Tough battle for shoppers

Tough battle for shoppers
PHOTO: The Straits Times

They walk into gleaming designer boutiques, browse the racks and pick out items they have their eye on. They try on the clothes, the leather bags and the shoes, taking note of their sizes or the styles they like. And then they leave without buying anything.

But these customers get exactly what they are shopping for: the information needed to purchase that coveted designer item overseas or online at a cheaper price.

"My sister is going to Hong Kong so she can get a Givenchy bag for me," says secretary Shelin Tan, 40, who spent half an hour at the Givenchy store in Paragon shopping mall one Saturday in October last year looking at different bags.

"I dropped by the store to check out which designs I liked and to note the prices."

Consultant Jonathan Tieh, 28, visited the flagship Gucci store at Paragon around the same time last year with a similar purpose.

He says: "I went to check the price and my size for a jacket because my parents are going to France and it is cheaper to get the item there."

Likewise, Ms Andrea Phua, 20, pops by luxury brand stores at The Shoppes at Marina Bay Sands to "find out how much a particular item costs just to get a gauge of the price range", before asking her aunt, who travels for business every month, to buy it for her overseas.

The marketing executive at a public relations and communications agency has at least five bags from high-end brands such as Chanel, Gucci and Balenciaga, all of which were bought overseas at about 20 per cent less than what she would have paid here.

Such are the customers who are making tough times tougher for luxury retailers here.

Adding to the retailers' woes: the strong Singapore dollar and a drop in tourist spending.

Mr Desmond Sim, head of CBRE Research, Singapore and South East Asia, says: "The strength of the Singapore dollar over the past year has driven shoppers to purchase online or to go physically to the source of the products.

"Chinese tourists, for example, are travelling to Milan and Paris to purchase luxury products, bypassing Singapore. "

According to statistics on international visitor arrivals from the Singapore Tourism Board, 13.8 million visitors arrived in Singapore from January to November last year. That compares with 15.1 million visitors in the whole of 2014, which was a 3 per cent drop from 2013.

According to tourism board data interpreted by property adviser CBRE, the average amount of money each tourist spent dropped from $341 in 2010 to $273 in 2014. Figures for last year have not been released.

Mr Sim says: "The profile of tourists has changed. Most of those who travel to Singapore come here for business and defer spending. Tourists who come for leisure are spending less, possibly in favour of sightseeing over shopping."

Based on data from the Department of Statistics, CBRE has also calculated that growth in total retail sales (excluding those of motor vehicles) has diminished in the last few years. Growth in retail sales fell from 7 per cent in 2010 to 1 per cent in 2013 and went into negative territory in 2014, declining by 1 per cent.

BRANDS STILL EXPANDING

Yet, more luxury brands are entering the Singapore market and existing ones are expanding.

New entrants last year include French-Italian apparel brand Moncler, which opened its first standalone boutique in South-east Asia at Ion Orchard in November; and Belgian handbag brand Delvaux, which set up shop at Scotts Square in September.

Ion Orchard also saw a slew of existing tenants, such as Saint Laurent, Dior and Dolce & Gabbana, expand their shop spaces. New tenant, jeweller Tiffany & Co, moved into a 5,000 sq ft duplex store.

At Paragon, Givenchy expanded from a 1,600 sq ft boutique into a 3,100 sq ft flagship store. Spanish fashion label Loewe opened a 3,000 sq ft shop there as well.

Takashimaya saw the introduction of new high-end brands such as contemporary womens label Red Valentino and luxury ready-to- wear brand Kiton.

At Scotts Square, luxury multilabel footwear and accessories retailer Pedder Group opened a 20,000 sq ft concept store, Pedder On Scotts, at Scotts Square in October, making it the group's largest free-standing outlet in Asia.

This year, Como Lifestyle, a subsidiary of Singapore fashion doyenne Christina Ong's Club 21, will open high-end multi-label concept store Dover Street Market in the Dempsey cluster of Tanglin Village.

According to a study published in May last year by CBRE, Singapore was second only to Tokyo in new retailer expansion, having attracted 58 new retail brands in 2014, just shy of Tokyo's 63.

Mr Sim, in a press statement for the study, says: "Despite the high level of new entrants, the retail market continues to be challenging. Retailers big and small are using Singapore as a test bed for the South-east Asia market, given the Republic's cosmopolitan consumer market."

POOR SALES ALL ROUND

However, positive physical growth does not necessarily reflect positive sales growth. For example, fashion and lifestyle group FJ Benjamin reported a first-quarter loss of $5.5 million in November last year.

According to a report in The Straits Times, it was the third consecutive quarter of red ink for the group, which distributes luxury brands such as French label Givenchy, American designer Tom Ford, Italian luxury leather goods brand Valextra and French trunk and leather goods maker Goyard.

On why the retail industry has been so badly affected, Mr Douglas Benjamin, 51, chief operations officer of FJ Benjamin, tells The Straits Times: "Tourism is down and tourist spending is down. Domestic spending has also dropped. Overall rental and general costs have increased and it is also not easy to find staff.

"A lot of people are going online where offerings are cheaper and they can find better deals."

Mr Steven Lam, 40, managing director of Hugo Boss South East Asia, says that almost everyone in retail has been "affected by the downturn in spending".

"In June, Hugo Boss Singapore's retail sales were down almost 20 per cent as compared with that in 2014. But we recovered in December and brought the sales decline to a low single digit that is close to 2014 figures.

"Right now, we are up from last year, trending at about 15 per cent higher than in 2015. But that is off very weak 2015 numbers. I think we are confident that we can maintain last year's numbers."

He also says that consumers have changed their spending habits.

"Food, travel and experiences are high on the priorities of many Singaporeans. They are investing in experiences that last and brands which are consistent and timeless."

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