SINGAPORE : When normalcy returns and when cross-border travel is allowed, Indian visitors who come to Singapore to shop, may see changes to their usual shopping haunts. The retail industry is almost certain to emerge from the COVID-19 pandemic dramatically different.
Singapore is scheduled to exit its planned 8-week “circuit breaker” economic shutdown in about 2 weeks on June 2. Already some businesses like hairdressers and barbers, traditional Chinese medicine and acupuncture clinics, pet food shops and laundry services have been allowed to open. McDonald’s, one of the most popular fast-food restaurants in Singapore, also finally opened for deliveries and takeaways after a three-week shutdown due to a coronavirus outbreak in some of its outlets.
During the “circuit breaker”, many people in Singapore have gotten used to cooking and baking at home or ordering takeaway or home-delivered food. Those that need to get their retail fix have resorted to online shopping.
DFS, who owns the concessionaire to run duty-free shops at Changi Airport, held an online liquor stock clearance sale on Thursday last week and sold almost everything within 48 hours. DFS is the Hong Kong-based subsidiary of luxury brand LVHM (Louis VuittonMoet Henessy). It is preparing to hand over their airport retail business to the South Korean group, Lotte.
Online shopping has certainly skyrocketed in a big way during the COVID-19 pandemic.
This is reflected in the stock price of Amazon, the online retail pioneer and behemoth. Its stock ended last week at USD2,409.87, near its all-time high of USD2,474 achieved in April. Alibaba, the Chinese e-commerce giant has also seen its stock price reach the stratosphere although at the moment it is at USD203.68, a little shy of January’s all-time high of USD230. The stock price of NYSE-listed Sea Group who owns one of Singapore’s leading e-commerce shopping sites, Shopee, achieved an all-time high ofUSD62.91 last week.
Many who are shopping online during the COVID-19 lockdown may decide that they like the convenience of buying things in the comfort of their homes and will continue to do so when the malls open again. Traditional retailers had already felt the impact of competition from online shopping well before the pandemic and COVID-19 will cause an almighty and abrupt shakeup in the industry.
Traditional brick and mortar stores which only have a rudimentary online presence or none at all are scrambling to set-up online stores.
Singapore’s China-owned retailer BHG (with flagship store is in the Bugis Junction mall) which did not have an online store is planning to start one later this month. In the meantime, it has partnered e-commerce mall Lazada to sell some of its products.
British retailer, Mothercare, which specialises in products for expectant mothers, babies and young children has seen a four-fold increase in online sales compared with a year ago although overall revenue has fallen some 70 per cent. Managing Director, Pang Fu Wei, said in an interview with The Straits Times that it has managed to successfully transfer one of its most successful in-store experiences online. The online version is called the “digital nursery adviser service”. The service allows customers to call for a consultation and receive product recommendations customised to their needs. The average basket size for these orders is more than three times that of a regular online order
Traditional retailers are hard-pressed to survive the COVID-19 outbreak due to overheads like staffing costs and rents. They are earning no revenue at all in their physical stores but many still must pay rent.
Fortunately, in Singapore, the financial rescue package and new legislation will help them tide over this difficult period if they can resume business soon. Wage subsidies and training incentives have prevented mass layoffs, though some outlets could face closure if landlords do not provide adequate rental relief. Landlords are compelled by a new temporary law to pass on the property tax rebate offered by the government to tenants.
Still, the government’s relief measures have not stopped retailers from closing stores.
Esprit, a popular mid-range clothing brand in Singapore announced the closure of all its 12 stores in Singapore as well as another 44 stories in Asia outside mainland China. Esprit which has almost 390 directly-owned retail stores worldwide was founded in San Francisco California in 1968, headquartered in Ratingen Germany and listed on the Hong Kong Stock Exchange. Its share price has fallen some 57 per cent since the beginning of the year.
Earlier this month, 162-year old department store Robinsons, now owned by Dubai’s Al-Futtaim Group, announced the closure of its outlet in Jem, a mall in the Western part of Singapore. This leaves them with just two stores – one in Orchard Road and another in Raffles City.
In the US, 118-year old retailer JCPenney just filed for bankruptcy protection last week. Neiman Marcus, who like JCPenney missed recent interest payments, could soon follow. California-based jeans company True Religion Apparel and clothing brand J.Crew both filed for Chapter 11 bankruptcy in April. J. Crew who boast of fans like Michelle Obama and Kate Middleton is however expected to stay in business.
British fashion chains Oasis and Warehouse have permanently closed last month with a loss of 1,800 jobs after administrators failed to find a buyer for them.
The Indian retail scene is also going through a difficult time with most shops closed and employees in the industry either furloughed or unemployed currently.
The Indian retail industry is one of the top employers in the country. According to a Boston Consulting Group-Retailers Association of India report, it generated USD700 billion of revenue in 2019 and hires about 10 per cent of its workforce or between 50-60 million people based on World Bank’s estimate of about 520 million Indians informal employment.
With little or no revenue, the industry is bleeding at least USD50 billion every month.
Once the lockdowns are lifted, the retail scene would almost certainly have radically altered. Retailers should not expect an immediate return to the good old says once the lockdowns end. It may never. Social distancing measures will be in place for some time. Many will be reticent about spending too much time in shops and in the malls at least until the virus threat has faded. Retailers will also have to deal with shopping habits that would have shifted online.