'Sales are dismal': Businesses in CBD see slow recovery as most offices continue work-from-home arrangements

'Sales are dismal': Businesses in CBD see slow recovery as most offices continue work-from-home arrangements

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Guoco Tower during the evening peak hour in Phase 2 of reopening. (Photo: Butterflies & Marigolds) 

SINGAPORE: When asked to describe a typical lunchtime situation before COVID-19 at her fashion store, Butterflies & Marigolds, Ms Elsie Szto said with a laugh: “The store would be swarmed with women who are stressed at work.” 

Located at Guoco Tower - a skyscraper in Tanjong Pagar - a queue at the fitting room during lunch hour would not be a rare sight. But when asked about her business now, Ms Szto’s desperation is palpable. 

“It’s like a ghost town now, I have almost zero walk-in customers,” she said. “Sales are dismal.”

Ever since Phase 2 of reopening started on Jun 19 after the COVID-19 "circuit breaker", retail outlets have resumed operations and dining in at food and beverage outlets is permitted. 

READ: COVID-19: Phase 2 of reopening to start from Jun 19, social gatherings of up to five people allowed 

Yet, those located in the central business district told CNA that they are still facing challenges despite the reopening. With the majority of their customers continuing to work from home, businesses are losing their office crowd - which was once their core customer base. 

DINE-IN CUSTOMERS STILL “SPARSE”

The lack of a lunchtime crowd would be most deeply felt by F&B businesses located in the CBD, which rely heavily on the hungry stomachs of office workers in the vicinity. 

Mr Zilch Ng, who owns a stall at Amoy Street Food Centre, said that revenue has been “pretty much the same” even since dining-in was allowed. His stall, Lagoon In A Bowl, serves up butterfly pea rice bowls. 

“We are very affected ... there's no dine-in crowd because our main crowd is from the offices,” the 34-year-old said.

This is why islandwide delivery, a service that he launched on Facebook over the circuit breaker period, still makes up 80 per cent of his revenue. 
 
While the other 20 per cent comes largely from takeaways, Mr Ng said that hawkers are still paying for table-cleaning and centralised dishwashing services, which were subsidised by the National Environment Agency until May. 

READ: COVID-19: Cleaning fees to be subsidised by NEA in support for stallholders at hawker centres 

“People are dining in but it’s still very sparse. So we are paying a lot for things that we don’t utilise,” he lamented. 

“But we understand that cleaners still have to be paid and this is where we contribute.”

Similarly, S-City Cafe, an eatery at Collyer Quay’s The Arcade, is experiencing a slow return of sales given that the CBD crowd makes up “about 95 per cent” of its business, said catering manager Darren Kwek. 

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S-City Cafe at The Arcade. (Photo: S-City Cafe Facebook) 

“In the past during lunch or peak hours, we would serve up to 300 people in a day. Right now it’s about 50.” 

Since the implementation of the circuit breaker, Mr Kwek has experienced a 90 per cent drop in revenue and the “uncertainty in forecasting of sales” will continue to be a challenge as most of his clientele remain at home. 

GRADUAL RETURN FOR AESTHETIC SERVICES 

For businesses offering aesthetic services, there is also a huge reliance on the schedules of their regular customers, many of whom are working from home and not coming into the CBD so often, if at all.

“Our core customers are mostly from the office and what has been happening is that they’ve been adjusting their appointments to fit their work-from-home schedule,” said Ms Evonne Ng, the head of marketing for Mizu Aesthetic Clinic at Marina Bay Link Mall. 

“Some of them come back to the office every two weeks.” 

While the clinic took a hit during the circuit breaker period and Phase 1 of reopening, Ms Ng said that there were a lot of clients who were “waiting to come back”.

“(In the past) we saw our core regulars come in around lunchtime or in the evenings. But during this period of time, there are a lot of people who are forced to clear leave - now they can take a half-day off from home and get things done at the clinic.”

While regulars from the CBD have declined in number in Phase 2, Ms Ng said that the clinic makes up for it through “more intensive procedures”, which are more expensive and popular in this period.  

“These are procedures that will make your face swell ... and you will need some downtime (for recovery),” she added. Examples of such procedures are skin resurfacing and high-intensity focused ultrasound treatment. 

