Food and fashion take opposite routes in Singapore’s diverse retail scene

Malls are stocking up on F&B.

If it seems like your favorite restaurant now has branches everywhere you look, but your preferred fashion boutique is closing down its stores, then you are not alone.

Singapore is currently facing a divergence in retailers’ fortunes, with F&B players keen to expand into the local market while fashion brands do away with brick-and-mortar stores.

But this disparity isn’t that surprising, according to Donna Lee, chair of the Franchising and Licensing Association of Singapore (FLA), as the divergence can be attributed to the completely different environment and market that each industry is operating in.

Retailers and restaurant operators in Singapore are weighed down by extremely high leasing expenses.

For Tung Lok, rents take up 15% of total earnings. Other players spend less than 10% of their revenue on rents, but are still impacted by high wage costs.

The difference between the two camps appears to boil down to sales. The higher their revenue, the better they appear positioned to handle high costs. That’s just simple mathematics, but it brings up a troubling issue.

If consumption ever dips so slightly, costs for even those which are doing well now could catch up. This makes it imperative for them to break into bigger external markets, such as what Jumbo has done and what Sheng Siong will soon be doing.

But rental woes didn’t stop F&Bs from growing and innovating.

A highly competitive fashion retail market

In contrast, Lee explains that fashion is considered a luxury, and fashion retailers are now beginning to feel the heat in a highly competitive market. Throw in the hype of Singapore’s burgeoning online retail scene, and you have fashion retailers finding new and creative ways to sell their products to consumers. “Consumers in the local market are fashion-forward, price conscious, and enjoy having unlimited options. As such, the online retail sector holds great appeal for a number of reasons,” Lee says.

A universal need to innovate

However, despite the disparity, Lee says one thing is common in all of Singapore’s retail industries. “Nevertheless, businesses and franchises in both the fashion and F&B industries need to constantly innovate and stay ahead of the trends in order to remain relevant and competitive in the market,” Lee says.