Great Singapore Sale a grand bust

Retailers billed it as the Great Singapore Sale. Chinese tourist Zhu Liang bought it, only to regret afterward.

"We will never come here again to shop on purpose," said Zhu, a 35-year-old businessman from Hangzhou. Visiting the city during the final days of the summer sale season in July, he purchased a Loewe handbag for his wife, only to discover he could have paid less in Hong Kong.

Behind the mark-up: a strengthening exchange rate, rising labour costs and a sales tax Chinese tourists don't encounter in neighbouring Hong Kong. A reduction in visitors from Asia's largest economy contributed to a sales slide of as much as 4% in Royal Sporting House and Robinsons groups during Singapore's annual shopping festival, according to the operator of those retail chains.

Singapore's retailers, already facing growing regional competition, are under the most pressure since the Asian financial crisis, said Singapore Retailers Association Honorary Treasurer Kesri Singh Kapur.

But their idea of a Singapore Grand Sale is hardly unique. Thailand is running its fifth-annual Thailand Amazing Sale - focused primarily on shopping in Pattaya, which calls it the Pattaya Grand Sale - and has called the promotion a huge success in diving revenue during the low tourist season.

Singapore's Grand Sale, by comparison, has been a bust.

"It is that grim," Mr Kapur, 47, said in a July 29 interview in Singapore. "Both the sides of consumption, which are the domestic customers and tourists, are not spending. I anticipate that at least for the next 12 months, the market will be sluggish."

Singapore's average retail sales growth dwindled to less than 1% in the two years through May, according to government data that excludes motor vehicles. In Hong Kong, the average was 6.9% in the 24 months through June.

The Southeast Asian island, home to an Asian leg of the Formula 1 series and two casino resorts, has seen its currency strengthen almost 3% against China's yuan in the past year, the most after the Korean won among major Asian currencies tracked by Bloomberg. The Hong Kong dollar has gained 0.9%.

"If we change our renminbi to Hong Kong dollar, it seems like we have a huge amount of money. With Singapore dollar, you just feel like it is little money," Mr Zhu said last week as he walked empty handed out of the Paragon mall on Orchard Road with his family. Singapore retail goods are generally about 10% more expensive than in Hong Kong, he said.

Singapore imposes a 7% goods and services tax. While tourists can claim back part of that on departure, "there is still a differential of 2 to 3%," said Mr Kapur.

International tourists including those from China, Indonesia and India account for at least 20% of Singapore retail sales, with Chinese accounting for about half of that, Mr Kapur estimated. Tourism Board data show Chinese visitors spent S$800 million ($640 million) in Singapore in the first quarter, of which almost half was on shopping.

Retail brands have expanded into other markets in China, Indonesia, and Malaysia, making Singapore a less unique shopping destination, said Mr Kapur.

"Singapore had this aura and advantage of being slightly different from its neighbours" five or 10 years back, he said. "Yes we have a great Orchard Road, we have a great environment where people can walk and shop, but availability of brands has come at parity now."

Al-Futtaim has closed stores for brands including Shana and Vince Camuto in Singapore, and is closing Mango Touch, he said, estimating front-end retail staff costs have gone up as much as 30% in the last two to three years.

The tourist dollar is also being stretched harder. Sightseeing, entertainment, and gaming income from visitors rose 19% in the first quarter from a year earlier, Tourism Board data showed. Shopping revenue slid 6%.

"Hotels are a little more expensive, entertainment is galore in Singapore, the dollar is getting diverted into other areas and not so much into retail," Mr Kapur said.

Revenue at the Royal Sporting House and Robinsons groups during the Great Singapore Sale that ran from May 30 to July 27 showed a 2% to 4% decline from the 2013 period, Mr Kapur estimated. Official statistics on industry performance during the shopping festival haven't yet been released.

In contrast, Genting Singapore Plc, Southeast Asia's largest casino operator by market value, said in May that gaming revenue from its venue on Sentosa island rose 29% in the first quarter from a year earlier to S$671.94 million.

Arrivals from China have also been hurt by political turmoil in Thailand and the March disappearance of a Malaysian plane carrying many citizens from China, whose travellers often include Singapore as part of a broader Southeast Asian holiday, according to Song Seng Wun, a Singapore-based regional economist for CIMB Research.

"It all adds up to a fairly bearish picture for the retail sector," said Selena Ling, an economist at Oversea-Chinese Banking Corp. in Singapore. "It's hard to see immediate light at the end of the tunnel."

Share your thoughts

Back to top

More From