Feature

The 'phygital' mall: CapitaLand explains why Funan represents the future of shopping

The newly reopened Funan mall is unlike any other shopping mall in Singapore, which embraces omnichannel through click-and-collect services, relies heavily on technology and even operates an urban farm. The Drum speaks to the various stakeholders involved in the project and retail experts to find out if the Funan model is the future of shopping malls.

The newly reopened Funan mall is unlike any other shopping mall in Singapore, which embraces omnichannel through click-and-collect services, relies heavily on technology and even operates an urban farm. The Drum speaks to the various stakeholders involved in the project and retail experts to find out if the Funan model is the future of shopping malls.

A day at Funan could look like this – As you drive to your office, which is in the WeWork co-working space in Funan, you take out your phone and book your car park slot ahead of time. Driving into the mall, you are guided to your allocated lot by the video-based smart car parking facility.

Before entering Funan’s twin office blocks to head up to the WeWork, you go through a facial recognition turnstile.

For lunch, you decide to head to the KOPItech food court, operated by Kopitiam, where you can order your food through Facebook Messenger or self-service kiosks at each stall, which accepts various forms of cashless payments including cryptocurrencies. On the way there, you stop by the cashier-less FairPrice Finest supermarket to buy groceries and pay for them at self-service terminals through your phone.

Before heading back to work, you head up to the 5,000 sq ft urban farm, operated by Edible Garden City, located on the roof of Funan to get some fresh air. Once there, you learn how vegetables are produced and harvested, as well as experience a variety of edible plants through smell, touch and sight.

While waiting for the lift to head to your car after work, the digital ad board near the lift is advertising different products from different retailers, all on one page. You decide to do a little shopping and browse through the products, finding a dress you like, which you add to your wishlist by scanning a QR code. It then directs you to the Funan website, where it shares details of the collection from the Love, Bonito store.

Once at the Love, Bonito store, you pick up the dress you have chosen, book the on-demand stylist and take a number for the electronic queuing system to try it in the fitting room. As you wait for your number to flash up, you try an augmented reality walkway photo to share your shopping experience on social media with your friends.

The future of shopping malls is happening now.

Why malls must evolve

CapitaLand, one of Asia's largest real estate companies and Funan’s landlord, believes that as the retail landscape undergoes disruptions, the formula for a successful mall must evolve as well.

Chris Chong, the managing director for retail in Singapore at CapitaLand, tells The Drum that while a decade ago, a mall could succeed largely on the merit of its tenant brands, today it must be able to anchor its own community of supporters and followers. In addition, consumers of today do not just buy products or services, they invest their time and effort in understanding brands and supporting relevant causes.

“Against this backdrop, CapitaLand has created Funan differently right from the onset. We envisioned Funan as a new-gen integrated development comprising retail, office and co-living components to appeal to digitally-savvy consumers pursuing a quality of life in a creative and sustainable environment,” he explains.

According to Chong, when CapitaLand was rebuilding Funan, it wanted a concept that marked a departure from the usual way of thinking of a mall as a box, with a standard checklist of retailers to tick off.

This meant building a passion-led retail model around interactive communities clustered into six passion themes of Tech, Craft, Play, Fit, Chic and Taste. To do this, CapitaLand incorporated spaces for performance, connection, collaboration and experimentation in Funan for shoppers to explore and provided retailers with a more dynamic environment to innovate within.

The result of that was green spaces, rest areas and interactive corners to encourage visitors to discover and experience.

“At the onset when we engaged retailers about CapitaLand’s vision for Funan, many were inspired to leverage Funan as their own innovation platform. Today we see many retailers breaking new ground at their stores in Funan, whether in incorporating digital innovations to enrich their in-store experience or through new concepts and offerings,” says Chong.

“For example, Courts opened its first IoT-themed store, which retails the latest smart home, AI and voice-control technology from leading brands, incorporates interactive in-store experiential concepts and robotics. Swiss sewing machine brand Bernina’s flagship store at Funan offers a new lifestyle concept that includes themed sewing workshops, machine rental service as well as gift personalisation service.”

