The Big Read: A month into COVID-19 outbreak, retailers, eateries are reeling from near-empty malls and streets
Businesses say they are worried about the prospect of closures should the situation drag on longer than expected.
SINGAPORE: It has been just about a month since the first case of COVID-19 landed in Singapore, but Ms Patricia Zhuang has already had her pay cut by half, to just under S$1,000.
The 37-year-old sales staff at Vivy Boutique, an apparel store at Novena Square, was converted from a full-time employee to a part-time staff as part of her company’s cost-cutting measures.
“Now, I’m only earning my pocket money,” said Ms Zhuang.
It’s a similar story for Mr Rex Xu, a manager at Ker’s Hair Salon, over at Jurong East. The decline in the number of customers at the hair salon has led to a drop in his commission, resulting in an overall 50 per cent dip in income, said the 32-year-old.
“If this continues, we cannot survive. We need to eat and pay rent,” he said.
The novel coronavirus, now officially known as COVID-19, originated from the Chinese city of Wuhan and has now spread to 29 other countries and territories, with Singapore reporting 86 confirmed cases as of Friday (Feb 21).
Explore our interactive: All the COVID-19 cases in Singapore and the clusters and links between them
Not only has the virus infected close to 75,000 individuals globally and caused more than 2,000 deaths, mainly in China, it also left a trail of economic casualties.
As the authorities in Singapore try to curb the spread of the virus through various measures, such as a travel ban on non-residents who have been to China recently, businesses in the retail and food and beverage (F&B) sectors have borne the brunt of the sharp drop in tourist arrivals and weak consumer spending among Singaporeans.
The virus-related blow comes on the back of an already challenging retail environment, which has been buffeted by continuing US-China trade tensions and e-commerce competition.
The plight of Ms Zhuang and Mr Xu was not uncommon among retail and F&B employees, based on our visits to eight different locations across the island this past week to find out how businesses in these sectors were coping with the economic fallout of the COVID-19 outbreak.
On Monday (Feb 17), the Trade and Industry Ministry downgraded its 2020 full-year growth forecast for Singapore to between -0.5 per cent and 1.5 per cent — with a possible recession — from an initial projection of between 0.5 per cent and 2.5 per cent.
Prime Minister Lee Hsien Loong had earlier said that the COVID-19 situation already had a greater impact on the economy compared to when Singapore went through an outbreak of the severe acute respiratory syndrome (SARS) back in 2003, and would likely last longer.
A ‘PITIFUL’ SIGHT
With travel restrictions imposed on non-residents who have been to China in the last 14 days, it is unsurprising that tourist spots have been hit the hardest.
READ: New Stay-Home Notice with stricter measures for Singapore residents, long-term pass holders returning from mainland China
At Chinatown, staff and business owners of several establishments said sales had gone down by 80 per cent.
“Business has dropped so much that it’s very quiet here, nobody at all during the night time … Everybody here is very worried, it’s very pitiful,” said Ms Kathy Fan, co-owner of Vietnamese restaurant Co Ba Quan, which is located along Chinatown’s Food Street.
During a visit on a weekday afternoon, it was possible to see one end of the road from the other, lined with rows of empty tables. Tourists were few and far between, with some restaurants serving only one table of customers, or none at all.
One elderly worker could be seen dozing off at an empty table.
Earlier this week, local news reports highlighted how some Chinese workers, businesses in Singapore — including those in Chinatown — are being shunned, amid discrimination faced by some Chinese nationals here. The discrimination stems from anxiety over COVID-19, which originated in the city of Wuhan in China.
But the retail slump goes beyond that — consumers are also avoiding retailers and F&B outlets elsewhere.
At Jewel Changi, sales staff said that business had gone down by as much as 70 per cent. Queues at fast-food outlets Shake Shack and A&W were also visibly shorter.
And it is not just retail outlets at tourist spots that have been affected. Businesses in the heartlands from Simei to Jurong East also reported a slump in sales.
Mr Kelvin Wai, owner of Evergreen Handphone Shop at Simei, said the travel restrictions had also affected his business as 20 per cent of his customers were Chinese tourists who bought mobile phone SIM cards. He has stopped ordering new stock with business down by 40 per cent.
