THE DECLINING ROLE OF DEPARTMENTAL STORES AS AN ANCHOR TENANT

Abstract

Departmental stores in Singapore are facing a declining role as an anchor tenant in shopping centres. As such, the study aims to address two questions related to the anchor tenant role of departmental stores. First, what are the causes of their decline as an anchor tenant? Second, what are the externality effects of incorporating departmental store within a shopping mall? Interviews conducted with 5 experts show full consent that departmental store is unlikely to be obsolete in the near future despite its declining role. Their one-stop-shop convenience will remain relevant in the light of the fast-paced lifestyle in Singapore’s developed economy. However, they face an uphill battle to regain their dominating role compared to the past. It is found that departmental store is no longer an exclusive draw to consumers. The lack of product differentiation fails to encourage repeated patronage. In addition, their inability to respond swiftly to the changing consumers’ preference has resulted in a substantial loss of market share. The recent high rental rates are the greatest challenge. It increases departmental stores’ occupancy cost, squeezing their profit margins to the minimum. 254 surveys collected from 4 selected downtown and suburban shopping malls are used to examine the effects of departmental store on shopping centre. It is conclusive that the presence of departmental stores has a positive and significant effect on the frequency of mall patronage for both locations. However, their presence does not necessarily have a direct impact on consumers’ duration of visit and expenditure. The externality effect is stronger in city shopping centres with 62% of the respondents surveyed frequent downtown departmental stores more than the outlets in suburbs. The drawing power of a departmental store as an anchor tenant is positively correlated to its physical size as a larger floor area can facilitate a wider and deeper assortment of merchandise, attracting consumer patronage.