Chart of the Day: Online retail to snap 10% of total sales by 2022

Food and drink are expected to account for a mere 0.53% of retail sales.

Online retail is expected to expand from 5.3% in 2017 to 10.3% of total retail sales by 2022, according to CIMB Research.

Of this number, food and drink form only $177.8m or a mere 0.53% of retail sales, which indicates that groceries may be the least popular online item.

Also read: Amazon's bid for e-commerce supremacy in Singapore falls short

Sluggish adoption of e-commerce may be due an embedded preference of Singaporeans for physical shopping as brick-and-mortar players are rolling out new business models striking a balance between online and offline shopping experiences.

Here's more from CIMB:

In Mar 2018, Singapore’s retail sales index (RSI) excluding motor vehicles (at current prices) grew by 2.6% yoy, continuing the positive trend seen in 2017 (1.8%). The RSI typically tracks the GDP growth rate, and given our in-house GDP growth forecast of 3.2% in 2018F, we believe Singapore’s retail sales are on a better footing in 2018F. Euromonitor forecasts Singapore’s retail sales to post a 2017-22F CAGR of 0.7%.

A KPMG report published in Mar 2018 stated that in the future, successful retail will boil down to customer experience, and as such it is vital for a retailer’s digital and physical touchpoints to work together seamlessly. We interpret this to mean physical stores will continue to exist but will have to innovate to stay relevant. We also believe the emergence of Alibaba in Singapore retail could mean M&As in near term, especially in the non-grocery segment (the bulk of Singapore’s retail sales value in FY17, according to Euromonitor) and cause pressure on sales growth in the medium term.

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