Why talent shortage is a serious issue among F&B retailers in Singapore

Are Singaporeans ditching careers in retail?

According to Colliers International, in the midst of all the exuberance in the retail sector, the sector’s growth and future direction currently lies in doubt due to several factors, most of which are cost-related. These are the critical labour shortage, rising occupation costs, congestion and parking shortages.

The shortage of labour in the retail sector, particularly the F&B sector where specialised skilled workers are required, has led to shops and eateries being understaffed. This shortage is due to the Government’s tightening of foreign worker quotas as well as the reluctance on the part of Singaporeans to pursue a career in the retail sector.

Here's more from Colliers:

Shops and F&B outlets have had to increase salaries in order to retain trained and experienced staff. And at the same time, the extra, and often overwhelming, demands on existing staff in understaffed outlets have led to a fall in service standards and a drop in quality of shopping or dining experience in many outlets.

It does not help that rents in shopping malls are regularly raised upon the renewal of tenancies that are typically two to three years long, putting more cost pressures on retailers.

Many of the popular shopping destinations in Singapore, whether in malls or standalone outlets, are able to draw crowds, especially on weekends. However, the volume of vehicular and pedestrian traffic can overwhelm access roads and parking spaces, causing congestion.

In some areas, the congestion and inconvenience has reached levels where potential shoppers are deterred.

While each of these challenges on their own would not seriously affect shopping patterns and retail sales, the combination of all of these places a major strain on the cash flows of retail and F&B businesses.

Once these pressures build to a critical mass, some of these retail brands and F&B chains could cease to expand, close down less profitable stores and outlets, strategically consolidate operations and/or leave the industry altogether.

Restaurant Wok & Barrel closed its doors in March 2013, citing a shortage of manpower as the main reason. 

Japanese restaurant group RE&S, and the TungLok Group (which runs a chain of mostly Chinese restaurants) also had to close some of their eateries because of the manpower crunch. It was reported that the TungLok Group would not be opening any new restaurants in Singapore for a while.

And it is only a matter of time before the effect on the retail real estate sector is felt.