For Singapore retail it can sometimes feel like the challenges are coming from every angle. Many stores are finding it difficult to source the sales staff, with fewer locals keen on lower-paid, labour-intensive work. At the same time, e-commerce giants are increasingly putting the squeeze on brick-and-mortar shops in The Lion City’s malls, while shifting shopper behaviour making planning for the future increasingly difficult.
For a country that once called itself a shopper’s paradise, is it slowly moving towards becoming retail hell?
We don’t think so. Savvy operators are rethinking the world of brick-and-mortar retail, delivering experience-hungry shoppers with unique spaces to explore, enjoy, and share. By melding space design, innovative business models, and technology, select Singapore retailers are charting a new course for the future of the retail industry.
In this article we’re going to take a closer look at some of the key trends challenging the Singapore retail industry, as well as considering how savvy retailers can safeguard themselves against an uncertain future.
The Challenges Facing Singapore Retail
Singapore has felt the disruptive power of labour crunch since 2017 where, according to Ministry of Manpower, the decline of 32,000 work visas issued was 10 times more than 2016’s decline of 2,500. This has at least in part been triggered by the tightening of foreigner hiring rules in recent years. The issue is likely to become even more pressing as the country’s twin challenges of ageing population and shrinking base of citizens becomes even more acute in the next 5 years.
With a falling number of workers, conditions are only getting more competitive as retailers fight to hire available talent. The result? An increasing cost gets transferred to the shoppers.
Shoppers today do not shop like they did 10 years ago. Even in a tiny city where travelling 30 minutes by car is considered by many to be a long ride, more savvy shoppers buy their shirts, shoes, and groceries online. This has led to some of the world’s biggest e-commerce players have targeted the country, due to its location as a gateway to the lucrative ASEAN market and because of the buying power of its affluent population.
All these factors are putting pressure on malls, with rents falling and vacancies rising. This trend is affecting all except the most popular of shopping malls. Physical retailers who insist on maintaining a brick-and-mortar presence will need to change their business models in order to offer unique experiences that online retailers can’t provide.
Leading with the Experience
Many retailers are tackling the challenge head on. Several of the most innovative brands are, for example, turning their premises into event or lifestyle spaces, offering more than the chance to shop. Kinokuniya is a great example of this trend, with the leading Japanese bookstore chain providing in-store events such as meet-the-author sessions and panel discussions.
Meanwhile retail/cafe hybrids like In Good Company, a fashion boutique with its own bakery cafe, are becoming increasingly common.
Exclusivity is another incentive that can tempt consumers out of their homes, as evidenced by the long queues every time H&M has a limited-edition designer collaboration.
The Time for Change has Arrived
It’s unrealistic for retailers to expect customers to someday return to their previous shopping habits. Millennials and Generation Z are more focused on experiences than ever before, while e-commerce businesses will only become better at providing ultimate convenience for time-strapped consumers.
For retailers, the time has come to think about their business models in order to deliver the unique experiences that online retailers can’t provide. It’s also time to think about the strategic partnerships needed to execute on such experiences. From identifying new spaces suitable for experiential retail, to creating the engaging store experiences themselves, a partnership-first approach can help take the guesswork out of the future of retail.
If you’re interested to find out more let’s schedule a time to discuss further how to navigate the changing Singapore retail environment.