Singapore expected to lag regional peers in retail sales: report

Singapore expected to lag regional peers in retail sales: report


THE growth of Singapore's retail sector is expected to underperform its regional peers, but an affluent population could provide stability especially in luxury goods, according to a study by Frost & Sullivan.

Using forecasts by the Economist Intelligence Unit, the study reported estimated annualised growth of 15.5 per cent from 2015 to 2018 for the combined retail sales of Indonesia, Malaysia, Singapore and Thailand, to US$1 trillion (S$1.35 trillion).

"Much of the expansion is being driven by the strong fundamentals of the Asean market including a young, fast-growing population, emerging middle-class consumers, and robust GDP growth," Frost & Sullivan wrote in the report, which was commissioned by the Singapore Exchange.

"Other parameters stimulating the retail sector include falling unemployment numbers amid a tight labour market and increasing urbanisation. Employment growth clearly adds to a country's consumption ability, while urbanisation prompts demand for the development of organised retail outlets."

Indonesia is expected to lead the way, with annualised growth forecast at 19.3 per cent to US$639 billion by 2018 .

The forecast for Malaysia is 12.1 per cent per year, followed by 8.9 per cent for Thailand and 6.4 per cent for Singapore.

Consumer confidence in Singapore at the end of 2015 was also the second-lowest among the four countries, behind Indonesia and Thailand.

Singapore is also a regional laggard when it comes to growing its e-commerce sector. The size of Singapore's e-commerce market, estimated to be US$0.9 billion in 2014, is only expected to grow at 13 per cent per year through 2017.

That is below the estimated 38 per cent annual rate for Indonesia, the 21 per cent rate for Malaysia and the 19 per cent rate for Thailand.

The report cited a greying population, tighter foreign labour rules, slower tourism and high costs - particularly labour and rents - as key challenges for the Singapore retail sector.

"Singapore represents a mature retail market," the study stated.

But the Singapore retail sector enjoys certain benefits from having the wealthiest population in the region.

"Rising per capita income in Singapore continues to preserve the base domestic demand for premium retail segments such as watches and jewellery, private education and lifestyle products," the report said.

"As the regional hub for banking, logistics and research and development, to name a few, Singapore also attracts a steady influx of highly-paid professionals with an appreciation for luxury and premium goods and services."

This article was first published on July 5, 2016.
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