Landlords’ gains may not mean more choices

Source : Sunday Times – 21 Jun 2009

I refer to the report, ‘Mall landlord encroaching on our turf, claim tenants’ (June7).

It would be short-sighted for consumers to celebrate the presence of more competition when mall landlords get into the business of their tenants.

This could merely be short-term, as a mall operator is a commercial entity and will always seek to maximise its profits.

A lesson from the past is instructive. If one recalls, when foodcourts first appeared in Singapore, many of them had stalls operated by local names developed over decades before.

Increasingly, these have been replaced by stalls operated by the foodcourt operators themselves, selling the same food such as braised duck rice, beef noodles and Hokkien prawn noodles in the same locations where the external food outlets used to be.

It is not surprising that a bigger player has the resources to overwhelm the incumbent. A foodcourt operator is also in a position to observe the operations of a small successful outlet and then leverage on the goodwill generated by that outlet.

I am sure many consumers lament the disappearance of the original stalls, which occurred despite their operations appearing to be successful.

The loss of these brands only serves to restrict consumer choice, and we now have to live with generic versions of such food copied by foodcourt operators.

With the advent of Singapore’s Competition Act in 2005, restrictions on the use of dominant activity have been imposed. The Competition Commission of Singapore carried out one study of retail mall space in Singapore last year relating to any dominant power of real estate investment trusts and mall landlords, and found that no such power existed.

However, it seems an opportune time to revisit this study.

Bryan Tan