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SINGAPORE: The retail industry may be going through a rough patch due to the COVID-19 pandemic, but US footwear brand Skechers still sees pockets of opportunity and has increased its presence in Singapore in recent months.
It opened five new stores in July and August, increasing its retail presence here to 30 physical stores and expanding two existing ones. It also hired 40 new employees.
These movements take place in the context of an industry badly affected by the coronavirus outbreak.
Retail sales posted record declines in April and May when a “circuit breaker” was imposed, before recovering to minor declines in June and July when retail activities were allowed to resume. Meanwhile, the commercial space availability rate across the island increased to 9.6% at the end of the second quarter, up from 8% in the first quarter.
“It’s definitely (that) in the retail industry, it’s quite challenging,” Skechers vice president for Southeast Asia Zann Lee told CNA.
“But I always tell my team that we see challenges as opportunities.”
One such opportunity is the availability of “good locations” in shopping centers.
“A lot of brands are coming out, so there are good locations that are available now compared to before,” he told CNA in an interview on Thursday (September 10).
“Right now, the owners are also re-evaluating the rent, so that’s where we can do some additional negotiation.”
READ: American shoe company Skechers opens flagship store in Paris
With mall owners more open to negotiations, rental rates for the company’s new stores have dropped 20 to 30 percent compared to the days before the pandemic, according to Ms Lee. The drop reflects trends in other markets, he added, with store rents at 40 percent in China and more than 30 percent in Thailand.
While three of the newly opened stores were part of plans made long before the pandemic, the remaining two locations were decided after recent negotiations.
“This is a good time for us to really get into a market with good locations,” Ms. Lee said.
The continued growth of the athleisure casual sportswear market is another reason why Skechers is sticking with its expansion plans.
“We are proud to say that we are one of the market leaders. We are blessed with products (that are) capable of meeting the needs of the market, ”he said.
Ms Lee did not disclose exact figures, but said that Skechers achieved single-digit sales growth in Singapore on an annual basis for the months of June, July and August. This compares with the double-digit sales growth seen earlier in the year.
The company remains “bullish” about the next few months and is targeting a single digit drop in its annual sales this year from 2019.
“The initial projection we were doing in May was a double-digit reduction in sales,” Ms Lee said.
“We remain quite optimistic, but of course we have to watch and react to market sentiment … If we see consumers spending less, we will adjust our in-store promotions.”
READ: The future of retail after COVID-19
It is also betting on the launch of new products, such as an upcoming collaboration with the popular Japanese character Hello Kitty, to appeal to those who want “novelty items”.
When asked if the expansion measure could be risky given the economic recession, Ms Lee pointed out how some consumers prefer to shop at malls close to their homes.
“Especially during this pandemic, we can see an increase in sales in suburban areas, compared to sales in the Orchard area,” he said.
That is why one of the five new Skechers stores is in Tiong Bahru Plaza. The rest are in Great World City, Ninth Square, Suntec City, and Marine Square.
“Right now we are about 30 stores, which I think is the right fit for the market,” Ms. Lee said.
LABOR NEEDS
Right now, Skechers has around 290 employees in Singapore, and the local office also serves as its headquarters in Southeast Asia.
His new hires, all local, filled 30 retail positions and 10 on the logistics team. Hiring locals, especially those with a background in the retail industry, has been a bit easier these days, Ms. Lee noted.
Zann Lee, Skechers vice president for Southeast Asia. (Photo: Skechers)
“A lot of brands are coming out … so we can tap into experienced people and offer them another position.”
With the recent increase in qualified salaries for Employment Pass (EP) applicants, the company wants to train more local employees for higher-paid store manager roles in the future.
At the moment, Skechers has job pass holders in some of the managerial roles in its retail stores, as well as managerial apprentice positions. It also hires work permit holders as retail assistants.
Still, the local retail industry continues to face hiring problems. Even among recent new hires, about a fifth changed their minds shortly after joining Skechers as they couldn’t get used to the demands of working in a consumer retail store. The company was able to find replacements fairly quickly due to the increased number of job seekers right now, Ms. Lee said.
READ: Food & Beverage, Retail & Construction Business Owners Raise Concern Over S Pass Qualified Salary Increase
Ms. Lee also noted that the company is not affected by recent changes in foreign worker policies, but has some concerns about the long term.
“It will be a concern if they continue to raise the (salary) criteria for the different countries,” he said.
ELECTRONIC COMMERCE
Meanwhile, Skechers is also working to add e-commerce features 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 underway since last year, but the pandemic and its disruptions led the company to speed up the process, Ms Lee said.
When asked if the company is concerned that it is a bit late for the ecommerce game, Ms Lee said she doesn’t think so, given that Skechers currently has an online presence through online marketplaces such as Lazada and Shopee. .
“I think customers still appreciate the sensory and social aspects of shopping offline in our physical stores. They would prefer to receive face-to-face advice from our associates.
“But at the same time, consumers also want to shop online when it’s convenient for them, so… we see e-commerce as a complement to our physical stores,” he said.
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