E.g. NtuC, guardian, the 3 telcos, in heartland mall, throw in a library/ garden/ playground

      It's a moat, I want to go to capitalmalls because I am assured of footfalls, and as a result landlord can afford to cherry pick ...

      I lived near balestiar, there is plenty of mix-development. Retail + Residents or office ... Most are empty with banners screaming for tenants: one very atas building with nice exterior facade has mum and pop shops and "sneezy" saloon.

      Before u accuse me of elitism, I do $5 haircuts but, i am seeing it's a obvious mismatch of the image/branding u want to project

      Well, guess when times is bad, landlord cannot be choosy

    3. Even the most promising Zhong Shan park with hotels is....

    4. Sillyinvestor,

      If you are in Shanghai, take a visit to Capitaland's Raffles City Shanghai - 不是猛龙不过江 ;)

      And compare to their local local developers' shopping centres.

      In a way, its nice to know some foreign developers who came to Singapore are... Well, you don't want everyone to steal our lunch do we?

      Zhong Shan park... Another example of things not thought out right from the very beginning.

      No need go so big, let's start with Food Courts.

      Why some Food Court operators have a better stall/food mix? Got put effort into décor and design of seating places?

      Or maybe start with your backyard?

      Why some schools can attract "better" students?

      Why some schools are more famous and sought after by parents?

    5. Oh Muhahhaha

      If I get what u are trying to say about mall
      Managers and comprehensive planning, then schools same same but different

      I shall not say more...

    6. Sillyinvestor,

      Is it?

      I'm glad you had your conversation with Investing Wolf.

      There are always choices ;)

      And don't forget your conversation with the butterfly on the Animal School.

      People matters ;)

    7. Hi SMOL,

      I went to search for that ulu Alexandra central mall you talked about. Wah, sibei jiat lat (http://forums.hardwarezone.com.sg/eat-drink-man-woman-16/alexandra-central-mall-flop-5039532.html)! Like that can open to public?!

      Must go down there to see see look look one day.

    8. Hi LP,

      i been there before there is a toast box there n saw all empty! I did not know it's called Alexandra Central Mall.

      I use to stay walking distance from there long time ago!

    9. LP,

      "Power" right?

      I'll encourage students of retail management come and use it as a case study.

      Compare with Anchorpoint and Queensway Shopping Centre.

      Those interested in Retail REITs, come see too ;)

    10. Rolf,

      Quite a mouthful in the naming right?

      In branding, we try not to exceed 3 syllables if we want to make it easily recallable by the public ;)

  5. There is one 3 syllable one nearby called Alexandra Retail Centre at PSA there n doing well, but we always call it ARC!

    So maybe we should call it ACM ...not nice also.

    ABC is better but the famous market aready take the name!

    hahaha... Just called is Alexandra point Lar.... LOL

  6. Hi SMOL,

    Nice post. A good knock knock for reits investors too.

    Retail scene is ever-changing or consumers get bored. That's why every now and then we see some big retailers doing haul-over of their image and shop floors to keep up with the competition. Now I start missing being part of the dynamic scene (minus the customer complaints part). LOL

    1. Rainbow lady,

      Ah! You're from the industry too ;)

      Every 3 years a small touch-up; every 10 years a big makeover.

      And people "surprised" why some malls and retailers are doing better than others?

      Those that never "invest" in keeping themselves relevant are the ones who blame high rentals, economy bad, internet buying...

      Just like investing.

      If I make money - its all me!

      If I lose money - its big daddy's fault!

  7. Hi Jared,

    Thanks for the article. Retail REIT investors will surely support you on letting the free market weed out the uncompetitive retailers and replace them with the competent who can afford the high rental so that investors can continue collect their dividends.

    A more serious competitor to the retailers would be online e-commerce. How do bricks-and-mortar fight against the online competitors who have these structural advantages;
    - convenience to shoppers who want to buy without leaving home
    - cheaper prices because there is no rental expense
    - no need to squeeze with the crowds and/or waste time queueing.

