Why is Giant closing its VivoCity hypermarket outlet?

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Giant's VivoCity Outlet Closure Attributed to Lease Non-Renewal and Business Rationalisation

The Giant hypermarket outlet at VivoCity is set to close in the first quarter of 2019 because its lease will not be renewed. This decision is part of a broader business rationalisation process by the parent company, Dairy Farm, which involves regular reviews of its store portfolio to maximise efficiencies. Employees at the VivoCity store are slated to be redeployed to other Giant outlets or to sister stores under Dairy Farm, such as Cold Storage, Guardian, and 7-Eleven.
Lease Expiration Necessitates Closure

The immediate cause for the impending closure of the VivoCity hypermarket is the non-renewal of its lease. This lease is scheduled to expire in the first quarter of 2019, prompting the decision to cease operations at this location. The hypermarket, which opened in 2006 and occupied two levels, was a significant anchor tenant within the VivoCity mall.
Strategic Business Review Underpins Decision

The closure aligns with Giant's parent company, Dairy Farm, undertaking a regular review of its retail portfolio. This "business rationalisation process" aims to ensure optimal business efficiencies, encompassing decisions on opening and closing stores based on factors like performance, lease renewals, and site potential. In 2017, Dairy Farm itself reported a "disappointing" performance, with a 30 percent drop in operating profit for its supermarket and hypermarket businesses, primarily due to underperformance in Singapore, Malaysia, and Indonesia.
Potential for Rising Rental Charges Cited

While a spokesperson for VivoCity did not confirm rising rental charges as a specific reason, a sales assistant at the Giant VivoCity store indicated that increased rental costs were a factor in the decision. Mall tenancy assessments, according to a VivoCity spokesperson, consider various elements to curate the mall's tenant mix and foster a comprehensive shopping experience.
Future Tenant Expected Within Six Months

A "major and reputable grocer" is expected to take over the space previously occupied by Giant, aiming to cater to diverse shopper needs. This new tenant is anticipated to move in within six months from April 1, signalling a transition in the mall's retail landscape. While NTUC FairPrice has not confirmed if it will occupy the space, the supermarket chain stated it is continuously seeking viable locations for new store openings.

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Why is Giant closing its VivoCity hypermarket outlet?

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