At The Digital Gadgets, a mobile phone accessory outlet at Westgate mall in Jurong East, its manager, Ms Serena Nguyen, said that her company was trying to push for more online sales via e-commerce websites as business had dropped by 50 per cent at the shop.
Reports of confirmed COVID-19 cases at Marina Bay Financial Centre, as well as companies’ directive for staff to work from home, have also turned the Marina Bay Link Mall into a “ghost town”, said Ms Lyn Lee, founder of Awfully Chocolate.
Sales of her two stores at the Marina Bay area have been particularly affected, she said.
When we visited Suntec City around noon on Thursday, there was a decent lunchtime crowd at the restaurants surrounding its iconic Fountain of Wealth. But those located further away were more than half empty.
Mr Oscar Apiado, the outlet manager of apparel store The Shirt Bar, said that the mall corridors were “almost empty” after 3pm when the lunchtime crowd dwindled.
At Japanese buffet restaurant Kuishin Bo, staff could be seen standing around, tending to only a handful of customers during the lunch hour.
Its restaurant manager, Ms Chao Jun, said that the place would typically be three-quarters full during lunchtime, but it was not even a quarter-full at the time of visit.
SHORTER OPENING HOURS, STAFF ASKED TO TAKE NO-PAY LEAVE
With sales dropping by 80 per cent, Ms Chao said staff had been asked to clear leave as there was no longer the need to have the usual manpower strength of five servers on a weekday.
“Now I only plan for two people to work. Even two people also got nothing to do … only standing there waiting for customers,” she said.
Even restaurants which open only for dinner are facing the same problem. Two Saturdays ago, Mr Marjun de Claro, manager at the House of Peranakan at Outram Park, said that the restaurant did not have a single customer for the whole night.
The “zero sales” phenomenon is also happening at retail outlets. Ms Zhuang said that there were several days where the store did not manage one single transaction. There was one particular day where it made a total of S$15 in sales.
During a visit to apparel store Ns’ Boutique at Novena Square at 2pm on Wednesday, its director Ms Chrislyn Ng said the store had not managed a single sale since it opened at 10.30am.
With business down by 30 per cent, Mr Freddy Ng, operations manager of Wang Tian Kitchen at Outram Park, said that his restaurant is now closed on Saturdays. Operating hours on weekdays have also shortened by about two hours.
Across the island, several business owners said they have started similar cost-cutting measures, such as reducing the number of part-time staff, or shortening the working hours of their full-time staff, inevitably affecting the income of these workers.
Several workers also voiced fears about losing their jobs if their companies continue to be battered over the next few months.
READ: Commentary: Amid gloomy outlook, Hong Kong wrestles with novel coronavirus. But it’s surprisingly resilient
Ms Candy Chen, 47, a sales staff at Just Mobile, a mobile phone accessory store at Nex mall in Serangoon, said her commission had fallen by 30 per cent along with the drop in sales.
All three employees of Mr Joe Chen, a director of two apparel stores at Novena Square, have been asked to take turns to go on no-pay leave. As a result, they end up working only three to four days a week.
He has applied for them to go for skills upgrading courses on the days that they are not working.
CONSUMERS STAYING AT HOME
With companies activating remote-working arrangements, and more individuals choosing to stay home because of the COVID-19 outbreak, it is not surprising that malls are seeing lower footfall, thus affecting the businesses of retailers and F&B outlets.
For Ms Michelle Chin, 49, it is not just the malls she is avoiding. She has also stopped going to her church in Bukit Batok.
“When (the virus crisis) first broke out, I said I didn’t want to go church. My kids say, ‘Ma, don’t be paranoid’. But it’s my personal choice… It’s just a precaution,” said the retiree, who had stopped attending church service for the past three Sundays.
Some churches and other religious institutions have cancelled or scaled back their regular religious services and holding them online instead, after two COVID-19 clusters were identified at churches.
Before the outbreak, Ms Chin used to head to Novena Square at least once a day to buy her groceries, and patronised some of the shops in the mall now and then.
That has all but stopped with the exception of a weekly grocery run.
