The year-end festivities are typically a lucrative period for retailers. As people take their leave and spend extended time with family and friends, there’s a natural increase in spending. This usually translates to higher revenues for retailers.

However, a recent CNA article paints a less optimistic picture for Singapore retailers this year. The article notes that ‘some retailers along Orchard Road are experiencing a quieter year, with smaller crowds and the traditional holiday spending spree seemingly absent.’ A similar sentiment is echoed in a Business Times article, indicating a decline in fourth-quarter revenues for retailers.

The Return Of COVID

We live in a post-COVID-19 era, yet this doesn’t mean the virus has forgotten us. As many are aware, COVID-19 cases are rising in Singapore, prompting government reminders about social responsibility. The year-end gatherings and parties have taken a toll on many, and a casual check among work acquaintances reveals a significant number of people falling ill.

With news reports highlighting the surge in COVID cases, it’s unsurprising that many in Singapore might choose to avoid crowded places. This doesn’t imply a complete avoidance of social events, but activities such as leisure strolls around Orchard Road or mall visits might be considered unnecessary.

A Strong SGD Means More Overseas Trips For Singapore Residents

Whether it’s a short drive across the Johor-Singapore Causeway or a flight to Japan, a strong Singapore Dollar (SGD) means that we, Singapore travellers, will get more bang for our buck when we are overseas. Combined with one of the world’s most powerful passports, Singaporeans are increasingly choosing to travel abroad, especially during the year-end holidays.

Data from Singstats reveals a significant uptick in outbound travel from Singapore. In November 2023, there were 1,036,448 Singapore residents who travelled abroad, with 895,327 of these journeys made by air. This figure surpasses December 2022’s total of 1,000,880 outbound travellers (802,372 via air travel) and is similar to the pandemic days (1,072,972 outbound travellers, of which 874,748 via air travel in November 2019)

Given that December is traditionally a peak travel month, it’s expected that the number of outbound travellers for December 2023 will exceed those of November 2023 once the data is revealed. This surge in international travel would imply that fewer Singaporeans are spending their SGD domestically compared to last year.

A Strong SGD Makes Singapore More Expensive For Tourists

Since foreign exchange is a zero-sum game, a strong Singapore Dollar (SGD) makes it more costly for tourists from other countries to spend in Singapore. This is because, with a stronger SGD, the purchasing power of foreign visitors decreases, making goods and services in Singapore more expensive for them.

Data from the Singapore Tourism Board (STB) corroborates the impact of the strong SGD on inbound tourism. As of November 2023, the number of visitors arriving in Singapore fell for the fourth consecutive month, with only 1.1 million visitors recorded. This figure is notably lower than the pre-pandemic levels of November 2019, which saw 1.53 million visitors.

The decline in foreign visitors contrasts sharply with the outbound travel patterns of Singaporeans. While Singaporeans are travelling abroad at rates comparable to pre-pandemic levels, the influx of tourists into Singapore has not mirrored this trend. This imbalance indicates that while Singaporeans are benefiting from their strong currency in foreign lands, the Singapore tourism sector may face challenges due to decreased foreign visitor spending.

Online Shopping Will Continue To Disrupts Physical Retailers

Unlike traditional brick-and-mortar stores, online platforms allow customers to shop from anywhere at any time, eliminating the need for physical travel and adhering to store hours. This level of accessibility has shifted consumer preferences towards the ease of online shopping. Additionally, online stores often feature a more extensive range of products than physical retailers. Given the competition, customers may even get a better deal when shopping online. 

These aspects of online shopping will continue to challenge the traditional retail model and pose significant challenges for traditional retailers in Singapore that will continue having to deal with higher rental and manpower costs.

Read Also: 3Q2023 Labour Market Report: Retrenchment Continue Increasing In Singapore While Job Vacancies Decline

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