2 Retail Companies Vividly Describe How Singapore’s Retail Scene May Never Be The Same Again

Singapore’s retail scene may never be the same again.

It is not a secret that retailers in Singapore have been facing a tougher time over the past few years. There might be several reasons for this. To find out more details, I took time recently to dip into the annual reports of major retailers in Singapore. I wanted to figure out what the retail scene in Singapore looks like from the eyes of the major players.

What I found were some vivid descriptions on the challenges that retailers face.

1. Not a passing fad, but a change for good

Here’s how departmental store operator Isetan (Singapore) Ltd (SGX: I15) described the retail landscape in its latest annual report:

“In recent years, retailers have seen structural changes that are permanent in nature and that have altered the competitive landscape.

These include the influx of foreign fast fashion brands and e-commerce competitors as well as the increasing number of malls that have resulted in the dilution of sales among many retailers.

The slowing economy has also had an effect on consumer demand. Against this backdrop, many retailers have resorted to price discounting to draw in customers to meet sales targets. Our stores are not immune to these effects and we have been monitoring the situation closely.”

The key message here from Isetan is that the retail landscape has changed for good. Challenges cited include new fast fashion brands as well as the rising use of online shopping by shoppers as an alternative to visiting bricks-and-mortar stores. Isetan, which makes the bulk of its sales from physical retail stores, is not immune to the challenges.

2. Going beyond traditional business models

Luxury watch retailer Hour Glass Ltd (SGX: AGS) runs boutiques in Australia, Singapore, and a number of other Asian countries.

In the company’s latest annual report, its chairman Henry Tay offered this candid assessment on the future of bricks-and-mortar stores:

“Physical showrooms alone are no longer the final retail solution and our watch retail business model will begin to alter form. With the internet of things, how traditional brick and mortar retailers deliver an integrated online-offline service to their clients will determine the winners in this new world order.

‘Disrupt yourself before someone disrupts you’ has never been a more appropriate maxim.”

Tay does not hold back here.

Hour Glass’s chairman believes that the traditional physical retail model is insufficient to handle the changing retail landscape. Tay believes that physical stores have to move beyond their current form and embrace integration between the online retail world and the offline retail world.

If traditional retailers choose not to disrupt themselves, they could leave themselves open to be disrupted by others who are willing to do what traditional retailers are not.

Note: Two more retail companies' discussion of the retail scene in Singapore have since been published. They can be found here and here.

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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 contributor Chin Hui Leong doesn’t own shares in any companies mentioned.