Even then, it is a real quick run. “The minute I get into the mall, I get to the escalator, buy whatever I need and run back,” said Ms Chin.
While work-from-home arrangements naturally mean that F&B establishments in office areas would see a smaller lunch-time crowd, it does not automatically translate to increased sales at outlets in residential estates.
To reduce the risk of exposure to the virus, Ms Doreen Yeow started working from home whenever possible even before her workplace made it official.
Her lunch now consists of home-cooked food, as the 38-year-old engineer has stopped going to crowded places, such as malls.
“I don’t step out of the house at all,” she said. She only left home twice in the past week, once to visit her parents and another time to attend a class.
Mr Sean Wei Leong, a 32-year-old risk manager, who also started working from home last week, said he generally avoids crowded areas, such as Orchard Road, although he does head to the suburban malls in Tampines where he lives.
SOME LANDLORDS EXTEND A HELPING HAND
Amid mounting calls for help from the retail and F&B sectors due to the COVID-19 outbreak, Deputy Prime Minister Heng Swee Keat on Tuesday unveiled two special packages totalling S$5.6 billion to help firms and workers, as well as households during his Budget speech.
The packages dwarf the S$230 million package introduced during the SARS crisis in 2003, and significantly exceeded analysts’ expectations of at least a S$500 million package.
Part of the S$5.6 billion package is a S$4 billion Stabilisation and Support Package (SSP) meant for businesses and workers affected by the COVID-19 outbreak.
The SSP includes:
- A S$1.3 billion Jobs Support Scheme where the Government will pay for 8 per cent of the wages of local employees, up to a monthly cap of S$3,600, for three months.
- Flexible rental payments for tenants and lessees under the JTC Corporation, Housing and Development Board (HDB), Singapore Land Authority, Singapore Tourism Board and Sentosa Development Corporation.
- A waiver of one full-month of rent for tenants at National Environment Agency-managed hawker centres and markets.
- A half-month rent waiver for tenants under government agencies, such as HDB.
- A 15 per cent property tax rebate for Changi Airport and commercial properties.
“I strongly urge landlords to pass this on to their tenants by reducing rentals,” Mr Heng had said.
Several property developers, such as CapitaLand, GuocoLand, AsiaMalls and Frasers Property, have said that they will pass on the full savings of the tax rebates to their tenants, in response to queries.
Marketing campaigns and free parking for visitors, among other initiatives, have also been introduced by some developers to help their struggling tenants.
BUSINESSES SAY THEY NEED MORE HELP
On the Budget measures, several businesses said they would have preferred more direct help on rental rebates — such as how Jewel Changi is offering a 50 per cent rebate on rent for its F&B tenants for the months of February and March — instead of leaving it to the landlords’ discretion whether to pass on savings from tax rebates to them.
“Savings from the tax rebates are nothing to me … We are talking about occupancy costs (being) as high as 70 to 80 per cent (out of tenants’ total costs) now,” said Mr R Dhinakaran, president of the Singapore Retailers Association (SRA).
If developers do not provide a direct rebate on rent, a potential consequence would be the closures of several retailers, causing the malls to be empty, he noted.
“What can (the developers) do? They can’t sue everybody who can’t pay rent… (Retailers) will just pull down the shutters and go away… That’s a situation, I hope, will not happen,” Mr Dhinakaran said.
Instead, a “fair approach” during these challenging times would be to pay the landlord a certain percentage of the tenants’ sales as rent, he suggested.
Mr Vincent Tan, president of the Restaurant Association of Singapore (RAS), echoed Mr Dhinakaran’s sentiments, adding that passing on savings from a tax rebate is “way below” what the association is asking for.
“In fact, the 15 per cent rebate (announced during Budget) comes from the Government. The developers (are not going to) sacrifice a single cent,” Mr Tan said.
Last week, RAS told the media that it had sent letters to 24 landlords, requesting that they offer rental rebates of up to 50 per cent for February, March and April.
Awfully Chocolate’s Ms Lee said there was “little” offered in the Budget that would help retailers directly and materially. Recalling how property tax rebates were also part of the SARS relief package back in 2003, she said that landlords then were reluctant to pass on the savings to their tenants.
