Commenting on Metro’s shift to capsule concept, SMU Lee Kong Chian Professor of Marketing and Deputy Dean (Research) Kapil Tuli said the shift is a necessary reaction to market forces. He observed that the financial commitment required in terms of rent, deposit, dedicated headcount, and maintenance is significantly larger when operating a large-scale department store. He added that with the smaller format, a firm can adopt a more focused and agile approach in terms of identifying high-margin and high physical-retail demand items that can provide a better return on investment (ROI). Still, Prof Tuli cautioned that it will take time for capsules to replicate the same scale of financial returns as a big department store.