Retailers need to connect with consumers

Funan’s retailers like Love, Bonito tell The Drum that CapitaLand presented Funan to them as an opportunity for the brand to explore how it can meaningfully connect its customers with its brand better. That meant Love, Bonito had to thoughtfully consider how to make them feel like they matter when they walk into the store with tech.

For the brand, embracing tech was not an issue as it began life as an online shop. It also previously formed a partnership with Adyen to improve the omnichannel experience for its customers.

“Beyond the infinity mirror room and the AR walkway, we are also rolling out features like Click & Collect, Omni Returns and Endless Aisle which not only contribute to a one-of-a-kind in-store experience but also complete the seamless, omnichannel experience that modern female shoppers desire,” says Rachel Lim, the co-founder of Love, Bonito.

“All this is part of our larger rebranding strategy where we’ve taken steps to offer women new ways to engage with Love, Bonito, including making enhancements to our website and tech stack. We are optimistic about how these new concepts can help bring to life the idea of a ‘phygital’ retail playground where shopping can be a refreshing, contextualised and personalised experience."

For WeWork, Turochas Fuad, its managing director for South East Asia, says the co-working space is seeing landlords like CapitaLand getting creative with mall spaces as they rethink the retail experience, and reframe it as a lifestyle destination that can offer an all-inclusive space for living, working, and shopping.

Funan is WeWork’s first location in a mixed-use development, sitting across three floors with direct access to the retail component.

Fuad says by integrating elements of living, working, and shopping to create an all-encompassing lifestyle concept, malls can reshape what the retail experience means for consumers and excite them in the process. For instance, he points to how incorporating co-working spaces in malls has translated to higher daytime footfall for retailers, especially since most shoppers with disposable incomes are professionals.

“As a pioneer in our expertise of connecting spaces with people, we have seen how businesses and communities – both within and around the building – have transformed, creating a ripple effect on the surrounding neighbourhood,” he explains.

“According to WeWork’s Global Impact Report 2019, 63% of members in Singapore did not work in the neighbourhood prior to joining WeWork and are thus bringing more activity and revenue to local restaurants and shops.”

China-based Lenovo, the world's largest personal computer vendor, chose to open its Singapore flagship store in Funan because it believes in delivering meaningful innovation, driven by direct customer engagement and interaction, in line with CapitaLand’s direction for Funan.

Eddie Ang, the country general manager for Singapore at Lenovo, adds that Funan was a fitting opportunity for the brand to advance its vision of ‘Intelligent Transformation’ to better serve the needs of its customers through smart retail.

“The store was designed with our customers in mind. Our goal is to address our customers’ evolving needs for comfort, convenience, and personalization through increased community engagement, as well as to create a seamless digital experience for them,” he explains to The Drum.

“The store is also divided into different zones to cater to the needs of customers across all ages and interests. For example, the gaming zone, dedicated to our Legion brand, is a key differentiator of the store and is fully furnished, arranged in a tournament style and complete with Legion peripherals, allowing customers to immerse themselves in full gaming mode.”

Will malls like Funan revive the retail sector?

The rise of e-commerce has affected brick-and-mortar retailers around the world, including in Singapore, where half-empty shopping malls have become the norm, leading the sales from the 26-year-old Great Singapore Sale (GSS) to dip for three consecutive years.

It has also affected Orchard Road, which is Singapore's main shopping belt. This has concerned the government so much that it has commissioned an S$1.3 million study by Australian urban planning consultancy firm Cistri.

As the world is moving to a ‘phygital’ environment, where physical and digital are coming together, Scott Rigby, the head of digital transformation for Asia Pacific at Adobe believes that reimagined malls like Funan can help revive the retail sector and improve retailers’ bottom line.

Charanjit Singh, the managing partner at Construct Digital, agrees, and adds that by making shopping malls more fun and attractive, people are more likely to go to the mall more often, increasing the chances of them making a purchase at the retail stores.

Social media analysis by Meltwater seems to back up Singh’s observations, as Funan’s offline features were what most people discussed, proving that people are responding well to experiential features.

According to Mimrah Mahmood, the regional director of media solutions at Meltwater, the analysis also shows how conversations peaked in the days following the Funan launch, not just on social media but also on forums and blogs. Most of these conversations are neutral or positive in tone, with ‘surprise’ being the key emotion evoked in the online conversations.

