The overall retail outlook in Singapore has not been rosy in recent months, to say the least, with lower customer footfall due to safe distancing controls, coupled with conservative spending by retailers amidst the economic uncertainty, exacerbated by rentals and overheads. Indeed, retail sales have dropped while mall vacancies spiked, also seen in the closure and exit of several well-established retailers and familiar brands.
Bucking the trend, however, is the sports and lifestyle brand Skechers – which has opened a staggering five new stores in months of July and August 2020, and also expanded with bigger stores in two existing malls. Even in this tough retail climate, the brand has not stopped its growth plans to develop Skechers’ footprint in Singapore.
The brand has also continued to thrive in recent months, moving ahead to launch new products, such as its collaborations with Sailor Moon, One Piece and Premium Heritage sneaker series. This meant that Skechers was able to achieve positive single-digit sales growth in both June and July 2020, despite the grim outlook.
What is more, even in these rocky times Skechers did not forget to lend support to frontline workers and to contribute back to the community. It launched its #SkechersAppreciates initiative to thank the healthcare heroes, offering the brand’s signature comfort walking shoe for a small fraction of its original price.
Retail in Asia had the pleasure to interview Zann Lee, Vice President of Skechers Southeast Asia, on the topic of retail expansion and growth amidst the challenging climate in this pandemic.
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RiA: How has Skechers been leveraging on the sneakerization phenomenon?
Zann: In the past two years, Skechers has ramped up on providing diversified product categories and different ranges of products that suit the market, each with its own focus and target demographic – for example our Performance range for running and sports, Lifestyle and Casual footwear, Fashion and Style-centric styles which has also expanded with more apparel choices, and definitely collaboration launches (most recently One Piece, Sailor Moon and Hello Kitty).
Skechers’ products are also aimed at various price points, including the recent Premium Heritage series, a limited-edition premium priced collection. I’d also say that we are blessed to have trend-right products which have enabled us to catch onto the growing athleisure trend.
RiA: What is Skechers’ customer profile? Have you seen any shift in the past few years?
Zann: Our customer profile encapsulates a wide demographic segment, as Skechers products are available for kids and adults, as young as 3 and all the way to 80. About 60% of Skechers customers are female.
We have seen more younger consumers who are purchasing Skechers, especially in light of the collaboration collections that cater to this target audience, featuring their favorite anime and cartoon art. Our marketing campaigns have also helped to attract younger customers, with the endorsement and ambassadorship campaigns from popular K-pop idols like SISTAR, EXO and WayV.
We also work with well-followed influencers to wear and style Skechers products, such as Night Owl Cinematics and Jianhao & Debbie of Titan Digital Media to connect with this consumer demographic.
RiA: How has Skechers been able to continue its business expansion (in Singapore and Southeast Asia) amidst the challenging retail climate?
Zann: There is no doubt that it is a tough time for retail right now, but we see challenges as opportunities, so this is a good time for us to enter the market with good store locations which have freed up, as there are brands which are exiting Singapore or even the region entirely.
The decision to expand with new stores had been taken even before the pandemic started, as Skechers was able to achieve double-digit sales growth in January and February this year. The excellent performance pre-COVID, as well as a healthy recovery in June-July 2020 allowed us to proceed with the new store openings and expansion.
In addition, the landlords have also been reassessing their rental rates, which allows us room to negotiate with them. Due to the tough retail environment, landlords are more open to negotiations, and we’ve seen a 20-30% reduction from the listed rental rates in Singapore. This mirrors the trend that we observed in other parts of Asia, like a 40% reduction in China and 30-40% drop in Thailand – which helps in making opening new stores possible in this current climate.
RiA: What are some strategies Skechers has adopted to stay afloat?
Zann: I think we have done something significant in all the four areas you mentioned. Our retail marketing and sales tactics helped to drive sales in the Phase 2 retail opening period in Singapore, with the in-store deals and tactical promotions proving popular among consumers, some of whom tended to be more price-sensitive in light of the pandemic.
But on the other hand, we continued to launch products that are appealing to certain groups of consumers, such as our afore-mentioned collaboration launches with Jeremyville, Sailor Moon and the most recent Hello Kitty collection. These are novelty items which are able to attract consumers to spend as well.
In terms of store distribution, the new openings have helped to expand Skechers’ store network, so that customers have more access points to purchase our products. Indeed, we have noticed that sales in sub-urban areas have increased as compared to stores in the central or town locations, as there are some consumers who do not want to travel far to make their purchases.
Lastly, we made use of the circuit-breaker retail closure period to send our staff for virtual training in various courses, for both frontline retail associates and backend staff. This helped them be ready for the new retail environment when Phase 2 reopening was announced.
RiA: In this new retail norm, are there any changes in business priorities in comparison with pre-pandemic times?
Zann: During the retail closures, we had to ramp up our online and e-commerce platforms in order to continue doing business. We are already partnering with Lazada and Shopee currently, and own Skechers e-commerce website will go live very soon.
Especially in this current climate, we see e-commerce as a complimentary strategy to brick- and-mortar. I think customers still largely appreciate the social and sensory aspects of shopping in-stores, and they prefer to get advice from our retail advisors. But at the same time, there are some consumers who like to have convenience in online shopping, so we have to ensure that we are covered on both online and offline channels.
At the same time, we ensured that our employees remain one of our business priorities. We try to reduce costs and increase efficiency in our operations, but we did not cut any staff headcount or implement salary cuts. On the contrary, we put in our best effort to drive sales (both online and offline) and also to open more stores instead.
RiA: What are the relevant consumer and retail trends that will be relevant for Skechers and the Singapore fashion/retail industry?
Zann: During this period, people are increasingly health-conscious, so categories such as sportswear and activewear categories remain popular despite the pandemic. In addition, the athleisure category is continuing to grow steadily, and I’m proud to say that Skechers is one of the market leaders in this segment, especially walking shoes which we are known for.
It will also be important to continue identifying experiences relevant to your consumers. For example, when we saw the market demand for athleisure shoes, we brought back the Skechers Friendship Walk but in a virtual format this year, with synergistic links to our walking shoe range. We held it in 3 countries in Southeast Asia this year (Singapore, Malaysia and Thailand) and saw great response from the public.
RiA: How do you foresee the current and future retail outlook for Singapore and the region?
Zann: Even despite the overall challenging climate for retail, there are still pockets of opportunity available. During this time, the key will be to react fast in order to respond to market sentiments. For example, retailers will need to place adequate focus on online channels, while ensuring that they continue to train their staff and develop exciting product offerings to keep up with the evolving market.
While there are many retailers that are exiting the market or winding down, brands who are able to weather through this storm will emerge stronger and better equipped for the future.
RiA: What’s next for Skechers?
Zann: For Singapore and the region, we want to continue to grow Skechers’ market share here. So, expansion is definitely still on the cards for us. In fact, as some retailers are now exiting the market, we are eyeing prime locations at more affordable rental rates. I think in this new retail environment, our marketing strategy will be more localized and digital, to adapt to border restrictions (lack of tourists) and also as people are staying home more often.
We also see an upcoming trend for superstores and bigger store sizes where people can get everything under one roof. We opened the first SEA Superstore in Bangkok in June 2020 and will be opening the second Skechers Superstore in Kuala Lumpur in November 2020. In order to react fast and cater to consumer demand, we are also keeping our eyes and ears out constantly, analyzing consumer data and having a deep understanding of the market.