Industry Outlook Growth % Retail (Singapore)
Transcript of Industry Outlook Growth % Retail (Singapore)
Industry Outlook
Retail (Singapore)
Refer to important disclaimers at the end of this report
DBS Group Research . Asian Insights Office 17 September 2015 9 March 2017
Page 1 .
Macro Outlook
Singapore’s GDP growth to accelerate to 2.8% in 2017. We have upgraded our 2017 growth forecast for Singapore to
2.8% (up 1.5 percentage points) on the back of the upward GDP revision for previous quarters and a robust 2016
fourth quarter, which registered the strongest quarterly growth in six years at 12.3% on-quarter, seasonally adjusted
annual rate. This translates to 2.9% on-year growth, with GDP growth for 2016 coming in at 2.0%, substantially
above expectations and backed by significant upward revision to previous quarters’ data as well. The key driver in the
2016 fourth quarter was an 11.5% on-year surge in manufacturing growth, driven by semiconductor (up 62% on-year)
and pharmaceutical (up 34% on-year) manufacturing. The services sector grew by 8.4% on-quarter, seasonally
adjusted annual rate, or by 1% on-year, led by financial (up 36.5% on-quarter) and trade-related services – transport
and storage services rose by 12.4%. Loan growth has bottomed and will likely trend higher. Container throughput and
re-export growth have continued to creep higher too.
Expect spillover from the manufacturing and services sectors into the rest of the economy. GDP performance from the
2016 fourth quarter bodes well for overall GDP and employment growth. We see the positive impact from
semiconductor and pharmaceutical clusters spilling over to the rest of the economy, e.g. into the precision engineering
cluster, transport and warehousing for exports, financial, other supporting services and small- to medium-sized
enterprises. This should drive more broad-based improvement in the rest of the economy.
GDP growth rate: Year-on-year change Remarks
1. GDP growth is set to
accelerate to 2.8% in 2017
2. 2016 fourth quarter driven
by semiconductor and
pharmaceutical
manufacturing
3. Services sector is improving
– led by financial and
trade-related services
Source: ThomsonReuters, DBS Bank
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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F
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Industry Outlook Retail (Singapore)
Page 2 .
Singapore retail sales (ex-motor vehicles) Remarks
1. Overall retail sales (ex-
motor vehicles) have, since
2012, trended on a gentle
decline. This is largely in
line with decelerating GDP
growth
2. Retail sales growth
negative in 2016, in line
with lower private
consumption and higher
unemployment rate
Source: Bloomberg Finance L.P., DBS Bank
Singapore shop rental Remarks
1. Retail rents have fallen in
2016 due to weak
consumption and GDP
growth
Source: CEIC, DBS Bank
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Industry Outlook Retail (Singapore)
Page 3 .
Private consumption tapered off as unemployment rate increased. Post-financial crisis recovery has led to growth in
consumption expenditure. However, the decline in 2012 was due to a reduction in tourist arrivals and non-resident
expenditure, as well as recreation and culture. In 2015, consumption growth expanded sharply on increased
transportation costs, attributable to the high cost of certificates of entitlement (COE, vehicle ownership licenses) and
the number of new and used car sales. It, however, tapered off in 2016 due to a higher unemployment rate of 2.1%.
Private consumption expenditure growth Remarks
1. Increase in private
consumption in 2015 was
led by the transportation
sector
2. In 2015, the number of
new vehicle registrations
increased 54% while
vehicle transfers increased
20% at a time when COE
prices ranged between
S$54,000 and S$78,000
Source: DBS Bank
The age distribution of cars in Singapore is lumpy. COE prices currently stand at around S$50,000. According to the
age distribution of cars in Singapore, close to 100,000 cars will reach the age of nine to ten years and will be due to be
scrapped this year, compared to 30,000 to 50,000 per year for cars aged two to nine years. Motor vehicle taxes and
vehicle quota premiums revenue for the Singapore government in 2017 are estimated to total S$9.3 billion (up 0.8%
from S$9.2 billion in 2016). COE quotas are expected to expand, driving up motor vehicle tax, estimated at S$2.7
billion, by 18.2%.
