3 Big Trends That May Haunt Singapore Retailers

The typical annual report can be a ho-hum affair, filled with corporate talk which does the job but not much else.

And then, there are some annual reports that go beyond the conventions and provide a succinct insight into their industry. 

From where I stand, Hour Glass Ltd’s (SGX: AGS) annual report is worth reading every year. In particular, I look forward to reading chairman Henry Tay’s letter to shareholders. As a luxury watch retailer, his views on retail might be worth taking note.

In his latest report, Tay shared three main themes in retail:

Changing of the guard

“Baby boomers are all but retiring and those Millennials born in the year 2000 will by 2020, account for 40% of the luxury market, exerting their influence on global shopping habits with their minute to minute updates on social media of what’s hot and what’s not.”

Tay recognizes that maintaining status quo in retail is no longer enough. In last year’s report, he said that 40% of the Hour Glass team are millennials, reflecting his view that the team has to adapt to the new generation.

No one will be spared

“Shoppers are online hunting for the lowest prices and shopping malls and traditional retailers are struggling to attract customers through their doors.

Even what were once considered mainstay brands that controlled both their own stand-alone boutiques and webstores are facing the threat of the online retailer undercutting them on pricing.”

It seems like no one will be safe from the change that is happening. As Tay notes, even the mainstay brands are not immune to the threat of online shopping where prices might be lower. In the previous year, Tay noted that the new shopper is well-informed on the pricing available worldwide, and moves to where the best prices can be found. 

To make his point, Tay said: 

“That our management and sales teams have been running twice as hard just to remain in the same place.”

Experiences, not goods

In another observation, Tay wrote:

“Other trending observations we have made are that in 2016, in mature retail markets such as the U.S., consumers spent 31% of their discretionary income on goods and 69% on services and experiences. Three decades ago, 45% of their spend went towards goods products.”

Increasingly, the new generation of consumers is showing a preference towards services and experiences, rather than owning goods. Retailers will have to adapt and find ways to involve the consumer in the process; maybe even conduct guided tours to the art of watchmaking. Either way, retailers will have to adapt or face a shrinking market.

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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.