“It felt as if a great amount of cajoling had to be done before help was given … Is the same thing going to happen? I can only assume so … So if the Government’s intention is that these tax rebates are passed down to the tenants, then I think they should be given with a set of parameters and directives. Not left to goodwill and best endeavours,” she added.
Passing on the savings of a tax rebate may also not be as timely as compared to a direct rebate, said Wang Tian Kitchen's Mr Ng.
“If for now, I keep paying the same rent, so at the end of the year, the landlord say, ‘I rebate you 15 per cent’. What’s the point? It won’t help already. The thing is already over by then,” he said.
Some businesses said they were disappointed that unlike the 2003 SARS relief package, the foreign worker levies were not reduced this time.
While Ms Chris Lim, a business partner at children edutainment provider Diggersite, said she knows that the Government’s intention is to encourage companies to hire more locals, her hands, unfortunately, are tied.
“Our situation is different. The jobs we have, the locals will not take... (The Government) thinks we should hire locals, but it’s actually not our call,” said Ms Lim, whose business includes a cafe at Suntec City.
As her company provides edutainment at company events and conducts field trips for children, she has had to temporarily suspend these weekday services, as the Government has discouraged large-scale public gatherings with the raising of the Disease Outbreak Response System Condition (DORSCON) risk assessment level from Yellow to Orange.
LISTEN: Getting to grips with DORSCON orange in Singapore's fight against COVID-19, a Heart of the Matter podcast episode
As for Mr Wai, who is renting a space from HDB for his mobile phone accessories shop in Simei, he lamented that the half-month waiver for rental is “very little” and not of much help.
However, he said he was looking forward to the possibility of setting up flexible arrangements to pay rent, such as through an installment plan.
A STRUGGLE TO HANG ON
Businesses are worried about the prospect of closures should the situation drag on longer than expected.
Mr Heng has repeatedly assured businesses and households that the Government is watching the situation closely, and it will not hesitate to do more if needed.
Mr Chen, the apparel store director, said that he has an emergency fund that would be able to tide him through this crisis for the next six months, at most.
“If worst comes to worst, if after six months and we’re still making losses, then we may have to close one of our stores. Instead of two, we would just run one,” he added.
Other businesses gave a shorter time frame.
For example, Diggersite’s Ms Lim said she may have to take more drastic measures, such as retrenching full-time staff, if things do not improve in three months.
Mr Shah Iskandar, owner of South Asian eatery Az Zumar at Outram Park, said he would assess the situation in a month’s time.
“If the problem goes beyond end of March, finances will be very tight for us,” he said. He might have to cut short his eatery’s operating hours, which is currently open for 24 hours daily to just 12.
That would also mean cutting the number of staff required to sustain the operations, he added.
Mr Dhinakaran said most retailers would probably be able to hold the fort for only the next two to three months, if things do not get better or if the landlords do not provide substantial rebates in rent. He said:
Suppliers will also chase for money. You have stock in the shop but not sold, doesn’t mean they won’t chase… You have to pay this, pay that, but no sales, how do you pay? Then everybody will put up their hands and say, ‘Sorry cannot pay’. That’s what will happen.
RAS’ Mr Tan said most F&B outlets would be able to sustain business under current conditions for the next three to six months.
Professor Lawrence Loh, from the National University of Singapore Business School, called on major developers — the ones with the “deep pockets” — to “demonstrate their social responsibility” and help retailers and F&B outlets struggling to cope with the crisis.
He pointed out that the economy this time would not undergo a V-shaped recovery, unlike what happened after Singapore eradicated SARS in July 2003.
“It would be more like a flat U-shaped recovery … For this COVID-19 outbreak, it’s expected to be longer. It will simmer on, in dribs and drabs ... There will be a persistent effect on retail. And even after the outbreak is officially declared to be over, business will not just recover overnight,” he said.
In the meantime, for service staff like Ms Zhuang and Mr Xu, they would need to tighten their belts and watch their spending — setting off a spiral of reduced consumption which would further hit retailers and eateries. Mr Xu said:
Right now, having a job is not bad already.