What Happens When An Industry Refuses To Change with The Times?

I started today like I always would – with my weekly dose of business publication The Edge Singapore along with my morning coffee.

But I nearly choked on my coffee while reading one of the articles on this week’s The Edge Singapore.

The article in question was an interview with the President of the Society of Remisiers (Singapore). The choke-inducing content was about his reasons for why trading volumes in the local stock market have been weakening for the past few years: MediaCorp’s decision to cease the Teletext service for updates on stock prices.

The Teletext..? What is that you might ask?

I remember playing with the Teletext service on my television set when I was 10 (I’m now 28 by the way), pretending to check stock prices and flight details the way my dad did. Thinking about the Teletext service brings back memories of a younger me (a much younger me) watching cartoons on Video Home System (VHS) tapes and listening to music on cassette tapes.

The President of the Society of Resmisers’ comments on the Teletext service caused me to be taken aback because it is akin to a VHS seller blaming his weakening sales on manufacturers’ decisions to stop producing the videocassette recorder (VCR).

For me, it’s a classic example of an industry which refuses to change with the times. Sadly, this situation is not unique to the brokerage industry in Singapore. There are many companies in Singapore which are operating in industries that are at the crossroads of transformation and obsolescence.

Here are a few of such companies and how they’re coping with the changes.

The business of snail mail

In Singapore’s mail industry, Singapore Post Limited (SGX: S08) has a strong monopoly position.

In theory, Singapore Post is in a great business as it does not have competition and would thus possess strong pricing power. But, the mail industry is facing obsolescence as snail mail is being steadily replaced by the faster, more efficient, and more environmentally friendly email.

Singpost seems to recognize the changing tides as it has been busy trying to transform itself. The company’s management team has been active in pushing the company toward the growing societal trend of e-commerce and the related-logistical services.

As the demand for snail mail cools, the demand for e-commerce and its related-logistical services is growing (accelerating, even). Till date, Singapore Post seems to be doing a fine job in its transformation, having even attracted the attention of China’s e-commerce juggernaut, Alibaba Group. Alibaba had invested in SingPost last year, gaining a minority but substantial stake in the company.

The dying newspaper business

The current situation that Singapore Press Holdings Limited (SGX: T39) finds itself in is almost identical to that of Singpost.

Operating as the leader in a controlled industry (newspaper publishing) with strong pricing power, Singapore Press Holdings is also seeing the survival of its industry being threatened by the rise of the Internet and online news sources.

But to give credit where credit’s due, Singapore Press Holdings has also been actively trying to transform its business to remain relevant in consumers’ eyes.

The company has invested in multiple businesses using the web as a platform and has set-up online versions for many of its newspapers. Some, such as The Business Times, have even successfully launched online subscription models.

But make no mistake – Singapore Press Holdings is involved with a tough fight as it is going against the trend of news readers switching from national news sources to international news sources.

Media companies would require a license to officially print their publications in Singapore, and that has restricted competition against Singapore Press Holdings.

But when it comes to the web, such restrictions are not in play and Singapore Press Holdings would need to compete freely with other international news sites and blogs for the attention of readers. It is a much tougher fight to be in (as compared to the paradigm shift that Singapore Post is currently navigating) and there’s much for Singapore Press Holdings to prove.

Foolish Summary

I do hope the comment made by the President of the Society of Remisiers (Singapore) is not a reflection of the general view that is held by most remisers in Singapore. This is especially important given that Singapore is nowhere near the forefront of the brokerage industry internationally.

A look at how brokerages in the U.S. have transformed their businesses would give remisers here a glimpse of what the future is like.

To quote Andrew Grove, former chief executive of Intel Corporation, “Only the paranoid survive.” I urge investors to understand this point. Also, I hope companies which are operating in businesses facing obsolescence can start changing before they’re well and truly left behind by the times.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn't own shares in any company mentioned.