Singapore retailers are on track to thrive post-pandemic
Retail | 10 May 2022
Much of Singapore’s characterisation as a shopping paradise is tied to its retail industry. The COVID-19 pandemic saw the retail industry grapple with new challenges and leverage on digitalisation to survive. As the economy continues to re-open and the retail sector heads down the road to recovery, a lot will ride on whether Singapore retailers will be able to innovate and keep up with the latest trends and changing consumer behaviours post-pandemic.
The Singapore retail scene and COVID-19
COVID-19 has ravaged economies and communities across the globe. Travel restrictions and strict safe distancing measures (e.g., Circuit Breaker) that prohibited social gatherings and closure of non-essential businesses severely disrupted consumer-facing sectors like retail. At the height of the pandemic in 2020, Singapore’s retail sales suffered its biggest drop since 1986, plunging 40.5 percent year on year according to data released by SingStat. Labour shortages and rising occupancy costs exacerbated by the pandemic forced major brick-and-mortar retailers (e.g. Robinsons, Esprit) to exit the local market and smaller retails to fold. Despite this, the 2021 Economic Survey of Singapore had positive news – the retail sector expanded by 4.3 percent in 2021 and is expected to show improvement in 2022 as COVID-19 restrictions ease further.
Retailers are cautiously optimistic about their current business situation
The progressive easing of restrictions and a successful vaccination programme is expected to boost domestic consumer spending and lift the retail industry. Coupled with Singapore’s move to further relax border measures on 26 April 2022 to allow all fully vaccinated travellers to enter Singapore without the need to take a pre-departure COVID-19 test, this is expected to benefit tourist-reliant retail segments. Industry observers echoed similar sentiments and predicted the sector to recover to pre-pandemic levels in 2022.
Singapore retail companies’ sentiments towards their current business situation remains fairly positive, though less optimistic than other sectors.
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Singapore retail’s revenue on the uptick
In tandem with improving business sentiments, local retail companies also saw an uptick in their revenues. IndSights Research’s quarterly Business Sentiment Survey (BSS) found that retail companies’ year-on-year (YoY) revenues have shown gradual improvements over quarters since Apr to Jun 2020, despite a dip in Jul to Sep 2021 likely due to Singapore’s return to Phase 2 Heightened Alert then. Retail companies’ YoY revenues have also been trending closely to the overall numbers across all sectors, reinforcing that economic recovery boosts consumer confidence and spending.
Digitalisation is key for retail sector’s recovery
Despite its adverse impact on the sector, COVID-19 was also a catalyst for many retailers to digitalise their operations. Cited as “a very important enabler” of recovery by Trade and Industry Minister Gan Kim Yong, digitalisation may translate to improved operational efficiency, increased brand awareness, and enhanced customer experience.
Many brick-and-mortar retailers were forced to shift their business online over the course of the pandemic situation, as strict safe distancing measures curtailed consumer flow to their physical storefronts. Findings from our Digital Platforms Usage poll revealed that a majority of local retailers (87 percent) found e-commerce platforms to be at least moderately important in supporting their business during COVID-19. More retailers have also adopted an omnichannel strategy, blending physical and online retail shopping to fulfil a purchase experience.
Findings from the BSS suggested that Singapore retailers are aware of the benefits of digitalisation, and therefore intend to increase their investments in digitalisation in 2022 – and at a higher rate than other sectors.
Smaller retailers with leaner resources will require support to digitalise but will likely struggle to identify available support in this area. Seven in 10 of the retail firms polled from the BSS that were unaware of any government support initiative for digitalisation were micro-sized firms. Industry players that IndSights Research spoke to shared that the search for information on the types of support available, including application, can be a confusing and resource-intensive process.
The Singapore government launched the Retail Industry Digital Plan (IDP) in 2019 to assist small medium enterprises (SME) in their journey to digitalise. The IDP is part of the larger initiative (SMEs Go Digital programme) to make going digital simple for SMEs, with step-by-step guides on the digital solutions to adopt at each stage of business growth.
READ ALSO: Business resources to support Singapore companies’ digitalisation journey –
The key to thrive: Envisioning the retail of tomorrow
Looking ahead, some key trends are set to revolutionise the retail sector such as:
- live streaming commerce where retailers can combine elements of entertainment to increase audience participation and drive sales;
- transformation of supply chains to facilitate speedier order fulfilment or timelier update of inventories to satisfy consumers’ increasing need for instant gratification;
- shopping in the metaverse, which creates immense opportunities for retailers to exploit as an additional channel for brand engagement.
READ ALSO: Other strategies that Singapore retailers can adopt to be competitive
It is encouraging to see that despite the challenges and disruptions, the retail industry remains optimistic about its business outlook.
The journey towards recovery will undoubtedly require retailers to harness the transformations that are taking place and rapidly adapt to changes in consumer behaviour to thrive in a post-COVID era.
- Channel News Asia: https://www.channelnewsasia.com/business/digitalisation-important-enabler-recovery-retail-sector-covid-19-2132316
- Channel News Asia: https://www.channelnewsasia.com/singapore/big-read-live-streaming-e-commerce-retail-covid-19-online-shopping-2328556
- Forbes: https://www.forbes.com/sites/forbestechcouncil/2022/03/16/virtual-shopping-in-the-metaverse-what-is-it-and-how-will-ai-make-it-work/?sh=30606aea5f27
- Infocomm Media Development Authority (Mar, 2022). Retail Industry Digital Plan. Retrieved from: https://www.imda.gov.sg/programme-listing/smes-go-digital/industry-digital-plans/retail-idp
- McKinsey & Company: https://www.mckinsey.com/business-functions/operations/our-insights/how-retail-can-adapt-supply-chains-to-win-in-the-next-normal
- Ministry of Trade and Industry: https://www.mti.gov.sg/-/media/MTI/Resources/Economic-Survey-of-Singapore/2021/Economic-Survey-of-Singapore-2021/FullReport_AES2021.pdf
- Singapore Department of Statistics: https://www.singstat.gov.sg/-/media/files/news/mrsapr2020.pdf
- The Business Times: https://www.businesstimes.com.sg/hub-projects/property-2021-april-issue/the-retail-scene-in-post-pandemic-singapore
- The Business Times: https://www.businesstimes.com.sg/consumer/singapore-consumer-spending-to-normalise-from-2022-fitch-solutions
- The Singapore Government: https://www.gov.sg/article/facilitating-the-resumption-of-travel-using-the-vaccinated-travel-framework
This article is contributed by Jamie Choo, Executive (Research), IndSights Research.