As Singaporeans turn to online shopping and continue to shun DIY, are hardware stores dying?
SINGAPORE: In a corner on the third floor of Lucky Plaza lies a hardware store that some have described as “the shop that has it all”.
Inside, display shelves carry a dizzying array of home repair tools and products, ranging from nails and bolts in various shapes and sizes, hand and power tools, to electrical and pipe fittings. More supplies and boxes line up the walls from floor to ceiling.
“We try to carry a wide range of stocks,” said the second-generation owner of Handyman Centre who preferred to be known only as Mr Tan. “So we have to be really compact, which means (our store) may not look as nice as shops in the shopping centres.”
That did not seem to matter for customers, such as Mr Phil Walter who was checking out gardening tools. “Despite the size, this is the shop that has it all,” he said.
But even then, the store, founded by Mr Tan’s father in the 1970s, has seen better days.
Business has become “very erratic” over the past decade, said the owner, with competition from e-commerce being a reason.
“We’ve had people coming here to ask if we sell this. They have a look and ask questions, then they buy online.
We also get customers saying they don’t like to buy online and still want to support brick-and-mortar stores, but how many of them are there?”
The other reason is the lack of a Do-It-Yourself (DIY) culture here.
While step-by-step videos online have spurred some to try things out on their own, “there is a limit as to what people can do” given the space constraints in HDB flats, said Mr Tan.
“DIY is about really building something, not just hanging a picture or replacing a light bulb … The community remains very small here,” added the 64-year-old.
“VERY SUNSET” INDUSTRY?
These are not just hurting the independent hardware stores; even bigger players have been hammered.
Once a familiar sight in many shopping malls, home-grown retail chain Home-Fix closed down all of its stores earlier this month as it undergoes interim judicial management.
At its peak, the family-run business had 26 stores islandwide. But amid rising costs and dropping sales, some of these stores have struggled to turn a profit, reported the Business Times.
Home-Fix may have also over-extended itself with new ventures, such as selling high-end furniture and opening a concept store that carried exclusive brands of cookware and tools, said experts and industry players.
The firm is currently in talks with potential investors and mulling a return in a “very different form”, co-founder Low Cheong Kee told CNA in an interview.
READ: Store closures an end of chapter, but Home-Fix to come back in a very different form: Co-founder
Associate Professor Lawrence Loh from the National University of Singapore (NUS) is expecting more hardware retailers to pull down the shutters in this “very sunset” industry.
In particular, retail chains like Home-Fix that have been “caught in a no man’s land of increasing costs, falling customers and rising competition”, he added.
This is because apart from challenges – such as niche demand in Singapore where busy lifestyles and the convenience of engaging a handyman go against a DIY culture, as well as more industry-wide woes like e-commerce and a sluggish economy – that are plaguing all hardware stores, the likes of Home-Fix has had to contend with ever-increasing rent in shopping malls.
“To survive, they will have to charge more,” said Assoc Prof Loh. But this premium pricing means losing out to neighbourhood retailers that offer similar products at better value. “(Home-Fix) has completely lost its proposition,” he added.
Experts that CNA spoke to said Home-Fix’s woes are a “wake-up call” for its closest competitor, Selffix.
“Selffix operates in a model similar to that of Home-Fix,” said Mr Samuel Tan, the course chair of the retail management diploma course at Temasek Polytechnic.
“Without in-store service staff who are knowledgeable in hardware, customers may not have a good reason to patronise these stores.”
On the other hand, hardware retailers in the neighbourhood estates “would have a better advantage” due to their convenient locations and affordable pricing.
Added Mr Tan: “The services provided by these neighbourhood stores are also more personalised than those in the malls. The shop keepers are also able to provide expert advice.”
NOT DOOM AND GLOOM: SELFFIX
Interestingly, Selffix opened its 14th outlet at the basement of Great World City last Friday (Dec 20) – marking its third new store opening this year.
Speaking to CNA before the opening, its director John Teo candidly admitted the challenges facing his industry, but he also said that the strategy of expanding in shopping malls may not be doomed for failure.
“There’s still a need for physical stores so that customers can see and touch the items. We also want to provide the convenience of store pick-ups for online orders.”
Selffix plans to maintain the number of its brick-and-mortar stores at around “13 or 14”, which means it will not hesitate to close down underperforming stores, said Mr Teo.
Its venture into e-commerce, with the set-up of its own website and partnering other e-marketplaces like Lazada, has also paid off. Online sales registered a double-digit increase from last year.
Other strategies that the retailer is working on include keeping a lean workforce of about 70 people and adding “exclusive” home appliances to its store offerings.
But Mr Teo said Selffix is not delusional, as the exit of the company’s biggest competitor suggests “big challenges” present in the industry.
“But at this present moment, we want to hunker down and just do what we know best … (It’s) quite sad that they believe Selffix will be next but all is not so gloomy,” he told CNA.
“I think if we continue to have good outlets and introduce new products to our stores, there should still be money to be made.”
Another retailer that disagrees with the “very sunset” industry outlook is Mr Dennis Chua, who has been running 1st Prize Home DIY at Parkway Parade since 1984.
“There will always be wear and tear, and replacements needed at home that will be too minor to engage a handyman. You just have to do it yourself,” he told CNA in Mandarin. “That is why DIY tools and products will not become obsolete, like CDs.”
Singaporeans, especially the younger generation, also still prefer shopping in a comfortable and fuss-free environment, such as that in a mall, he added.
While the rent for his store currently makes up about half of the business’s operating cost, Mr Chua said small retailers like him have ways to keep other expenses low and stay afloat.
“Running my own business will mean that I try to manage as many things as possible on my own, together with two other staff. But thankfully, I only have one store so it’s not too difficult to manage costs.”
NEIGHBOURHOOD STORES SEE OTHER CHALLENGES
Over in the heartlands, while experts think that small family-run hardware stores have advantages over their bigger counterparts, those that CNA spoke to did not seem to share the optimism.
Mr S. Tan, who sells home DIY tools in an HDB estate in Tanjong Pagar, said they do not necessarily benefit from lower rental and operating costs. He had taken a five-figure loan to start his business in 2011 and only managed to repay that two years ago.
Meanwhile, neighbourhood stores continue to face the struggle of attracting younger customers.
“There may be customers but it’s mainly the middle-aged and above. This group will eventually decrease then what will happen to us,” said Mr Teo Chew Sen who has been working at a hardware store in Toa Payoh for the past two decades.
Hardware stores in the HDB estates have also had to contend with the rise of generalised budget stores, which have added home-improvement tools to their offerings and attracted price-sensitive consumers.
"(The store beside me) used to be a traditional hardware store and we were fighting until they retired,” said Mr Tan.
“Then came another two budget shops under the same HDB block … It’s tough but no choice, we got to face the music.”
ANOTHER THREAT: NO SUCCESSOR?
For his store at Tanjong Pagar, Mr Tan intends to keep at it for another ten years until he retires. His children have no interest in taking over the business.
This issue of succession is echoed by other independent hardware shop owners.
“In about 10 to 13 years’ time, I will want to retire but my daughter isn’t interested in my store,” said 57-year-old Mr Chua.
Handyman Centre’s Mr Tan said his daughter has expressed “some interest” in taking over. “But I said no,” he told CNA.
This is because running a retail store involves long hours and hard work. Operating a hardware store also requires experience and knowledge of the various tools.
“You’ll need to know how to use a tool or if a customer comes in with a problem, you know what solution to suggest,” he said. “It’s not so straightforward.”