SINGAPORE: The retail industry may be going through a rough patch due to the COVID-19 pandemic, but American footwear brand Skechers still sees pockets of opportunities and has ramped up its presence in Singapore in recent months.
It opened five new stores in July and August – growing its retail footprint here to 30 brick-and-mortar stores – and expanded two existing ones. It also hired 40 new employees.
These moves come against the backdrop of an industry hit badly by the coronavirus outbreak.
Retail sales posted record slumps in April and May when a “circuit breaker” was imposed, before recovering to smaller declines in June and July as retail activities were allowed to resume. Islandwide vacancy rate for retail space, meanwhile, rose to 9.6 per cent at the end of the second quarter, up from 8 per cent in the first quarter.
“It’s without a doubt (that) in the retail industry, it is quite challenging,” said Skechers vice-president for Southeast Asia Zann Lee told CNA.
“But I always tell my team, we see challenges as opportunities.”
One such opportunity is the availability of “good locations” in shopping malls.
“Many brands are exiting so there are good locations that are available now versus before,” she told CNA in an interview on Thursday (Sep 10).
“At this point in time, the landlords are also reassessing the rental so that’s where we are able to do a further negotiation.”
With mall owners more open to negotiations, rental rates for the company’s new stores have come off by about 20 to 30 per cent compared with pre-pandemic days, according to Ms Lee. The drop mirrors trends in other markets, she added, with store rents down by 40 per cent in China and more than 30 per cent in Thailand.
While three of the newly opened stores were part of plans made well before the pandemic, the remaining two locations were decided following recent negotiations.
“This is a good time for us to actually enter into a market with good locations,” said Ms Lee.
The “athleisure” casual sports clothing market continuing to grow is another reason why Skechers is sticking to its expansion plans.
“We are proud to say that we are one of the market leaders. We are blessed with the products (that are) able to cater to the market needs,” she said.
Ms Lee did not reveal exact figures but said Skechers achieved single-digit sales growth in Singapore on a year-on-year basis for the months of June, July and August. This compares with double-digit sales growth seen earlier in the year.
The company remains “optimistic” about the months ahead and is targeting a single-digit fall in its annual sales this year from 2019.
“The initial projection we were doing in May was a double-digit reduction in sales,” said Ms Lee.
“We are still pretty much optimistic but of course, we need to watch and react to the market sentiment … If we see consumers spending lesser, then we’ll adjust our in-store promotions.”
It is also betting on new product launches, such as an upcoming collaboration with popular Japanese character Hello Kitty, to attract those who want “novelty items”.
Asked if the expansion move could be a risky one given the economic downturn, Ms Lee pointed to how some consumers prefer to make purchases in heartland malls near to their homes.
“Especially during this pandemic, we are able to see sales around suburban areas increasing, versus sales around the Orchard area,” she said.
This is why one of the five new Skechers stores is in Tiong Bahru Plaza. The rest are located in Great World City, Novena Square, Suntec City and Marine Square.
“At the moment we are about 30 stores, which I think is just right for the market,” Ms Lee said.
At the moment, Skechers has about 290 employees in Singapore, with the local office also serving as its Southeast Asian headquarters.
Its new hires – all locals – filled 30 retail positions and 10 in the logistics team. Hiring locals, especially those with experience in the retail industry, has been slightly easier these days, Ms Lee noted.
“A lot of brands are exiting … so we are able to tap on people with expertise and offer them another position.”
With the recent rise in qualifying salaries for Employment Pass (EP) applicants, the company wants to train more local employees for higher-paying shop manager roles going forward.
At the moment, Skechers has Employment Pass holders in some of the managerial roles at its retail stores, as well as management trainee positions. It also hires work permit holders as retail assistants.
Still, the local retail industry continues to face hiring issues. Even among the recent new hires, about one-fifth changed their minds soon after joining Skechers as they could not get used to the demands of working in a consumer retail store. The company was able to find replacements fairly quickly due to the bigger pool of jobseekers at the moment, said Ms Lee.
READ: Business owners in F&B, retail and construction raise concerns about rise in S Pass qualifying salary
Ms Lee also noted that the company is not affected by the recent changes in foreign worker policies but has some concerns about the longer run.
“It will be a concern if they continue to increase the (salary) criteria for the different passes,” she said.
Meanwhile, Skechers is also working on adding e-commerce functions to its local website, as part of meeting the needs of consumers who prefer the convenience of shopping online.
Work for its own e-commerce site has been under way since last year but the pandemic and its disruptions prompted the company to expedite the process, said Ms Lee.
Asked if the company is concerned that it may be a little late to the e-commerce game, Ms Lee said she does not think so given how Skechers has an online presence currently via online marketplaces such as Lazada and Shopee.
“I think customers still appreciate the social and sensory aspects of shopping offline in our brick-and-mortar stores. They would prefer to get advice face-to-face from our associates.
“But at the same time, consumers also want to shop online at their convenience so … we see e-commerce as complementing our brick-and-mortar stores,” she said.