Singapore’s retail sector has hit some tough times. Several home-grown names have been dealt blows and malls are feeling the brunt of escalating vacancy rates, highlighting the growing plight of retailers here.
Despite concerns over the sluggish economy, retailers remain hopeful; gearing up to attract shoppers, tourists and locals to spend the big bucks.
Looking back at retail performance in the previous years, what should local retailers expect in terms of consumer footfall this festive season? Can they expect a short but significant respite from the slumping sales during these traditionally shopping-heavy months? What can retailers learn from Singapore’s shopping patterns?
What does the data say?
There are both positive and negative signs to be found in the data. The vacancy rates for retail centres seem to be plateauing, and consumers are beginning to establish patterns that could indicate retail growth during the forthcoming 2016 festive shopping season.
However, in June, 2016, during the Great Singapore Sale, retailers saw a decrease of 3 per cent in sales compared with the same month last year. And monthly gross rents for retail shops slipped by 1.2 per cent in the third quarter of the year.
Consumer footfall in Singapore has always remained a strong indicator of buyer behaviour. Comparing consumer footfall data during the Great Singapore Sale of 2015 and 2016 bears both good and bad news for retailers. Data from Near showed a 58 per cent decline in footfalls of 18-25-year-old shoppers, while shoppers in the 36+ age group fell by 17 per cent year-on-year. Shoppers in the age range of 26-35 saw an uptick in retail traffic, indicating that retailers may need to take a closer look at this segment. Based on the latest report by Telstra Global, millennials are the great ‘Spenders’. The ratio of Millennials ‘Spenders’ to ‘Savers’ is 2:1, highlighting the opportunities this group presents to retailers.
Overall, the figures highlight that Singapore shoppers as a whole are shopping significantly much less. Why is this the case and what can be done to mitigate the impact of this trend?
The Great Singapore Shift?
One plausible reason could be that both retailers and consumers alike have shifted online. According to findings from a 2014 survey by PayPal, online shopping in Singapore has grown 38 per cent per year from 2011. The millennials in specific are contributing to this shift by shunning away from the traditional brick-and-mortar outlets.
With the online shopping scene heating up, should there be a new metric to determine the success of Singapore’s retail scene?.
Retailers must act quickly if they are looking to capitalise on the current shopping trends. If wages and income remain steady, consumers will begin to frequent brick-and-mortar locations soon. Even though shoppers will continue to research pricing advantages using mobile and digital platforms, the actual purchases will be done in-store more often during the upcoming season.
Moving forward, marketers must have specific strategies targeting specific demographics. Understand your consumers’ preferences, influencers, and spending patterns by knowing what is important to them in terms of payment methods, spend habits, and preference towards any category and brands. Mobile data, particularly location data, can help in understanding the different demographics and their interests. Furthermore, marketers need to use the channel that has proven successful to specific consumer demographics while measuring impact and improving outreach to the consumer.
Strategy, strategy, strategy
So how can retailers mitigate the impact of slumping sales amidst these disruptive digital trends? Marketers need to continually innovate and rethink their business models while developing new strategies that are in line with current shopper trends.
A healthier targeted marketing approach will result in better impact, shifting the approach so that they are targeting the demographics who are visiting brick-and-mortar locations. Data points that help you better understand your audience is the key to providing valid consumer-habit statistics. Using marketing automation, retailers can capture information to build rich profiles about their consumers and the consumer purchase journey. Rich data can be translated into consumer use cases and be used to build buyer personas.
Embracing omni-channel marketing might also be the key to the Singapore puzzle. Marketers need to provide a seamless experience regardless of the channel or device the shopper chooses. Consumers can now engage with a brand while physically in the store, online or through mobile app, through a catalogue, or through social media – make sure that you are actively listening to and responding to these interactions.
If taking omni-channel approach is expensive, you can leverage insights from data convergence. Fuse social and mobile data streams to get granular insights on consumers shopping preferences and to drive walk-ins. Gather historical, digital, lifestyle, transactional, and even real-time, location-based consumer data that helps you understand your consumers’ preferences on a more intimate level. Create data-driven marketing campaigns that speak to a consumer’s individual needs.
Watch this (retail) space
By better understanding spending patterns, and buying influencers such as social media and word of mouth, we can begin to understand what gets the most valuable reaction. By discovering the shopping patterns specific to your brand, a retailer can make more finite marketing decisions this Christmas.
Also published in Inside Retail.