Bonita, a salon that offers a range of services from waxing and facials to henna hair colouring, has outlets at Orchid Hotel and One Raffles Place. Its director Ms Uppkar Kaur said there was a steady recovery of sales when Phase 2 first started in June.

“Pre-COVID-19, we would serve around 80 customers in a day per outlet. In June, we were serving 70 a day.”

READ: Grooming services overwhelmed, gyms grapple with distancing measures ahead of Phase 2 re-opening

However, maintaining the sales in July has been a challenge.

Ms Kaur attributed the initial strong return of customers to the fact that “everyone wanted to look and feel good again”, after having no access to these services for at least 2 months. 

“(Customers felt that) they needed to get these services before (the Government) says, okay we need to shut it down again. That was the reason why everyone just jumped in.” 

With many offices staying shut coupled with concerns about the risk of community spread of the virus, Ms Kaur believes that sales are affected as customers are cautious towards certain services that require close contact with staff.

Both Mizu Aesthetic Clinic and Bonita said they have stepped up their hygiene practices but that also comes with trade-offs for the businesses. Ms Ng said that at least 10 to 15 minutes have to be set aside for cleaning after a procedure, which has affected the scheduling of appointments. 

For Ms Kaur, it is the provision of disposable gowns, gloves, masks and shields that has increased the expenses by 20 per cent - despite a 40 to 50 per cent fall in revenue over the past three months. 

“We knew it had to be done ... we need to protect our customers, at the same time we need to protect ourselves,” she added. 

RENTAL WOES AHEAD 

As businesses in CBD are finding their footing again with the reopening, another concern looms ahead - the ceasing of rental waivers come August.

In June, Singapore’s Parliament passed amendments to the COVID-19 regulations, which required commercial property owners to give eligible tenants a waiver of base rent for June and July.

READ: Amended COVID-19 laws passed requiring landlords to give SME tenants more rental waivers 

“From August onwards, we are back to paying 50 per cent of the rental fees and then September onwards, we’re back to paying the full rent,” said Mr Ng of Lagoon In A Bowl. 

“Our rental is very expensive – including miscellaneous fee and Goods and Services Tax, it’s S$6,000 per month.” 

Mg Ng added that the rental waivers were a “huge help” in this period as it helped him keep his costs low. If he has to pay the full amount come September, the business “will start taking a loss”. 

“Since we do not know when COVID-19 will end, we are hoping that there will be a rental waiver till December.” 

Other businesses that CNA spoke to said that they are currently in talks with their landlords for rental costs after August. 

Ms Szto of Butterflies & Marigolds said she is trying to propose gross turnover rent - which is a percentage of the business turnover generated - to her landlord, so that she can “share the pain”. 

She said that when the lease was signed, rental was "reasonable" bearing in mind the footfall at Guoco Tower, which is linked to Tanjong Pagar, one of the busier MRT stations.

“But now the footfall is zero. So the rental should come down. To say that in August everything will go back to normal is quite idealistic.” 

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The storefront of Butterflies & Marigolds during Phase 2 of reopening. (Photo: Butterflies & Marigolds) 

REACHING OUT TO THOSE BEYOND CBD

Responding to queries from CNA, OUE Limited - which is the developer for CBD malls like OUE Downtown and One Raffles Place - said that its malls are still experiencing low traffic “as many companies are still practising WFH or activating Business Continuity Planning”. 

“The traffic headcount is about 30 per cent of what it used to be,” its spokesperson said in an email reply. 

However, OUE said that “there is little” that it can do to drive physical traffic to the malls due to work-from-home arrangements. Instead, it is encouraging retail tenants to work on e-commerce and F&B tenants to “build on their deliveries”. 

That is the strategy that most businesses that CNA spoke to have started to adopt. For instance, Butterflies & Marigolds launched its online store last week for the first time - after operating as a brick-and-mortar business for 15 years.

“We also started to do livestreaming of our staff trying on the clothes so that we can show our customers how they look,” said Ms Szto. 

"We do get some sales that way and it makes for good interaction. Customers can see that we are trying.”

As for Bonita, it is planning to start its own product line to sell online - so the next time a pandemic happens again, there will be “some income”. 

“If things do not get better in the CBD, we definitely have to think of where else we can open, perhaps somewhere with a residential crowd since people are working from home,” said Ms Kaur. 

“There are still opportunities out there, you just need to look in that direction.” 

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Source: CNA/ct

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