Magazines Archives - 2008 January
Retail Outlook The Year Ahead
Optimism runs high among Singapore retailers
After an exhilarating year of 7.5% economic growth, with unemployment rates at a decade-low
of 1.7% and over 172,000 jobs created in the first three quarters of 2007, optimism is running
high in the new year among retailers throughout Singapore.
Singapores evolving retail landscape has seen more changes in the past two years than that of any other country in the region. SConstruction of the island-states first two integrated resorts (IRs) commenced early last year, while new malls VivoCity, Square 2 and Central sprouted up around the country. In addition, several shopping centres in town and the suburban areas embarked on ambitious refurbishment to keep shoppers going back for more.
On top of that, Singapore has welcomed its 10-millionth tourist, breaking its 9.7-million record a year ago, and looks well on its way to achieving its 2015 target of 17 million visitor arrivals,
and S$30 billion (US$21 billion) in tourism receipts.
Continuing its upbeat trend, the country seems unfazed by food scares and the burgeoning prices of transport and other commodities. Overall, the strong economy in Singapore has positively impacted consumer spending across the retail sector, notes Terry OConnor, CEO of Courts (Singapore) Ltd, one of Singapores leading furniture, electronics and IT retailers.
Drawing an example from the new Courts Megastore, he says the groups flagship store-cum-arehouse drew a million visitors six months into its opening and contributed up to 30% of the groups turnover within the year.
Even Singapore Prime Minister Lee Hsien Loong remarked in his New Years Day message: ... While prices have gone up, so have earnings, and generally more than inflation ... that is why shopping malls were thronged with Christmas shoppers, and tourist
agencies have had a record year arranging overseas holidays for Singaporeans. However, riding on the back of a 6% economic growth in the fourth quarter of 2007, a cautious 4.5%-6.5% expansion has been projected for the republic this year, taking into consideration the potential US recession which is expected to have an impact on Asia, said the prime minister in his speech. But on a heartening note, he added that a more diversified economy will weather external shocks better.
Still, no end to the increasing developments seems within sight for now, as PM Lee noted the major projects under way to upgrade our infrastructure and economy. Among these, the Singapore flyer, a giant observation wheel, poised as a must-see attraction, will start running
this March. Also, the highly anticipated F1 Singapore Grand Prixs first night races, which will flag off in September, is targeting S$100 million in tourism receipts.
As these plans progressively fall into place, we can look forward to a more exciting and vibrant city landscape, pronounced PM Lee in his message.
With so much coming up, it would be difficult to put a damper on the pace of developments, which are getting grander and more revolutionary in shape to challenge an evolving skyline. The
new year will not only see a total of 2.5 million sqf of retail space on the market,inclusive of new and enhanced properties, but will also witness the elevation of the Singapore retail landscape to a
whole new level of shopping for both locals and visitors alike.
Global property consultancy DTZ Debenham Tie Leung (SEA) Pte Ltd has revealed in its quarterly report that the total potential supply of retail space in the country stands at 1.7 million sqf this year. Anna Lee, associate director for retail at DTZ, foresees that new niche retail space [will] continue to energise the market as mall managers actively spruce up shopping areas through refurbishments, asset enhancements and redevelopments .
Indeed, as a result of this, there has been a proliferation of both furniture and homeware retailers, given the spillover effect on this sector, testifies Courts OConnor. Bolstered by the strong consumer sentiments last year, the Singapore retail landscape has become more competitive with many jumping on the bandwagon for electronics and furniture-space, he says.
Similarly, the evolution of technology has fuelled consumer demand for sleeker, faster, better gadgets, he adds.
Suburban malls, too, have started to differentiate from those in Orchard Road and Marina Bay through continual upgrading and enhancements. Mall repositioning is taking place across
neighbourhoods as well, with many establishments aligning themselves with the catchments they serve.
In the eastern part of Singapore, better known for its chalets and beach resorts ideal for holiday-makers, White Sands has been repackaged as an active lifestyle mall. Other heartland
entities Hougang Mall, Anchorpoint, Northpoint, West Coast Plaza (formerly Ginza Plaza) and Causeway Point among them have undergone or are in the process of revamping their facades
to cater more to the needs of residents nearby.
Space aside, deputy chief executive of SPRING Singapore Png Cheong Boon in his address at the Singapore Retail Industry Conference (SRIC) last year advised : For the industry to prosper, retailers must therefore provide more than just goods and services. They must also offer an enjoyable lifestyle experience for the customers. (SRIC is an annual conference for industry professionals organised by the Singapore Retailers Association.)
Notably, developers no longer build a mall to just house retailers and food outlets for shoppers. They now also look into the architecture and design, combining art and technology, as they launch
newer, more challenging concepts and formats.
Upgrading projects and new mall developments are important to ensure that the shopping environment continues to look new, refreshing and inviting to consumers, says OConnor. However, he cautions that it is important to note that innovation has to be sustained, and not based on a one-off effort.
One such project, spearheaded by Orchard Turn Development Pte Ltd, is ION Orchard. This retail-cum-residential development located in the heart of the city is said to be rewriting the rules
of the retail industry. Apart from the malls unique design and facade, it will house six internationally renowned superbrands, 60% of which are on their first foray into the Singapore scene, indicating a shift in the mix of retailers here.
Orchard Central and Somerset Central are two other developments expected to be completed this year on Orchard Road. Besides these, Singapores two IRs coming up will add more
premium retail space to the scene, says SPRING Singapores Png.
Meanwhile, incentive programmes such as Late Night Shopping and the Great Singapore Sale (GSS) continue to reap rewards for retailers. GSS 2007 set a new revenue record of
S$5.6 billion despite initial concerns over the goods-and-services tax (GST) hike to 7% from 5%.
OConnor believes that in the long run, the impact of service taxes is insignificant in impacting consumer spend when it comes to bigticket purchases, particularly electronics and IT products, which have a relatively short product cycle.
He says: The GST hike could not have been better timed to occur after the GSS season, so that retail sales were not compromised [by] the short-term withdrawal impact of the GST hike.
Singaporeans can also expect new retail concepts to show up. Supermarkets, too, look set to turn grocery shopping into an experience for shoppers to look forward to, leaving the days of
simply picking up groceries at the local supermarket and standing in long queues at the checkout counters soon behind us.
NTUCs premium supermarket, FairPrice Finest, for example, now invites shoppers to browse its extensive local and international product range, buy premium meats and fresh seafood,
pick from a range of hand-made chocolates at an in-store chocolatier, and then stop at the cafe for a quick bite before picking up a bottle of fine wine and heading to the cashier.
Apart from developments and newer retail concepts, maintaining the service standard of staff in the booming retail industry is another area that has garnered much attention over the past year.
OConnor adds: Service differentiation will be key in [setting apart] Singapore as a retail hub. As consumers in Asia become more affluent, the service experience will be important in gaining a share of their wallets.
With the National Retail Scholarship programme launched to encourage more people to take on retail careers, the service sector of the industry is poised for further improvements.
OConnor also points to the rise of low-cost air carriers in Asia giving shoppers greater access to shopping destinations in the region. We can then expect to serve a more cosmopolitan
base of customers who will no doubt be savvier, more demanding. Therefore, we need to continually benchmark across best practices globally, in order to differentiate Singapore as a retail destination.