Orchard Road has fallen from grace in the eyes of Singaporean shopaholics.
Heck, even rich tai tais and Chinese tourists have decided to spend their money online or in other countries, which explains why the formerly bustling shopping belt is now about as happening as Lim Chu Kang, with lacklustre sales and empty units galore.
To make matters worse, a recent PayPal study shows that brick-and-mortar retailers in Singapore have even more to be worried about.
Singaporeans are spending more and more money online
Online shopping has been blamed for the struggles of Singapore shopping malls. Well, this is a trend that looks likely to continue for some time to come.
The survey found that 38% of the adults interviewed predicted that they would be spending even more money online in 2017, with 78% of these people citing convenience as a key reason.
With more and more retailers offering customers online options or operating on a purely online basis, it appears those who don’t adapt are going to lose out.
Mobile shopping is on the rise, too
Brick and mortar retailers need to worry about the astronomic growth of mobile shopping, too.
Shopping on mobile devices like smartphones is expected to increase by 42% in 2017 to make up $1.2 billion worth of transactions—one third of Singaporeans’ forecasted online spending for the year.
At least now you know what all those people staring at their phones on the MRT will be doing.
Singaporeans are the most confident cross-border online shoppers in the region
Singaporeans have taken to online shopping like ducks to water. There hasn’t been much paranoia about security, or too many worries about undelivered mail.
No wonder Singaporeans have been ranked Asia Pacific’s most confident cross-border online shoppers.
Payment technologies are now very secure, and the corporates have also had a part to play in promoting online transactions.
For instance, MasterCard’s Zero Liability campaign, featuring Hugh Jackman, aims to reassure customers that they won’t be made to pay for unauthorised or fraudulent transactions.
Singaporeans’ propensity to shop online also indicates that shoppers are all too ready to abandon brick-and-mortar retailers for their electronic counterparts.
What does this mean for brick-and-mortar retailers?
When Singaporeans have something in mind they want to buy, they are now more likely to first search for it online than to waste hours of their lives squeezing with crowds in shopping malls.
In order to make sales, brick-and-mortar stores are often forced to wait till potential customers are physically out shopping, and then hope they have the right products in the right place at the right time that can catch their eye and convince them to buy.
As if that wasn’t bad enough, physical retailers often find it hard to compete with online retailers in terms of price, as their overheads are so much higher. Not only do they have to contend with paying greedy landlords high rents, they also have difficulty competing with online retailers’ product ranges, as extensive product ranges demand bigger storage and display spaces.
What can retail shops do?
Physical retailers who insist on maintaining a brick-and-mortar presence will need to change their business models in order to offer unique experiences that online retailers can’t provide.
For instance, many retailers are turning their premises into event or lifestyle spaces that offer more than the chance to buy stuff. Kinokuniya organises in-store events such as meet-the-author sessions and panel discussions, while retail/cafe hybrids like In Good Company, a fashion boutique with its own bakery cafe, are becoming increasingly common.
Exclusivity is another thing that can get people out of their homes, as evidenced by the long queues each time H&M has a limited edition designer collaboration. Instead of trying to compete by offering what online retailers are already selling at lower prices, brick-and-mortar retailers can focus on offering exclusivity. This could translate to much smaller retail spaces and a narrower product range which focuses on limited-edition or hard-to-find products.
You can’t turn back time, so retailers shouldn’t expect customers to someday go back to their previous shopping habits. It’s up to them to change if they want to survive.
Do you shop online or visit malls more frequently? Tell us in the comments!
More Info: blog.moneysmart.sg
Categories: Money Matters