The 8-week long GSS just ended in July and we went to Singapore’s prime shopping district (Orchard Road) for ground checks/shopping. With too many similar malls, lack of novelty deteriorated local spending, although GSS tourist receipts did grow 10%. In spite of a proliferation of outlets, we think F&B players are the main winners of this year’s GSS, while fast-fashion retailers continue to be strong.
■ Mauled by more of the same malls
Visitor arrivals to Singapore have fallen 4% YoY for the Jan-May 2015 period. On top of the strengthening currency, we think that the country’s appeal as a shopping paradise is diminishing. Although Orchard Road is still the preferred shopping destination in town, repetitive high-end and fastfashion chained stores deem the shopping scene as rather unexciting. We believe the lacklustre climate could be further aggravated when more international retailers move into suburban malls.
■ E-commerce drew the crowds
In an environment of labour shortages and high rental costs, online platforms pose a cheap and efficient method to penetrate the consumer market. During the first month of the Great Singapore Sale (GSS), spending on e-commerce was 14x higher vis-à-vis the previous month. Lazada, an online shopping site, saw visitors from search engines soaring 22% QoQ. Traditional stores that sell merchandises that can easily be bought online, such as cosmetics, apparels and accessories, are likely to continue to experience intensified competition.
■ Food & beverage (F&B) retailers likely to be the biggest brickand-mortar winners
Food service retailers provide the experience of dining with companions – something that cannot be purchased online. While consumers may be cautious on discretionary spending, or substitute traditional shopping with e-commerce, we observe that restaurants in town continue to see large crowds during peak hours. MasterCard further concurred that restaurants and eateries remain the top spending category for Singaporean MasterCard holders, with SGD65m transacted in F&B outlets on the island in June.
■ Consumer spending in Singapore still weak
Consumer spending on discretionary products continues to be weak in Singapore. Faced with greater competition from digitalisation, we think that F&B service sectors such as restaurants are likely to do better than the discretionary merchandise retailing segment as the former provides an experience that online platforms cannot replicate. (Read Report)
Source : RHB Research