Characteristics of Singapore Retail Industry
Retail industry in Singapore is polarized into two major segments: A mass market segment which caters for the domestic heartlanders and the immigrant workers who stay mainly in public housing estates (HDB flats and condominiums) ; and a premium market segment which makes up of higher income permanent residents, expatriates and international tourists who stay in prime districts. The mass market segment is anchored by close to 4 million local residents who are now having one of the highest income per capita in the world. This segment serves day-to-day consumer needs. Demand is sensitive to price performance. Consumers’ needs are wide ranging but sophisticated by international standard. As the domestic population growth is slow at less than 1 %, the growth of this segment depends on the growth of disposable incomes. Shops run by individual entrepreneurs, many of them family members( the so called “Mom and Pop” shops) dominate the scene of regional housing estates. Consumer’s taste is more localized, hence those “neighborhood brands” attract loyal and regular customers. In recent years more organized supermarkets and convenient chain stores such as NTUC Fairprice are gaining share in retailing goods sectors. However, majority of the retailing service sector remains in the hands of individuals and Small and Medium sized Enterprises (SMEs). The premium market segment is supported by a million of higher income permanent residents, expatriates and reinforced by international tourists which have reached more than one million a month in the recent months followed the opening of the two Integrated Resorts (IRs). This sector enjoys high growth due to the surge of international tourist influx. Consumers in this segment exhibit global taste. Many foreign brands therefore find easy entry into the market. Due to the rapid changes in the profile of the tourists, this segment has to be responsive to the diverse and changing needs. The style has to be trendy, the taste fashionable and colour contemporary. In recent years, the expatriates and tourists from the emerging economies such as China and India have grown to an extent that the retail segment has to alter and adjust the ways and norms they carry out their businesses. For example, signs and instructions at the stores have to be displayed in Chinese language and the Chinese visa card,, the “ Uniojn Pay” has to be welcomed. The demand becomes volatile and competition more severe. Global brands nominate in this segment. Both the mass market segment and the premium segment co-exist harmoniously in the highly urbanized economy. Both enjoy sufficient economy of scale, although their consumer base and growth rate differ. While cross-segment competition, i.e. heartlanders choose to purchase from premium stores, occurs from times to times, this motivates respective players to innovate and strengthen their competitiveness in their respective segments. “Cross-fertilization” between the two segment takes place frequently and naturally. More and more local companies are able to learn the good business practices from their foreign counterparts. For example, we can now see modernized hawker centre or food courts being located at the center of Orchard Road, the heartland of international tourists. This is a constructive outcome of an open and competitive market.
Evolution of the Singapore Retail Industry
Our retail sector develops in the same way as many other industries such as the manufacturing sector have been growing over the last 40 years in singapore. We first manufacture to meet our domestic needs. We then produce for export to external markets. We then design and set trends for others to produce according to our blueprints. Our industries progress from being labor intensive to skill intensive and then knowledge intensive. To enable the retail industry to progress and grow,...