Retailers rely on productivity initiatives to boost growth as sales drop

But initiatives will bite into margins.

Productivity initiatives will help retailers stay afloat despite soft retail sales, according to a report by OCBC.

Recent economic data and sentiment in Singapore were weighed down by external headwinds, as well as structural constraints such as a tight labour market, OCBC said.

Further retailers might not be able to pass on all of the costs--such as higher rents and wages--to consumers.

This makes it imperative for local operators like Sheng Siong to capitalise on productivity initiatives to boost their toplines.

“As retailers might not be able to pass on all of the costs to consumers, companies could benefit from SPRING’s Retail Productivity Plan, which aims to encourage retailers to adopt manpower-saving technologies and invest in upgrading operational capabilities,” said the report.

“It has been well documented that Sheng Siong is getting help under this broader initiative as well, whereby they have been implementing selfcheckout counters at their supermarkets in a bid to improve efficiency. A caveat however, is that automation could be disruptive instead, especially at the beginning stages,” said OCBC.