After 162 years one of Singapore’s leading department stores, Robinsons, closed its two remaining sites at The Heeren and Raffles City Shopping Centre and has shut down its ecommerce platform. The stores in Malaysia are destined to follow while its seven-year-old outlet at Jem shopping mall closed two months ago.
The closures are an acknowledgement that the traditional business model for department stores as a one-stop shop for fashion, household and other products is outdated. Changing consumer tastes, increasing property costs and a downturn in demand in 2020 sealed the fate of this once popular Singaporean shopping institution.
However, other retailers will continue such as Marks & Spencer, Zara, and Ted Baker, that are also part of the Dubai-based Al-Futtaim Group, which bought Robinsons in 2008 for S$600million.
A slow decline
While residents and tourists staying at home during the coronavirus pandemic precipitated the closures, Robinsons was already facing S$54.4million of debt after revenue fell by almost S$100million in four years.
The store’s first ecommerce site was launched in 2016 which, it could be argued, was simply too late. Ecommerce sites that also meet customers’ one-stop shopping requirements without the costs of on-site sales staff and property were already growing rapidly in the region.
There will be little financial relief for surviving brick-and-mortar stores in Singapore as, in many cases, high retail rental prices are tied to prevalent real estate investment trusts (REITs).
Robinsons isn’t the only retailer struggling in the current climate. In August the Japanese department store chain Isetan recorded a net loss in Singapore of S$317,000 for the quarter ending on 30 June, compared with a net profit of S$1.6 million during the same period last year.
A changing market
Online and in-store shopping experiences in China, Indonesia and India are now much improved, making Singapore a less attractive shopping destination in recent years.
Earlier this year Robinsons had set up shop on Lazada’s LazMall platform, but the move was too late. In fact, the new generation of shoppers are much more willing to compare prices and are becoming less loyal to brands. Online marketplaces simply allow them to make comparisons before choosing their best option.
However, the Competition and Consumer Commission of Singapore (CCCS) has become so concerned about the accuracy of pricing information both online and offline that it has just issued retail guidelines for price comparisons, discounts and free offers.
Retailers that want to attract customers to their brick-and-mortar stores are now looking at how they can enhance the overall shopping experience and complement their online offer. They recognize that simply competing online on the basis of price isn’t viable in the longer term and are looking for ways to add value.
Even ecommerce leaders like Amazon and Alibaba are opening their own physical stores, recognizing that offline shopping is still appealing. Possibly, as more people work remotely, the opportunity to visit a store and socialize will take on a new significance.
The challenge for retailers will be to make their online and offline offers work together consistently and coherently.
Singapore’s retail winners and losers
Singapore’s retail sector was already changing before the coronavirus pandemic, with retail sales falling by 5.3% year-on-year in January 2020, the twelfth consecutive monthly fall.
Although this figure was seriously affected by falls in motor vehicle sales, the rest of the retail sector showed only a small increase of 0.6%. Almost 6% of total sales were online in January, featuring computer and telecommunications equipment, furniture, household appliances and groceries.
Singapore’s grocery market, which is expected to be worth S$9.9 billion by 2023, has grown by 14.5% since 2018. Online grocery shopping is the country’s fastest-growing sector, with Alibaba-backed RedMart dominating the scene and NTUC FairPrice continuing its online expansion. As the pandemic took hold, RedMart’s average number of weekly orders tripled, while FairPrice said that demand for online orders exceeded the Lunar New Year period.
Across the world, coronavirus has affected the luxury and durable goods market, including clothing and furniture, compared to daily essentials. A recent study predicts that global luxury sales could reduce by US$33billion to US$44 billion.
New responses to new customer behavior
While online demand has increased this year due to the pandemic the trend is expected to continue. Ambitious businesses are planning to use digital technologies to transform their operations, enhance supply chains, and to become more scalable to meet surges in demand.
One approach is to integrate online shopping platforms with information about the stocks held in physical stores. This will mitigate excess stock and out of stock situations and will build an accurate picture of customer behavior over time.
New online start-ups without a physical store might work in partnership with delivery fulfilment companies such as Deliveroo. The Singapore government has already allowed taxi and private-hire car drivers to make grocery and food deliveries during the pandemic.
Meanwhile, leading luxury goods businesses are responding with innovative cause-based marketing and further digitization and have turned their production skills towards healthcare during the pandemic.
For Valentine’s Day in China this year Louis Vuitton launched an exclusive online pop-up store via WeChat, where customers were able to book consultations and place orders online, doubling its Valentine’s Day online revenue compared with 2019.
Singapore steps forward
All businesses are facing uncertainty due to the pandemic. In Singapore there is government support for businesses embracing technology and looking towards expansion.
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