However, Rigby warns a reimagined mall concept without the right focus on customer experience may draw large crowds at the initial launch with fancy technology, but be hard to sustain once the novelty wears off. That means malls and retailers must put customer experience at the core of their design and technology investments.

“For certain industries like fashion, for example, customers want to be able to feel, interact and try on fashion goods, while at the same time, wanting the convenience of making purchases at the comfort of their own home,” he explains.

“It is important for retailers to understand customer expectations and be able to merge these offline and online experiences together – after all, customers who research online before coming in stores tend to spend more after interacting physically with the brands.”

One such technology is location-based tech, suggests Redickaa Subrammanian, the founder and chief executive officer of Resulticks, is analysis on visitor traffic data to shopper behaviour to help optimise operations and advise brands within the mall.

Funan is already doing this, as CapitaLand is utilising video analytics to measure and analyse footfall throughout the mall and entering each store. It also using in-store smart terminals to further capture transaction data so that tenants can use the analytics to refine their offerings and enhance customer experiences.

Some retailers like Lenovo, have taken it upon themselves employ their own location-based tech. It has embedded its smart retail tech in its store that tracks footfall analytics and optimization, along with in-store cameras and product webcams that capture facial expressions.

This allows the brand to pinpoint the areas within the store and products that customers spend the most time on. With such information, it is able to gain insights into their preferences and cater its services to make sure we’re attuned to these details.

“The reimagined Funan is a social retail space for discovery, learning and shopping, underpinned by a digital layer of customer experience to enhance satisfaction. With this configuration, CapitaLand aims to support retailers in embracing opportunities in the brave new world of bricks-and-clicks by attracting and growing a responsive and vibrant community, powered by an ecosystem of sensors and analytics to deepen consumer insight,” explains CapitaLand’s Chong.

For Ritika Verma, the planning director for Singapore at Geometry Global, who recently visited Funan, the evident focus on customer experience by retailers is on display when looking around the mall.

“They are enhancing the shopper experience by attracting consumers to these beautifully designed retail stores, then engaging them with information on the product through immersive experiences (like a cycling track in-store when buying cycles), or digital screens to provide more information on the product, to driving conversion through kiosks payments, scan and go, and click and collect,” she explains.

For now, it appears that the heart of shopping malls remains for shopping. According to Jake Gammon, head of Omnibus APAC at YouGov Omnibus, when Singaporeans were polled on the main reason for visiting shopping malls, 44% said it was for shopping.

Two in ten (23%) said their main reason was for dining, and the other two in ten (20%) said they visited shopping malls to walk around.

However, Gammon says this trend is set to shift in the future. For example, while over half (52%) of respondents aged 55 and above selected shopping as their main reason for visiting a shopping mall, this drops to three in ten (31%) among those aged 18-to-24. There is also an increasing reliance on online shopping.

“Two in ten (21%) shop online, half (53%) shop in-store and the remaining one quarter (26%) shop equally online and in-store. With young people (18 to 24) twice as likely to shop online than older people (aged 55 and above (25% vs. 12%), it won’t be hard to envision shopping malls as no longer being the primary place for retail needs,” he tells The Drum.

Premanjali Gupta, head of marketing for APAC, at Blis, agrees and says contrary to common belief, Blis research suggests that reports about physical retail’s demise have been overstated.

She points out that in Singapore, 49% of people consider shopping a hobby and this sentiment is repeated across the region. This means in-person shopping is here to stay, but retailers who want to stay competitive have to strategically redesign the in-store experience.

"This isn’t a new trend, but it will decide who stays in business over the next five years. Whether that is making the most of new technologies like location-based advertising to attract nearby shoppers, automated store assistance or impressive interactive displays that show you the latest styles, businesses need to capture the attention of shoppers in a meaningful way to guarantee conversion," she explains.

Can this concept be introduced to existing malls?

Chong declines to say if Capitaland will be introducing this mall concept to its other malls, and would only say the real estate giant is focused on building its own community and serving the needs of that community underpins the design and operations of all its malls as each mall is curated differently to best cater to its population catchment.