COE price, Category A (S$) Remarks
1. Vehicle population
growth rate is currently
0.35%
Source: Bloomberg Finance L.P., DBS Bank
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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F
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10000
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Industry Outlook Retail (Singapore)
Page 4 .
Singaporeans’ nominal and real wages continue to increase. According to Ministry of Manpower statistics, the median
monthly wage grew from S$2,543 in 2007 to S$4,056 in 2016. The nominal wage has never declined. Workers
between the 25th and 75
th percentile generally draw a monthly salary of between S$2,000 and S$6,999 per month.
Mean gross monthly income (RHS) and real wage increase (LHS) Remarks
1. Real wage growth was
3.1% from 2010 to 2016
and 3.3% from 2015 to
2016
2. Average bonus between
2005 and 2015 was 2.2
months
Source: Ministry of Manpower, DBS Bank
According to the Monetary Authority of Singapore’s (MAS) Financial Stability Review 2016, Singapore’s household
debt-to-GDP was close to 80% in 2015, making it the fourth highest among Asia-10 nations, behind Malaysia,
Thailand and Korea. High-ticket items such as home purchases and cars require loans. Driven partially by low interest
rates, the property market price increase during 2010 to 2013 had also caused the increase in household indebtedness.
The TDSR (total debt servicing ratio), introduced in 2013, will help to keep household leverage in check.
Household debt-to-GDP ratio Remarks
1. Higher than Taiwan,
Philippines, Indonesia,
India Hong Kong and
China
2. Lower than Malaysia,
Thailand, and Korea’s
debt-to-GDP ratio
1.
Source: Singstat, DBS Bank
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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
S$Growth %
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40%
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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
%
Industry Outlook Retail (Singapore)
Page 5 .
TDSR and mortgage servicing ratios (MSR) relaxed in 2016. A series of property cooling measures have been introduced
since 2010, including adjustments to loan-to-value (LTV) ratios. Two key measures were the additional buyer stamp
duty (ABSD) and TDSR introduced in December 2011 and June 2013 respectively. Additional buyer stamp duties were
imposed on second and subsequent properties, while debt and MSRs limit how much buyers can borrow and repay to
fund their property purchases in relation to their income and total indebtedness. In September 2016, MAS allowed the
refinancing of property loans above the TDSR threshold and MSR threshold of 30% for owner-occupied HDB flats and
executive condominiums (ECs).
Singapore housing index Remarks
1. ABSD currently ranges
from 7-15% depending
on citizenship status and
the number of properties
already owned
2. TDSR cannot exceed 60%
of buyer’s net income
while MSR cannot exceed
30% of income for new
properties
Source: Bloomberg Finance L.P., DBS Bank
Singapore’s interest rates, in particular the three-month swap offer rate (SOR), are foreign exchange-implied rates that
take into account the US dollar/Singapore dollar forward swap. The SOR is used as a benchmark to price commercial
loans. The forwards typically reflect short-term interest rate differentials between Singapore and the US. As a foreign
exchange-implied rate, the SOR is susceptible to changes in demand and supply for the Singapore dollar, and usually
comes under downward pressure when the Singapore dollar strengthens against the US dollar, and vice versa. When
the Singapore dollar is strengthening, demand for the Singapore dollar results in narrowing forward points and a lower
SOR. Essentially, if a foreign investor can profit from narrower US dollar/Singapore dollar forward swap points
(strengthening Singapore dollar), he or she will be able to accept lower returns from Singapore dollar interest rates
(SOR).
Singapore interest rates Remarks
1. Interest rates expected to
increase in view of four
rate hikes in the US this
year
2. Interest rate increase had
led to sluggish retail sales
in 2015
3. Low interest costs also
fuelled the property
market from 2009 to
2013
Source: Bloomberg Finance L.P., DBS Bank
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Index 2000=100
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Industry Outlook Retail (Singapore)
Page 6 .
