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SINGAPORE: Retailers must re-look their marketing strategies and woo more international brands or risk being sidelined.
That was the assessment by industry watchers, on the back of the impending 2 percentage point hike in the goods and services tax, and they also say that the possible tweak in the employer's CPF contribution and rising rentals could further cut profit margins.
Shoppers are expected to cut spending for about 1 to 2 months once the GST hike comes into force.
This will come as a double whammy to retailers amid rising rentals.
"With the increase in the concentration of ownership of prime retail space, we are going to see that landlords will have more bargaining power and they will be able to push up rentals. I think rentals could go up anything between 5 to 10 percent; in some areas it might even go up as much as 12 percent year on year," said Nicholas Mak, Property Analyst, Knight Frank.
The costs could further pile up should the government decide to restore a portion of employers' contributions to CPF, but retailers are seeking to see a proactive way out.
"The only thing that retailers and Singapore as an industry can look at doing is again to try to reinvent ourselves, to see how we can differentiate ourselves from our competitors yet again, yes, there are a lot of global brands in our neighbouring countries, but there are still some brands that are still not there and this is what especially the larger retailers have to look at," said Lau Chuen Wei, Executive Director, Singapore Retailers Association.
Retailers may have to relook their marketing strategies, be more attuned to changing trends, and provide better service to stay ahead of the curve.
Still, there are concerns that Singapore is losing its price competitiveness viz-a-viz its neighbours.
The Singapore Retailers Association says it's inevitable that some costs will be passed on to the consumers.
However, this must be done carefully as the market is very price sensitive, and the shoppers might just decide to take their shopping elsewhere like Kuala Lumpur or Bangkok. - CNA /dt
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