- POSTED: 15 Aug 2014 18:07
- UPDATED: 15 Aug 2014 18:30
Real estate service provider Savills says the Great Singapore Sale performed below expectations and competition from online retailers added to the woes of traditional retailers.
SINGAPORE: The triple whammy of MH370's disappearance, Thailand’s political turmoil and China’s legislation on overseas tour packages contributed to a 1.7 per cent on-year dip for international visitor arrivals in Singapore for the first five months of 2014.
The drop in tourism numbers, coupled with declining GDP growth and the increasing popularity of online shopping have led to slower Q2 sales for retailers here, according to a report from real estate service provider Savills released on Friday (Aug 15).
Excluding motor vehicles, retail sales grew by a marginal 0.1 per cent on-year in May, and retailers do not expect sales from this year’s Great Singapore Sale (GSS), held from May 30 to July 27, to surpass that of GSS 2013, the report stated. Sales of watches and jewellery – an indicator of discretionary expenditure – continued its sluggish performance for the fourth consecutive month with a 6.6 percent on-year drop, Savills said.
Online shopping looks set to continue cannibalizing brick-and-mortar sales, as e-commerce retailers such as Qoo10, Taobao, Rakuten and recent entry Lazada have taken a significant share of the retail marketplace. “Faced with lower sales, higher manpower cost and rents, some stores such as F J Benjamin, have chosen to downsize or close under-performing stores and to re-assign their employees to boost service levels in better performing locations,” Savills said.
Despite the tougher business conditions, demand for retail space on Orchard Road remained strong, and vacancy rates for Orchard Road fell from 7.8 per cent to 7.4 per cent, the report stated. Also, rents remained flat in the second quarter, with prime retail rents on Orchard Road commanding S$34.6 per sq ft per month and suburban malls, S$31.1 per sq ft per month.
Vacancy rates in the Downtown Core, however, continue to climb. According to Savills, it was 8.8 per cent in the second quarter, higher than the 7.6 per cent in the previous quarter. One Raffles Place - which reopened for business on May 29 after a major refurbishment - bucked the trend for the CBD area, with an occupancy rate of over 90 per cent.
Nevertheless, the CBD will soon see new entry Capitol Piazza, scheduled for completion later this year. New entries in the suburbs include Seletar Mall and Northpoint City in Yishun. Japanese lifestyle brand Tokyu Hands and fashion label Kate Spade Saturday are also venturing into the suburbs, with new stores in Westgate.