Population growth rate of 1.5%. Singapore is targeting a population of 6.9 million by 2030, according to its latest
planning parameter. Based on the June 2016 population of 5.6 million, Singapore’s population growth rate would
have to be at a compound annual growth rate (CAGR) of 1.5% per annum for the population to reach 6.9 million by
2030.
Singapore’s resident population pyramid 2016 Remarks
1. There were close to 4
million Singapore
residents in 2016
2. Over 50% of Singapore’s
population is between 30
and 60 years of age
3. Gender split is 51% to
49%, in favour of females
2.
Source: Singstat, DBS Bank
Singapore’s inflation bottoming out. Singapore does not have natural resources and a huge agriculture community. As
such, most goods and raw materials are imported for manufacturing or consumption. Inflation is typically led by supply
and less commonly from the demand side. Singapore experienced two years of negative inflation led by the slump in oil
prices and, to a lesser extent, property cooling measures. The MAS manages the Singapore dollar to keep inflation in
check. It has maintained a zero Singapore dollar nominal effective exchange rate appreciation policy stance since April
2016 and will likely continue doing so in view of the slow growth.
Inflation rate: Year-on-year change Remarks
1. Slump in oil prices led to
negative inflation in 2015
and 2016
2. Inflation increase in 2008
due to food, transport and
housing, before declining
to a negative figure in
2009 due to the global
financial crisis
3. 2010 inflation was largely
due to increasing COE
prices
Source: Bloomberg Finance L.P., DBS Bank
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Apr-
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% chg
200,000 100,000 0 100,000 200,000
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10 - 14
15 - 19
20 - 24
25 - 29
30 - 34
35 - 39
40 - 44
45 - 49
50 - 54
55 - 59
60 - 64
65 - 69
70 - 74
75 - 79
80 - 84
>84 Male
Female
Industry Outlook Retail (Singapore)
Page 7 .
Singapore has rejuvenated over the years into a destination for visitors for both leisure and events. In 2008, Singapore
hosted its first edition of Singapore Formula 1 Grand Prix, with the Asia-Pacific Economic Cooperation Summit
following closely in 2009. The opening of Resorts World Sentosa and Marina Bay Sands in 2010 injected life into
Singapore and tourist arrivals crossed 15 million in 2013. By 2016, tourist arrivals crossed the 16 million mark, as
Chinese visitors, who stayed away following the MH370 incident, returned.
Singapore visitor arrivals Remarks
1. 2014 decline in visitor
arrivals due to decline in
Chinese visitors over loss of
MH370 aircraft
2. 2015 visitor arrivals picked
up due to events such as
South East Asian games
and lower 2014 base
3. 2016 saw a recovery in
Chinese visitors
Source: Singapore Tourism Board, DBS Bank
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Industry Outlook Retail (Singapore)
Page 8 .
Sub-segment Outlook
Luxury retail
Singapore’s luxury retail market represents 4.4% of Singapore’s store-based retail market. Singapore’s luxury retail
segment was worth S$1.3 billion in 2016. The luxury retail segment grew at a five-year CAGR of 2% between 2011
and 2016. Growth was dominated by luxury bag and luggage specialists (up 2.2%), luxury department stores (up
2.5%), and luxury jewellery and watch retailers (up 2.2%). Luxury apparel and footwear declined by 1.1%. The
number of outlets has moderated from the peak of 83 in 2014 to 79 in 2016. Luxury retailing peaked in 2014 and has
dipped in recent years, mainly attributed to the falling numbers of inbound tourists, the strength of the Singapore
dollar, locals spending overseas and reduced shopping expenditure.
