Transforming the Retail Horizon: Experiential Retail and Digitalisation key in driving post-pandemic growthBy Quan Yao Peh
In Singapore, retail sales have essentially returned to pre-pandemic levels. Consumers are returning to stores to find revamped and refreshed retail concepts that showcase the relevance of the brick-and-mortar store in the post-Covid era.
Experiential retail is taking centre-stage as brands highlight their stores as more than just a place to transact, but one where consumers can enjoy themselves and engage in experiences.
E-Commerce growth in Singapore has slowed down from pandemic highs, with an initial spike at 53% from 2019 to 2020, but remained strong with a 6% growth rate from 2021 to 2022, according to Euromonitor International. Consumers are now more confident buying higher-value products online. Retailers have also realised the significance an online presence plays in maintaining top-of-mind consumer engagement and are looking to build a consistent and always-on relationship with the consumer, to drive loyalty and recur sales.
Return of pre-pandemic lifestyles and travel drive growth for selected categories in retail
In 2022, the return of pre-pandemic lifestyles due to the easing of social restrictions and the return of international travel has driven demand for some retail categories.
Apparel and Footwear and Beauty Specialist Retailers are seeing good retail sales recovery in 2022, as a return to the office and social events has driven demand for workwear and beauty products. The reopening of international borders has also led to increased inbound visitor arrivals, especially from countries such as Indonesia and China with Singapore being a popular shopping destination for regional tourists. This pent-up demand has driven retail sales recovery for categories such as Jewellery and Watch Specialist Retailers and Bags and Luggage Specialists.
Use of technology to enhance the in-store and online shopping experience
Across physical and digital channels, retailers are utilising technology to improve the shopping experience in areas such as consumer engagement and supporting consumers’ purchase process.
In the store, technology is being used for a more customer-centric and immersive experience. Leading international Beauty Specialists Retailer, Sephora, launched its first Store of the Future concept store in Asia at Singapore’s Raffles City Shopping Centre in September 2022. The store seeks to provide a personalised shopping experience through digital technologies, mobile checkouts, and experiential retail, which includes services like workshops, hair consultations, and facial services.
In the online space, retailers and brands are also utilising technology to help engage and sell to consumers. For instance, Cellarbration is an alcoholic drinks distributor that distributes products to multiple bars, restaurants, and alcohol retailers. They also host live-streaming sessions online on Facebook Live, that have ignited the attention of numerous alcohol lovers in Singapore, with over 24,000 followers on their Facebook page.
The future of retail in Singapore
Looking ahead, the future growth of retail in Singapore will be uneven by category but remains exciting. Grocery Retail which saw significant growth in the pandemic is likely to see sales normalisation as dining occasions shift outside the home once more. Categories such as Jewellery and Watch Specialists and Apparel and Footwear Specialists are likely to recover in line with the recovery of international travel, discretionary spending, and pre-pandemic lifestyles.
Categories that have seen underperformance due to a shift towards E-Commerce will likely see continued poor sales moving forward. This includes Department Stores, which are less popular in recent times due to their uncompetitive pricing and product range, and Appliances and Electronics Specialist Retailers which are seeing sales declines due to manufacturers establishing their Direct-to-Consumer retail channels and price promotions offered by E-Commerce Marketplaces.
The continued digitalisation of retail outlets and the offering of a seamless experience across physical and digital channels is expected to continue, as retailers are now more aware of the need to meet and engage consumers across the purchase journey. Notable efforts include utilising augmented reality and virtual reality to enhance the purchase experience, integrating in-store product stock levels with their websites, and implementing digital payments in-store and online.