More global brands looking to open shops in Singapore as local retailers downsize

Local sellers struggle with rising costs and falling sales.

More big brands are looking to open branches in Singapore, while local retailers languish in the sidelines thanks to lacklustre sales and the continuing manpower crunch.

According to CBRE, 33% of global retailers intend to open stores in Singapore in 2014, but most multinational brands remain focused on China when it comes to their expansion strategies.

Retailers are also eyeing more shops in emerging Southeast Asian countries. Indonesia, Vietnam, and the Philippines are particularly attractive because their young populations have increasing disposable incomes.

Singapore is also one of the top ten cities where retailers intend to open stores this year. 36% of respondents claimed that Singapore is their preferred city when it comes to opening new outlets, on par with Beijing, Shanghai, and Hanoi.

However, this expansion comes at the cost of local retailers’ profitability, as small domestic brands continue to be impacted by tight manpower laws and falling tourist arrivals.

“In Singapore, the current high asking rents and high operational costs mean that many retailers feel that now is the time to consolidate as opposed to expand,” CBRE stated.

A report by Colliers notes that these difficulties are more acute for local brands, and Singapore’s malls may eventually come to be dominated by big retailers.

“In addition to rising costs, shrinking profits, tighter foreign worker policies and labour crunch, retail operators face competition from e-commerce retailers and online food delivery services. The steadily-increasing online shopping trend could eventually change the traditional retail model; consequently, putting pressure on the customary operating practices of brick-and-mortar shops,” Colliers noted.