Retailers grapple with rising rents and
higher costs.
Singapore’s
retail industry looks rosy on the surface, with new stores and restaurants
opening left and right. But retailers are struggling to make profits in spite
of the retail boom.
According
to a report by Colliers, factors such as rising tourism receipts are expected
to keep the retail sector upbeat throughout the year. But a horde of operating
challenges remain, affecting both established and small operators alike.
“Established
retail operators continue to face rising costs and shrinking profits. Tight
foreign labour policies and low interest from locals to work in the sector make
it difficult for retailers seeking to staff their outlets, especially so in the
hiring of front-end staff. Aside from labour costs, firms are also seeing their
margins being squeezed by rising rentals upon renewal. In addition, the
majority of Singapore shoppers are now more discerning and there is pressure on
shopping malls as well as individual shops and eateries to rejuvenate
themselves constantly in order to cater to changing consumer tastes,” noted the
report.
Here’s
more from Colliers:
Despite
some of the uncertainty in the first half of 2014, there are some factors that
will lend strength to the retail sector in the second half of 2014.
The
Singapore economy is expected to grow at a modest pace in 2014, with the Gross
Domestic Product (GDP) projected to expand between 2.0% and 4.0%.
The
Singapore Tourism Board (STB) currently projects visitor arrivals in 2014 to
grow to between 16.3 and 16.8 million, with tourism receipts to be in the range
of $23.8 to $24.6 billion.
The
Great Singapore Sale (GSS) taking place from 30 May to 27 July should also
provide a boost to the prevailing consumer
sentiment.
As a
gateway city to South-East Asia, Singapore is a desired location for new brands
as well as an attractive destination for top international labels.
However,
while new stores and F&B outlets will continue to make inroads by setting
up shop in a variety of locations, retail rents and prices are not expected to
increase by any substantial degree due to the lingering challenges in operating
environment.
Business & Investment Opportunities
Saigon Business Corporation Pte Ltd (SBC) is incorporated
in Singapore since 1994.
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