Buying a handbag or an experience? Brands are raising the retail bar

The go-to places for Singapore shoppers buying designer goods have always been in upmarket central areas like Orchard Road or Ion. So eyebrows were raised when luxury leather-goods brand Louis Vuitton (LV) opted for the heritage area of Joo Chiat in the east.

LV opened a temporary new outlet, not in a glitzy mall, but in a shophouse. The pop-up store, which opened for about two weeks in January, celebrated the launch of the brand's re-edition collection with Japanese artist Takashi Murakami.

For customers interested in sustainability, there was even a repair space, servicing merchandise from the original collection launched two decades ago.

The pop-up store was not just about goods for sale. It had a vending machine dispensing limited-edition gifts, a cafe and a cinema screening movies about Murakami.

It is part of a marketing trend, not just for designer brands, but for all kinds of merchandise.

This involves shifting from a transactional model -- where a shop has goods for sale and customers buy them -- to what retail experts call "transformational lifestyle experiences".

Experiential tactics have been the hallmark of brands for some time. But the competition is heating up.

Take the US bag and accessories maker Coach. In vibrant Keong Saik Road in Chinatown, the brand has opened the Coach Play Singapore Shophouse.

This is aimed at diverse groups, including Generation Z and the wine-and-dine crowd. There's a vintage store along with the latest ready-to-wear collections, a cinema, a New York-style cafe and a "craftsmanship" bar where customers can get their merchandise embellished with Coach's leather tea roses, pins, studs and patches.

Swiss watchmaker Audemars Piguet (AP) also opened its first destination cafe at Raffles Hotel's Bar and Billiard Room in Singapore. It aims to create an emotional and seamless space for experiencing the world of AP through culture, craftsmanship and cuisine. To this end, it collaborates with a renowned restaurant in Singapore to dish out classic Swiss dishes with a Singapore twist, a unique experience that customers can have only at this place.

It's not just upmarket branded goods retailers who have embraced this trend.

Home-grown flower wholesaler Far East Flora Market partnered its growers and internationally acclaimed florists from Holland and Japan to host the inaugural The Flower Show at its new Clementi premises in November 2024. The aim was to build its community of floral artistry.

Research shows this experiential approach can increase the number of shoppers and the amount they spend. CapitaStar, a lifestyle and rewards programme, reported an 8 per cent sales increase year on year in 2023 for brands that engaged their customers.

The idea behind this -- as the brands would claim -- is to foster deeper emotional connections with current and new customers.

As president of the Singapore Retailers Association Ernie Koh puts it: "Retailers used to operate on a transactional basis. With keen competition, they need to focus on building long-term relationships with their customers first, then fostering a sense of community.

"They need to create innovative yet relevant narratives to be in their customers' optics to gain mindshare first, then market share."

The challenge for retailers

Indeed, retailers face many challenges, including increased competition from online stores and overseas where operating costs are more favourable.

Singapore as a market is relatively small. Moreover, the investment-driven approach to mall management prioritises leasing to tenants with proven track records, resulting in repetitive and uninspired retail options.

So it's no surprise that retailing has evolved beyond merely selling products or services. It's no longer just about online, offline or "omnichannel" strategies -- seamless shopping across mediums. Instead, the focus is shifting towards cultivating the desirability of products.

Taking a broader perspective unlocks opportunities for retailers to collaborate creatively, innovate and build loyal communities.

Customers are attracted to brands that resonate with their aspirations and values. Their motivation to buy moves from functional to emotional needs.

To leverage this, retailers also need to be clear about who they are serving. With modern technologies such as data analytics and artificial intelligence, there is less guesswork in putting customers first and uncovering their desires.

With deeper customer insights, brands now have more confidence to create emotive destination spaces to enthral customers in the world of their preferred brands, thereby building a stronger community of like-minded customers.

For smaller players and new entrants, this direction may come with substantial costs.

But local retailers do not have to do it alone. They can engage in collaborations with established global brands.

For instance, in the case of the recently launched AP House, the local brands get to work with AP to create a sense of uniqueness, manage costs and be eco-friendly. Restaurant Burnt Ends, located in Singapore, runs its AP cafe at a lower cost and reduced carbon footprint.

The global-local hybrid curation offers unique in-store experiences that draw Singaporeans and global customers.

Retailers need to go beyond their core expertise -- forming a retail ecosystem of diverse capabilities complete with real estate, relevant infrastructure and social media publicity.

This integrated offering presents an opportunity for collaboration across different brands, pooling their diverse expertise to address complex customer needs and rising expectations.

An example of this is the recently launched New Bahru, a lifestyle development in River Valley featuring local brands. The former Nan Chiau High School has been transformed into a buzzing enclave of over 40 food and beverage and retail concepts.

The ecosystem comprises many stakeholders including the Singapore Land Authority (SLA) which tenders the land, and The Lo & Behold Group which selects promising local brands to create their own destination spaces. These brands can turn to Enterprise Singapore for funding support.

Another similar but smaller lifestyle hub is Kada in Maxwell which occupies the former St Andrew's Mission Hospital for Women and Children building. It targets the health, wellness and office crowd.

With more land options released by SLA, there are more opportunities to explore experiential lifestyle destinations.

These initiatives can provide the support that new or smaller retailers need to remain competitive. With the bar constantly being raised, support for them is critical to ensure a more inclusive and dynamic market.

This will bode well for Singapore's quest to remain a global lifestyle and retail hub.

Dr Lynda Wee is an adjunct associate professor specialising in retail management and value creation at Nanyang Technological University.

Source: The Straits Times