Ms Megan Ong, Director
Singapore Institute of Retail Studies (SIRS), a CET Institute of Nanyang Polytechnic
The Covid-19 outbreak has done no favours to an industry already beleaguered by poor performance for the past year – the retail sector now reels even more from further downturn in tourist and domestic consumption.
Footfall & Supplies
Visitor arrivals to Singapore are expected to fall by 25% - 30% this year, causing a serious impact on retail sales’ footfall. With restrictions in place for tourist arrivals from various countries, the industry is also significantly hurt by restrictions on one of Singapore’s key visitor source markets – China, which contributes approximately 20% to tourist arrivals and 20% to the $10.2 billion tourism receipts for Singapore.1
The areas of concern have widened signficantly, too: We have travel advisories now about non-essential travel to major European countries like France, Germany, Italy and Spain alongside our earlier-announced ones to China, South Korea and Iran.
In addition, tourists themselves from other countries are also cautious about visiting Singapore. This strongly affects our tourist-focused shopping malls, especially those in the Orchard Road belt. With locals also avoiding public places to shop, dine and socialise, retail, F&B and other lifestyle businesses services have resorted to shorter operating hours and having staff go on leave.
The silver lining? There is an increase in online shopping, and it’s provided some relief with many online retailers and F&B businesses reporting a surge in their online orders. Some business owners have lamented the higher costs of third-party logistics, but I say, better than having absolutely no demand at all.
Businesses which source supplies primarily from China are also suffering a breakdown in their supply chains. Many shops and factories in China remain closed due to COVID-19: employees who went home for Chinese New Year celebrations were unable to return to work due to city lockdowns, and the lack of manpower remains an issue for businesses trying to resume operations. The reduced supplies means costs have gone up for local retailers.
Retailers will have to prepare for long and lean months. Some experts are banking on the warmer summer months to halt the virus spread and set economic recovery in motion. Others are not so optimistic. Near term, the outlook for the sector still seems gloomy given that festive stockpiles, poor sales and high overheads continue to saddle businesses. There is little hope of a tourist revival in the next few months. The Government is looking to deliver a second tranche of help, and we’re all waiting for details.
What Companies Can Do
So, while we wait out, there are a few things that we can do, or start preparing for, especially in relation to business transformation – it’s been said before but it is worth repeating:
- Are your operations ready to take sales online?
- Is your company able to vend your goods and services on popular platforms like Taobao, Amazon and Qoo10?
- And, a related question: is your workforce ready to take these on, and run digital campaigns with relevant metrics to help you track ROI?
More than ever, technology will help companies survive this shift.
Then, consider the following:
- Look into short term initiatives to mitigate current business challenges such as managing cash flow and operating expenses. SkillsFuture Enterprise Credit and SkillsFuture Mid-Career Support Package are schemes that companies can explore to defray business costs while improving business capabilities.
- Upgrade your talent pools through job redesign to add value to current job scopes. There’s the Job Redesign Place and Train Programme aimed at reskilling existing staff or new hires for redesigned roles within the company.
- Review your business models, for example, in the areas of supply chain, sales channels, their products, services or target customers.
There is help available from the government for SMEs: Know what these schemes are and how they can apply to your business.
But it’s not just up to employers. Employees can also make a difference and use their SkillsFuture Credit to upskill and enhance their skill sets to maintain currency and relevance to the workforce. e-commerce, digital marketing, data analytics and customer experience are some emerging skills to pick up now.
There is no better time to explore a change in mindset, and to be adaptable and resilient. Both employers and employees would have to work hand-in-glove and think out of the box in managing resources e.g. by agreeing on shorter trading hours to pursue training. They can then be ready to gun for growth and be competitive when the economy recovers.
If you need help, just contact us. At NYP-SIRS, we support employers, employees and job seekers. Solutions and training are also available for retail operations and digitalisation, including advisory and initiatives in partnership with government agencies. Partnership programmes with Alibaba Business School and Amazon, etc, bring local retailers the best practices in the digital commerce space locally and overseas. All programmes and solutions at SIRS are subsidised by the government.
It is a challenging time, but we can journey together.
Visit us: www.sirs.edu.sg
18 March 2020