Retail sector stuck in the doldrums despite spike in tourist arrivals

Sales fell 2.3% in July.

Tourist arrivals growing 7.2% and 6.7% in June and July 2016, respectively were unable to help buoy retail sales.

Cushman & Wakefield notes that retail sales falling 3.2% and 2.3% y-o-y in June and July 2016, respectively, is a testament that tourists are spending less and the Great Singapore Sales (GSS) has lost its luster.

Watches and jewellery, telecomm, apparatus & computers segments saw bigger declines as consumers were more cautious when spending on big ticket items.

Even the F&B segment was not spared as retail sales for the segment fell 7.4% y-o-y in July 2016.

Moving forward, the research firm believes that the retail environment continues to be challenging on weak consumer confidence.

Consumer confidence in Singapore has dived to its lowest since June 2009, according to the Mastercard Index of Consumer Confidence for 1H2016.

"We believe that spending for the rest of the year could be affected due to weaker-than-expected economic growth and soft job market. Vacancies in retail malls could worsen with the ongoing retail business consolidations arising from higher operating costs and competitions from e-commerce," Cushman & Wakiefield said in a report.