Singapore’s luxury retail market breakdown 2016 Remarks
1. Department stores and bags
and luggage specialists
dominate the Singapore
luxury retail market with
close to 80% share
2. Department store
contribution was largely by
Takashimaya
Source: Euromonitor, DBS Bank
2.0% CAGR for Singapore’s luxury retail market from 2011 to 2016 Remarks
1. Growth led by department
stores, jewellery and
watches, and bag and
luggage specialists
2. Luxury apparel and
footwear declined, losing
growth to mid- to low-end
luxury apparel and
footwear retailers
3. Weakening tourist spending
has also a resulted in lower
luxury sales in recent years
Source: Euromonitor, DBS Bank
Apparel and footwear
11%
Bags and Luggage specialist
33%
Department stores44%
Jewellery and watch retailers
12%
0
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2011 2012 2013 2014 2015 2016
S$m
Apparel and footwear Bags and Luggage specialist
Department stores Jewellery and watch retailers
Industry Outlook Retail (Singapore)
Page 9 .
Four players dominate around 70% of Singapore’s luxury retail market Remarks
1. Luxury department store
segment is dominated by
Takashimaya
2. Market share is fragmented
across other luxury retail
players who are mainly
luxury bag retailers
Source: Euromonitor, DBS Bank
Prada shrank in retail area, while Tod’s, Takashimaya, Tiffany, Burberry, and Richemont saw sales areas remain
constant. Players continued to expand their physical presence in Singapore. There were a 4% increase in number of
stores and around a 50% increase in luxury retail selling area between 2011 and 2016. Only Prada decreased its selling
area by 3%, closing down one store in 2015. Those with increased selling area saw net store increases of between one
to four stores and floor area increase of 3-18%, namely LVMH, Hermes, Kering-PPR, Coach, Salvatore Ferragamo,
Ralph Lauren and Mulberry.
LVMH, Takashimaya, and Burberry dominate around 75% of Singapore’s luxury
retail floor area
Remarks
1. Takashimaya has the
biggest selling area in
Singapore
2. Luxury retail companies
take up an estimated
800,000 square feet of
selling space in Singapore
Source: Euromonitor, DBS Bank
Leverage growth on existing outlets. Based on the estimated market revenue of 14 companies across the past five
years, ten players registered positive CAGR growth of 1.5-6.4%. LVMH, Kering, Burberry and Lacoste were the four
that saw sales declines of between 0.5% and 7.8%. While selling space for these four companies had generally
increased, sales efficiency per store and per square foot declined, which could signal overexpansion. The ten players
which grew revenue did so in two ways: (i) Takashimaya, Prada, Tiffany, Richemont and Tod’s grew sales per square
foot while maintaining or reducing total sales area; (ii) the rest of the companies grew their revenues by increasing
Takashimaya Co Ltd
45%
LVMH12%
Hermès International
SCA7%
Prada SpA7%
Tiffany & Co6%
Kering SA5%
Burberry Group Plc5%
Others13%
Takashimaya39%
Burberry Group20%
LVMH15%
Others26%
Industry Outlook Retail (Singapore)
Page 10 .
selling areas via store or outlet expansion. However, they registered a decline in sales per square foot due to the
increased selling space.
Apparel and Footwear Growing at 1.5% CAGR led by internet retailing. Singapore's apparel and footwear segment was S$3.8 billion in 2016,
comprising of luxury apparel and footwear retailers and internet retail. The share of internet retailing for apparel and
footwear has crept up to 8% of the total market, growing at a CAGR of 6.4% over the past five years. There were
3,348 apparel and footwear specialist retail outlets and 23 luxury apparel and footwear retailers in Singapore in 2016,
lower than the total of 3,386 outlets five years ago.
1.5% CAGR growth for Singapore’s apparel and footwear market Remarks
1. Internet apparel and
footwear is now 10% of
the market
2. CAGR growth of internet
retailing versus brick-and-
mortar retailers was 6.4%
to minus 1% over the past
five years
3. While luxury footwear and
apparel declined from
2011 to 2016, mid- to
low-end apparel and
footwear retail sales
increased
Source: Euromonitor, DBS Bank
Mainly small independent retailers. Singapore's apparel and footwear segment is largely fragmented with many
independent specialist retailers. Entry barriers are low with some level of differentiation. Key fashion retailers are either
local distributors of various brands (Melwani Group, RSH Holdings, FJ Benjamin) or international groups operating their
own brands (Fast Retailing, H&M, LVMH).