    The retail malls can improve shopping experience by, say, building playgrounds to attract families to spend more of their time there. However, will this lead to more shoppers spending money? Yes, but that is limited mainly to the food and beverages stalls. For other shops, what is there to prevent the shoppers to try the products, ask questions free of charge, then go home online to buy on the cheap? This buying behavior is a rising trend among the young who grew up with the internet.

    I really salute those retailers who can survive the online onslaught.

    1. hyom hyom,

      It's the same free market that will weed out the poorly managed REITs - not all REITs are created equal ;)

      No, e-commerce will not replace brick and mortar retailing.

      E-commerce appeals to those who are super busy and those who likes a "bargain".

      If I have the means, why would I buy an iPhone from internet when I can visit the store and immerse in the total Apple experience?

      Although I can buy a Mercedes from Alibaba, why should I when I can let some tight skirt massage my ego at the showroom?

      Who would buy a Prada or LV from the internet? Only the budget wannabes do that right?

      There is a reason why ladies love visiting the hair-salons and spas. In the animal kingdom, the lower ranked females will groom the higher ranked alpha females ;)

      You can't it this experience from the internet :(

      No, the future of retailing will bifurcate - those with the means will continue to demand the personal experience; those with lesser means will opt for the more "budget" and impersonal internet experience.

      What's stupid is half-half measures.

      I'll bring up the supermarket example.

      Just buy from internet and have it delivered to our homes if you don't need to contact with a real human cashier.

      But if I want to visit a real brick and mortar supermarket because I value a real person's smile, don't expect me to use the automatic check-outs!

      I hope all these self paying "top down" productivity driven crap will fail.

      It's not new. Many years ago they tried to "encourage" car owners to pump petrol themselves to save on hiring pump attendants...

      The free market has voted NO!

    2. both Hyom hyom n Jared is half right.

      The shopping mall landscape will changed. Retail malls on clothings shrink while education and F&B, saloons, movie theatre will be more dominant!

      In SG, China or HK, I believed being Asians unlike the Americans who shop more online even for lots of supermarket stuffs, still prefer to go out. Afterall human touch is closer to heart for us I reckon.

      Just like VCD or DVD replacing Movie theatre in the talk of the 90s! Did our cinema in Sg closed shops? Only price increased and getting more and more crowded n need advance booking esp during wkend or public holidays period...

    3. Rolf,

      Great example with the DVDs and cinemas!

      We can build up the best home entertainment systems in our homes, but we still go to the cinemas as its a SOCIAL experience.

  8. Hi SMOL,

    So i guess you surely have some Reits in your stock portfolio.
    After all, sale and retailing experiences are in your blood.
    Mind showing which ones that we can understand the practical sides of your article.

    If you don't own any Reits, well what a waste of your talents and experiences.
    i would be definitely surprise lol!
    Sorli, sorli, you and i know we don't like to go into very specifics of a stock,
    Grasshoppers know all the numbers count for nothing for a company as there are many tangibles and intangibles that can decide the values of a company too.
    In fact the numbers can change anytime as and when the tangibles and intangibles of a company change.
    And who knows when the changes come?

    1. temperament,

      I used to own one REIT but not anymore ;)

      REITs are cyclical plays.

      Just like O&G and commodities plays.

      There is a time to buy, and there's a time to sell.

      But if one only knows how to buy REITs but no clue when to sell REITs, well... Somebody will gonna get hurt like those REITs holders who experienced the 2008/09 fiasco...

      Or maybe ask those buy and hold "investors" of O&G and commodity plays - how's that strategy working out for them?

      Being right-brained, I'm definitely more qualitative biased. I don't measure precision to the 4th decimal places.

      Reading people is more my thing.

  9. Look like you are another one who believes deeply the difference in Time-In-Market & In-Time-Market(ing)
    Once you consider investing for a lifetime, it is very hard to reset your portfolio to Zero and start all over a clean slate
    In that sense even if you favour In-Time-Market(ing), you still have some stocks during the "Down Syndrome" of the Market.

    i have two reits now, all from IPOs.
    Keppel K. C. and FLT.
    Some people think of the picture of milking-cows gazing on a farm with a farmer always in attendance feeding the milking-cows.
    i personally tend to dislike any companies that need to issue rights from time to time.
    The worse is rights issue is used to pay debt only or some complicated financial engineering maneuver - "The Heimlich Maneuver?"

