SINGAPORE : Large format retail stores are the way forward, especially in a climate of rising rentals.
This is according to retailer Courts, at the sneak preview of its new megastore which is set to launch as early as mid-December.
Courts is investing a total of S$80 million into creating the store and it expects to breakeven by the second year.
Spend a certain sum of money on your furniture and furnishings, and you’ll get to use Courts’ in-house interior design and renovation services – this is just one of a slew of new retail ideas to be introduced when Courts opens its new megastore in Tampines later this year.
The retailer says the trend is towards entertainment, bulk-buying and one-stop, lifestyle shopping experience in bigger stores.
“You’ve seen the success of hypermarkets in recent years in Singapore. The success of big format locations, it’s something like IMM with free parking. People are showing signs that they prefer to see choice of range, more items under one roof and more solutions,” says Terry O’Connor, MD of Courts Singapore.
Courts Megastore is part of the first retail park built under Economic Development Board’s Warehouse Retail Scheme, where three retailers group their regional warehousing, administrative and retail operations to take advantage of lower rentals in industrial land zones and to achieve productivity gains.
The company says retail store rentals per square foot in the outskirts of neighbourhoods such as Tampines can cost less than half of those in a downtown mall, and that larger stores tend to be more cost efficient.
“Rents have been going up – that’s another argument for having large format, stand-alone retail. It gives you visibility on how rental is going to be. If you build a bigger business through large format retailing, the marketing costs generally are held within the Singapore environment. That’s because you’re not going to new towns. You’re still using the same media, the same newspapers, TV, etc. So your marketing costs become more efficient, probably by a factor of up to 20%,” says O’Connor.
Courts says it expects the megastore to breakeven by the second year.
It is aiming for 1-2 million visitors annually. And if successful, it says it plans to take such large format stores into regional markets like Thailand. – CNA /ls