2016 share of apparel and footwear market Remarks
1. Market size of S$3.8 billion
2. Approximately 88% of
sales are through specialist
retailers even though the
internet channel is
growing
Source: Euromonitor, DBS Bank
0
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2011 2012 2013 2014 2015 2016
S$m Apparel and Footwear through Internet Retailing
Luxury Apparel and Footwear Retailers
Apparel and Footwear Specialist Retailers
A&F Specialist Retailers
88%
Luxury Apparel and Footwear
Retailers4%
A&F Internet Retailing
8%
Industry Outlook Retail (Singapore)
Page 11 .
Fast fashion taking over traditional fashion retail players. Fast fashion retailers with mid-priced positioning, including
Uniqlo, Forever21 and H&M, have seen their market shares growing over traditional retailers such as Charles & Keith,
Giordano and Esprit. The rise of online retailing and blogshops has also shaped consumer behaviour to be less brand
conscious, while paying much less online for designs similar or comparable to the branded designs found in stores. Fast
fashion outlets offer value, branding and the latest designs in this respect.
Key apparel & footwear retailers’ market share in 2016 Remarks
Brand Company Outlets Sales psf $ Share
1. Segment remains
fragmented with market
leaders holding market
share of less than 6%
2. Largest chain stores have
over 20 outlets
Uniqlo Fast Retailing Co Ltd 23 660 5.6%
H&M H&M Hennes & Mauritz AB 10 1,090 4.6%
Mango Punto Fa SL (Mango) 13 2,910 2.9%
Zara Inditex, Industria de Diseño Textil SA 8 1,688 2.6%
Burberry Burberry Group Plc 3 395 1.8%
Giordano Giordano International Ltd 41 1,287 1.6%
Esprit Esprit Holdings Ltd 21 551 1.4%
Topshop Arcadia Group Ltd 6 1,085 1.2%
Charles & Keith Charles & Keith Holdings Pte Ltd 26 2,074 1.1%
Others - 3,023 949 77.1%
Total 3,348 933 100.0%
Source: Euromonitor, DBS Bank
Internet retailing to increase while retailers shift to provide new retail experiences. Sales growth of apparel and
footwear specialist retailers and internet retailing is forecast to be at 2.2% CAGR for the next five years, largely led by
internet retailing. Growth will be driven by new retail spaces in new shopping malls, attracting online and overseas
players seeking to take advantage of the opportunity to develop seamless omnichannel operations encompassing
online and retail experiences. As consumers continue to be influenced online, a pick-up will also be seen in mobile
retailing, online fashion blogshops and on social media platforms. This is expected to drive more fashion-tech start-ups
during this period.
2.2% CAGR for specialist retailers and internet retailing over the next five years Remarks
1. Growth is expected to
continue being led by
online retailing
2. Expect new retail
experiences to kick in to
sustain growth in store
retailing
Source: Euromonitor, DBS Bank
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2016 2017F 2018F 2019F 2020F 2021F
S$mA&F Specialist Retailers A&F Internet Retailing
Industry Outlook Retail (Singapore)
Page 12 .
Recreational Goods Leisure and personal goods market largely driven by jewellery and watches. The leisure and personal goods market
grew at a 5.5% CAGR from S$5.8 billion between 2011 and 2014 but fell 4.6% from 2014 to 2106 to S$5.9 billion.
More particularly, the market fell 11% on-year from 2015 to 2016 on the back of poor economic performance and
driven by a 17% decline in jewellery and watch sales. The declining trend was in line with slowing GDP growth, albeit
with a one-year lag. Growth going forward is not expected to be robust, dipping slightly over the next few years before
ending flat at S$5.9 billion in 2021.
