What can Singaporean retailers do to beat the post-pandemic blues?

Analysts are bearish about the sector for the rest of 2020 due to weak tourism.

Although Singapore has been in the middle of relaxing the quarantine measures, analysts remain bearish on the country’s retail sector for the rest of 2020 due to a continually weak international travel environment, implying that the retailers will have to rethink their business model and organization to survive the coming months.

A report from Knight Frank revealed that international visitor arrivals (IVAs) are unlikely to grow in the coming months, meaning tourism receipts in 2020 are expected to be dismal. A separate macro note from UOB added that domestic demand may still stay relatively cautious given the global economic uncertainties.

But even before the pandemic struck, Singapore retail sales overall had been declining, driven by steadily weakening consumer confidence, decreasing tourism receipts, and consumers’ increasing demands for omni-channel shopping options, engagement, and personalization, according to Suresh Dalai, Alvarez & Marsal’s (A&M) Senior Director.

Now, amidst the pandemic, Dalai explained that due to the country’s relatively smaller size, the domestic market has not been able to at least partially offset the devastating effects of the fall in tourism receipts.

“For example, in Thailand, Indonesia, or Vietnam, you could help shore up retail sales by encouraging domestic tourism. In Singapore, it’s much more difficult because it has a relatively small population without significant domestic tourism potential,” Dalai said in an exclusive interview with Retail Asia.

Furthermore, he found that the bigger retailers in the country, which distribute global brands, still have an opportunity to adopt more “new retail” into their offer, e.g., engaging, personalizing, and selling to customers wherever they are and whenever they want.

“Of course, COVID-19 will likely accelerate this adoption,” Dalai added.

It’s for these reasons that Orchard Road in particular has suffered more proportionally than local shopping neighborhoods. “Orchard depends more heavily on tourists for footfall and sales,” he said.

Rethinking their business models
As the environment for retail remains weak, retailers are urged to think of new business and operating models, and bring more discipline and processes to their organisation.

As an example, Dalai suggested to consider selling parallel or extended products. He cited a restaurant in China that used their vegetable ingredients that were left uncooked due to lack of patrons to make salads, which are then delivered to customers’ homes. By doing this, the restaurant was able to recover some of their revenue loss caused by the lack of footfall.

Dalai also recommended that retailers figure out how they can leverage their network in a different way. For example, also in China, some offline retailers repurposed their sales staff by asking them to sell online and via livestream.

In another example, Budweiser China asked its customers and staff to form buying groups in their apartment complexes comprised of their friends and relatives, who then ordered meals or drinks at a discount.

“So retailers who haven’t yet explored new opportunities, need to consider ‘How do I leverage my network—my staff, my landlord, my bank, my supplier, and even my customer?’ How do I serve and engage with them so I can sell more and across a wider variety of channels?” Dalai said.

Dalai also suggested that retailers bring discipline, structure and process on a repeatable basis to their organisation. For example, retailers who did not usually re-forecast their sales and inventory on a regular basis have begun to do so during the pandemic, and Dalai recommended that they keep this habit well beyond the crisis.In addition, retailers should focus on bringing discipline to key processes such as planning, forecasting, setting up product assortments, distribution, allocation and replenishment, daily store openings, and customer engagement.

“This is what retailers need to do, because there’s going to be a lot of volatility at least for the next year and a half, two years. And to deal with that volatility, you need regular repeatable, cross functional processes as well as quick and regular decision making, to address whatever will come up,” Dalai said.

Leg up for small businesses
Though small businesses don’t quite have the cash to invest in big digital transformations, their nimble nature means that they still have a lot of opportunities to succeed. One of these is their  ability to execute after-sales service, which allows them to reach out to customers in ways that are difficult or impossible for bigger retailers.

“A lot of bigger retailers, once they sell the product don’t really reach out to the customer and ask: How did you like the shoe that you bought? Do you have any issues? Does it fit? And by the way, I’ve received a shirt that goes with that shoe. Would you like to come to the store to take a look at it? That kind of personalized after-sale service is something a small business can do relatively easily, because they are smaller and know their customers,” Dalai said.

Furthermore, even without big investments, small businesses can still digitise and engage with customers in a deeper way, for example, by personally sending messages to the customers via WhatsApp.

In addition, like bigger retailers, Dalai suggested that small businesses focus also on finding new ways to sell their products or services, engage with consumers, and leverage their network. Dalai cited a local Singaporean bar that tapped friends from other countries to order cocktails, which would be delivered to their friends’ homes in Singapore.

Taking cues from mono-brands
According to data from the Department of Statistics (SingStat), department stores saw the largest drop in sales in June, with a 69.5% crash. Dalai commented that the segment was already on a decline before COVID, as it fell farther behind in terms in providing omnichannel experiences to customers, in contrast to mono-brand stores that have ramped up their digital transformation and customer engagement.

Thus, department stores are advised to take cues from mono-brands. For example, a Nike mono-brand store provides a wide range of experiences for customers, from apps that help customers find their right shoe size, to a treadmill for trying out shoes before buying.

“This is what department stores need to change. They need to change completely their offer and engagement, and replicate what a mono-brand store would do on each of the floors,” Dalai added.

Looking forward, Dalai expects Singapore’s retail sector to recover towards mid to latter part of 2022. He states that some of the more digitally-advanced retail markets such as China are expected to recover by early 2022, Southeast Asian countries such as Singapore and Indonesia may take a bit longer.

Get Singapore Business Review in your inbox
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Its revenue also rose 23.4% YoY to. US$2,262.4m in the same period. 
It is expected to be ready for launch in H2 2022.
Encouraged by vaccinations, more Singaporeans plan to travel in the next three months.
The amendments include higher penalties for erring property agencies or agents. 
The centre aims to spearhead Singapore’s maritime industry’s energy transition.
However, PropertyGuru’s data showed continued confidence amongst sellers.
The system enables employees to have test results in as fast as 60 seconds.
COVID-19 disruptions continue to cause delays in its projects.
Its underlying profit of $832.2m is still 17% below pre-COVID levels.
The airline saw a net loss of $1.12b in the same period last year.
All of its key businesses were profitable in the first six months of the year.
Singtel, Keppel Corp, and OCBC Bank led the Straits Times Index on 29 July.
There seems to be a trend amongst workers looking to switch employers.