Singapore’s Department Stores Are Disappearing. What Happens to the Malls They Leave Behind?

Singapore's department-store era is quietly coming to an end.

Metro, which has traded in Singapore for almost 70 years, is closing its final two full-size stores at Paragon on Orchard Road and Causeway Point in Woodlands once their leases expire. The retailer plans to focus instead on smaller specialist shops and pop-ups.

Metro isn't alone.

Isetan has closed five Singapore locations since 2015, while BHG has reduced the size of its Bugis Junction flagship.

That's a significant change for a country where department stores once played a central role in the shopping experience.

But there is a bigger business question hiding underneath the closures.

Corporate strategy consulting

What happens to everyone else when the anchor leaves?

Department stores create what economists call a positive externality. They attract large numbers of shoppers, and neighbouring businesses benefit from that footfall without having to pay for it directly.

A café doesn't need to convince every customer to visit the mall if thousands of people are already walking past its door.

A boutique doesn't necessarily need to generate all its own traffic.

The department store helps bring people there.

Take that anchor away and the economics can change quickly.

Metro's exit from Paragon comes shortly after CapitaLand Integrated Commercial Trust completed its acquisition of the mall and announced plans to reconfigure parts of the property. Metro has said its decision followed a strategic review of its retail business, which has been loss-making.

That doesn't necessarily mean Paragon is in trouble.

It does mean the mall has to replace something that used to do a very useful job.

And this is where I think the story becomes relevant far beyond Singapore.

Retail landlords can't simply ask whether a store pays enough rent. They also have to ask what that store does for everyone else.

A popular department store might generate less direct value per square metre than a premium boutique, yet its presence can make the entire building more attractive.

Remove it, and the numbers can look very different.

For Singapore's malls, the next few years could therefore become an interesting experiment in what replaces the traditional department store.

Will it be entertainment? Food? Healthcare? Smaller specialist retailers? Pop-ups? Something we haven't really seen yet?

The answer matters because physical retail isn't disappearing.

It's being forced to prove why people should leave home to visit it.

That is a challenge founders and retailers everywhere should be watching.

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