Singapore’s government has unveiled ‘part 2’ of a Retail Productivity Plan for the city state.
In a speech to the 24th Singapore Retail Industry Conference, Senior Minister of State for Trade and Industry Lee Yi Shyan said while the original Retail Productivity Plan launched in 2011 had helped retailers improve operational efficiency, more needs to be done.
“We need to deepen the transformation of leading players, and also bring on board a large number of retailers that may be slower to adapt to fast-changing consumer preferences and consumption patterns,” he said.
The Retail Productivity Plan 1.0 included focuses on adopting technology, upgrading human resources and introducing more customer-centric initiatives. “I am happy to note that the plan has benefited over 1900 retailers,” said the minister.
“The retail sector is an important part of Singapore’s economy. It generated about S$35 billion in annual operating receipts and accounted for about 125,000 jobs in 2014.
“Given that the retail sector hires many workers, we identified it as one of the priority sectors for productivity improvement. Higher productivity would lead to higher profitability for firms, higher wages for workers and a more competitive industry as a whole.”
Lee Yi Shyan said Retail Productivity Plan 2.0 aims to improve both top-line growth and operational efficiency.
He said it was only a matter of time before online retailing “becomes commonplace in Singapore”.
“Some may argue that … smaller economies like Singapore may still rely on bricks-and-mortar stores for a long time to come. Do you subscribe to this argument? I personally believe… consumer preferences are changing. A study by Euromonitor International shows online spending in Singapore grew from S$1.08 billion in 2014 to S$1.22 billion in 2015. This is growth of 13 per cent over a year.”
He said the choices are clear for Singapore retailers.
“If we only play defensively, we would see our retail sector growing very slowly, or perhaps not at all. Our strategy therefore cannot be limited to cost-cutting and efficiency improvement. Our strategy has to be offensive, to include selling beyond the limitation of store-fronts and serving markets in the region and beyond.
“This is why we will place great emphasis on internationalisation and helping retailers sell online in RPP 2.0. We will help companies acquire the relevant capabilities to sell online, such as investing in product development, brand-building, e-infrastructure, digital advertising, and channel fulfilment.
“We will encourage collaborations between our retailers and experienced logistics players such as SingPost to better perform order fulfilment in Singapore and the region. We will also encourage our e-retailers to explore partnering global platforms, such as eBay, Amazon and Alibaba.com to market their products worldwide. For example, we worked with Google this year in February to organise the Great Online Shopping Festival.”
The minister said Singapore’s bricks and mortar stores will not vanish overnight.
“However, they will have to compete much harder for a shrinking pie by offering better and more immersive in-store experiences. This can make a difference. For example,Tangs has revamped itself to offer its shopping experience as a one-stop lifestyle destination. They extended their offerings beyond retail to include spa services and food offerings, and jazzed up their store with an area set aside for pop-up showcases for new brands.”
He said as well as helping companies lift top-line growth, RPP 2.0 will continue to reach out to many more retailers that can benefit from efficiency improvements.
“The use of RFID (Radio Frequency Identification) for inventory management, automated retail services and cashier-less stores are proven ways to help retailers improve efficiency and save costs. Experience in the past suggests that such technologies could save more than 20 per cent in manpower costs.
“An interesting example of automated retail is SingVita – a fully automated store which sells health supplements. Beyond allowing for substantial manpower cost savings, the cloud-connected machines used in SingVitaalso enable the company to manage inventory and prices in real time.
“We will also support retailers that embark on projects to analyse and improve their existing business operations. Companies can, for instance, embark on time motion studies to optimise the time that workers spend on various tasks.”
Another example he cited was Noel Gifts, an online floral and gift retailer, which embarked on such a project with SPC to identify and reduce wastages in processes such as hamper wrapping and flower arrangement. This, in turn, enabled it to deploy its manpower to more value-adding services.
“Singapore is an open economy, and our retail sector [will] have to compete regionally and globally. Our retailers can sell to regional and international consumers if we have unique products and services to offer. To survive, we cannot remain defensive. We need to have growth strategies that tap on markets outside of Singapore.
“While a good majority of our retailers could improve their productivity by improving operational efficiency, at least in the short term, I believe a vast number of our retailers will have to transform to become e-retailers quickly. The trend of shopping online is unlikely to reverse, and we have to be prepared for this.
“Let us work together to retain and enhance the vibrancy of our retail sector.”