CapitaLand currently operates 18 malls in Singapore including Funan, as well as malls in eight Chinese cities.

“CapitaLand will continue to review its retail portfolio, in Singapore and abroad, to identify areas and opportunities for reinvention,” he adds.

Dominique Lecossois, a distinguished fellow at the Insead Emerging Markets Institute speculates that CapitaLand is most likely taking six months to a year of operations to analyse Funan numbers before lessons can be gleaned on how this concept can be further improved since some areas will work, while others might not.

“Individual retailers and retail outlets (and not only the mall operators) will need to have a mindset shift of investing in the ‘future’ of malls, instead of purely focusing on numbers and profits. They will have to be willing to spend more money on improving the overall “in malls” customers experiences, atmosphere, and discoveries,” he explains.

For other mall operators looking to upgrade their properties to become like Funan, Tom Blackman, a senior director for Asia at Zendesk says malls can use the data they already have at their fingertips - in partnership with their retailers - to create richer experiences for shoppers.

He adds that by using data-driven insights about customers’ patterns and preferences, they can design a customer experience strategy that helps them drive scale while balancing shoppers’ desire for personalisation and today’s expectations of a seamless experience.

“In our research, we identify brands as being Digital Natives and Digital Transformers. In this case, malls like Funan are the Digital Natives who are disrupting the industry and using technology to differentiate their customer experience. Digital Transformers currently offer a more traditional retail experience and are looking for ways to modernize their approach,’ he explains.

“Our advice to the transformers who are looking to catch up to the disruptors is to put the customer experience at the heart of their retail model - start by looking for ways to integrate your communication channels and provide seamless, self-service support that enhances convenience and will give you a boost in customer satisfaction.”

However, Lawrence Cheok, the senior manager of digital commerce and marketing in the digital transformation practice for APAC at IDC, notes that while Funan has modelled the first steps toward mall reinvention, more needs be done to make way for the malls of the future.

This includes the reinvention of physical outlets with holistic, digital and physical infrastructures to facilitate end-to-end customer experiences that add value and the development of a closed-loop, place-oriented strategy to acquire and analyze customer data and activate insights in the design of the physical fixture, artefacts and architecture.

This will take into account privacy and security as vital hygiene elements.

"On-going data analytics to drive innovation and the creation of fulfilling digital experiences uniquely delivered or complemented by physical outlets," he explains.

"Omni-channel applications as the technology foundation to bridge the online-to-offline and offline-to-online experiences."

Smart nation, smart malls?

Singapore has made becoming the world’s first smart city-state one of its key objectives in the next few years, with Prime Minister Lee Hsien Loong emphasising the goal in his National Day Rally in 2017.

As the country celebrates its 54th birthday this weekend, is now the right time to build smarter and tech-enabled malls like Funan, and upgrade existing ones?

Rigby notes that Singapore’s focus and drive towards becoming a smart nation has provided the natural environment and infrastructure for tech-enabled and new-age malls like Funan to thrive.

However, he says investments in tech has to be driven by customer-centricity in order to be successful because the tech must augment the shopping experience, anticipate shoppers’ needs and deliver relevant, meaningful interactions at every point.

“To do so, shopping malls and their retailers need to think about the types of experience their customers expect and leverage an end-to-end technology platform to turn that into reality, focusing on the overall customer journey,” he adds.

While Funan has made it easier to purchase popular goods (click-and-collect), more convenient to make purchases (FairPrice and KopiTech) and made the malls a more fun and attractive place to be in, Singh does not think it is necessary for more similar malls to be built.

He says a cheaper alternative is simply embracing some of these new methods and best practices and implementing them to the old malls.

"People may be fascinated by these technologies at the start. But whether their interest can be retained depends on the value that these technologies bring. It all boils down to this - does it enhance customer experience?" he asks.

"Because if it doesn’t, these new technologies are merely gimmicks which we should not be investing too much time and effort in."

As retail and shopping malls evolve, the feeling of physically holding an item, taking ownership of it and walking from a store with the satisfied glow of the perfect purchase will not change. Retailers and malls can no longer just aim to push products, but instead, need to ask themselves how physical space and activities can add to creating a holistic experience.

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