    Who can be sure the rights issue is accreditive even it is meant to?
    The best is a company can grow organically.
    Anyone knows one?

    1. temperament,

      It's definitely "harder" to go back to 100% cash now that our portfolio is bigger...

      That's the strength of retail investors over institutional money managers.

      Mohd El-Erian of ex-Pimco fame was 100% into cash during 2015.

      Stanley Druckenmiller went 50% into cash during his early days before joining Soros. He was upset with himself for not going 100% into cash when he's bearish. He got creamed on the 50% vested part...

      I hope I have the courage and conviction when the time comes for myself.

      Yes, there's one company that comes to mind - IKEA.

      So cash rich it does not need to be listed. And every time there's a recession, it grows even bigger!

  10. Hi SMoL,

    Wow, people going 100% cash! Must be really very convinced that his call is right that the "whole sink" is thrown.

    What's the highest u ever being?

    Back to retail, the half half examples. I noticed many F&B expect customers to take orders using iPads

    The Lao Jie ba Ku teh serve very nice food, it's youtiao always hot and crispy, but my MIL will not go in on her own as she is "intimated" by iPad and want to ask the waitress question

    I dun really mind DIY, as I am the odd one out. When people are busy, I pumped my own petrol in Singapore.

    I enjoy going to the ba Ku teh restaurant although I need to key in my orders, because I still feel the service is better than Some atas restaurant, one of which is listed with digits behind.

    Service was bad, I was ignored. When we order only dim sum, I was given the "this table cheapskate face"

    Never visited again. Same brand and company, different outlet different ex. I tried ordering "cheap meals" at the outlet at orchard too, same smile ... Same attentiveness. We went back for birthday celebrations

    Another joke, when we ask atas restaurant what are the popular dishes and recommendations, got cheek to reply everything is nice, up to your taste lor...

    I rather go hawker centers, the auntie still call me" ah boy, what u work huh, so early wake up"

    1. Sillyinvestor,

      If I change only one word - from cash to vested - would you still stand by your statement?

      "Wow, people going 100% VESTED! Must be really very convinced that his call is right that the "whole sink" is thrown."


      See? The free market will decide what we want from retailing. Your MIL will patronise those restaurants that treat her "right".

      Why do we go back to the same store or watering hole again and again? Because its nice to walk-in and be RECOGNISED as a regular customer!

      When I recognise the aunties of jie-jies at the supermarket check-outs, I'll compliment their new hair or make some small talk.

      They happy; I happy.

      P.S. Just a side track to another of my pet interests - 江湖.

      Say don't use dialects, don't use Singlish. But once "free market" give a backlash, now lighten up a bit with dialect radio broadcasts.

      During sell "koyok" time every 5 years, eh? Now use Singlish and dialects to sell the impression they are one of us? Speak our lingo?

      No more top down whiter than white daddy knows best "wah kali gong"?


    2. Lol... Smol,

      If one word is changed, I still give the same statement. I dun see the difference ... More hints? Hey dun throw shoes at me.

      Actually huh... This politics thingy, u describe aptly. 江湖

      Regardless u have altruistic motives or whatever, u have to win votes first.

      We cannot be "ourselves"

      Remember our star who shout kee chiu? (Raise hand)

    3. Sillyinvestor,


      In schools, there's always a choice - but never easy.

      We can do what an9elfire has done, or we can fight harder and become a Principal ourselves.

      Both solutions are about doing it "our way".

      The saddest is dare not leave; cannot go up.

      The worst is when people know we 打死不走... Then we are setting ourselves up for further "abuse"...


  11. Hi SMOL,
    Trying to pull a fast one playing with words, Ah....
    100% this, 100% that, hmm... still 100% leh!

    1. temperament,

      Hee hee.

      But then again, how often do we feel the same way when others are 100% vested?

      As compared to meeting someone who is 100% into cash?

      Same same but different!


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