IT Savvy: Retailers intensify investments in technology

The Risks and Challenges

The cost of doing business in Singapore is relatively high as real estate is premium and retailers need to have a wide range of customer right Store-Keeping-Unit's based on the purchase baskets. This has led to a lot of stress being given to engage loyal customers.

The scope for improvement in productivity is huge and with the economic recovery, cost pressures are likely to rise. The cost of labor is expected to increase and rentals may face upward pressures. The cost of advertising and promotions could also go upwards pick up as well. The rising cost would hurt retailers profitability, most of them should be able to bear with the increase in costs as long as retail sales continue to improve in tandem with the economic recovery.

Growth Opportunities

Rising cost pressures and decreasing disposable income would lead to greater dependence on e-stores. There is a lot of opportunity for mobile based retailing services, the expectation to use mobile devices for retail transactions will be a norm rather than the exception for consumers, and this would not stop retailers from investing massively on opening new stores. Retailers would invest on IT costs with primary focus on IT infrastructure productivity, including store networks, and increased usage of in-store wireless technologies. Retailers would invest more time and dollars in understanding customer loyalties, pricing, sourcing etc.