Flat growth forecasted for the next five years Remarks
Source: Euromonitor, DBS Bank
1. Growth between 2011 and
2015 was driven by higher
sales per square foot for
watch and branded goods
retailers
2. In 2016, stores consolidated
due to competition from
online channels and cost
pressures
Between 2011 and 2015, sales per square foot of watch, jewellery and branded goods retailers experienced a surge. In
particular, names including Prada, Stelux, Sincere, Aspial, Soo Kee, Tiffany, Richemont, World of Sports and RSH saw
over a 5% CAGR increase in sales per square foot. Sales per square foot of the market declined in 2016 by 9.6%, on
high rents, softening tourist spending and the rise of internet retailing.
Singapore's leisure and personal goods market composition 2016 Remarks
Source: Euromonitor, DBS Bank
1. 80% of Singapore’s leisure
and personal goods market
is dominated by jewellery
and watches, bags and
luggage, media and sports
goods
2. Other leisure and personal
goods segments include
toys and games, pet shops,
stationery shops Jewellery and
Watch Specialist Retailers
57%Bags and Luggage Specialist Retailers
11%
Media Products Stores12%
Sports Goods Stores
8%
Other Leisure and Personal
Goods Specialist Retailers
12%
Industry Outlook Retail (Singapore)
Page 13 .
Online channels are expected to become more prevalent. These will generally hamper the growth of leisure and
personal goods sales in Singapore. Jewellery and watch specialists are poised for negative growth as retailers migrate to
online channels with more digital marketing. Bags and luggage specialists have seen falling tourist spending, while
marketplaces like Reebonz and Asos offer alternative channels for consumers to purchase similar products online at
more competitive prices. Media consumption in recent years has gone online with more books, music and video
content becoming downloadable as e-content into platforms such as smartphones and tablets. Sporting goods
continue to be stable and are forecast to grow at a CAGR of 1% over the next five years supported by the market’s
active lifestyle and sporting events. Competition, nonetheless, is keen with price discounts and promotions commonly
offered by retailers in the market.
2016 leisure and personal goods players
Players in Singapore Outlets Sales psf $ Share
Hour Glass Ltd, The 9 12,313 4.0%
Sincere Watch Ltd 4 16,219 2.6%
LVMH Moët Hennessy Louis Vuitton SA 17 1,436 2.5%
Popular Holdings Ltd 27 812 2.3%
Aspial Corp Ltd 42 4,132 1.9%
Cortina Holdings Ltd 6 7,143 1.8%
Soo Kee Jewellery Pte Ltd 32 3,124 1.6%
Hermès International SCA 3 8,169 1.6%
Prada SpA 5 2,640 1.6%
Toys "R" Us Inc 9 695 1.5%
Tiffany & Co 3 10,380 1.3%
Pet Lovers Centre Pte Ltd 69 446 1.1%
Kering SA 9 1,610 0.9%
Richemont SA, Cie Financière 5 2,035 0.8%
Kinokuniya Co Ltd 4 846 0.8%
Coach Inc 7 1,861 0.7%
Stelux Holdings International Ltd 18 2,592 0.7%
Poh Heng Jewellery Pte Ltd 15 2,937 0.6%
World of Sports Holdings Pte Ltd 19 546 0.6%
Taka Jewellery Pte Ltd 13 4,077 0.6%
Royal Sporting House (RSH) Ltd 22 921 0.6%
Nike Inc 13 1,867 0.5%
Adidas Group 11 1,943 0.4%
Samsonite International SA 16 839 0.4%
Mothercare Plc 17 374 0.4%
Ludendo Groupe 2 1,045 0.3%
Asian Jewellery Pte Ltd 6 1,845 0.3%
Pandora A/S 11 916 0.3%
Thai Beverage PCL 7 383 0.3%
Kiddy Palace Pte Ltd 15 108 0.2%
Mulberry Group Plc 3 1,504 0.2%
Rimowa GmbH 3 1,081 0.1%
Meyson Holdings Pte Ltd 6 1,184 0.1%
MPH Group Malaysia Snd Bhd 3 574 0.1%
Pets' Station Holding Pte Ltd 5 830 0.1%
Princess Jewellery 3 1,833 0.1%
Mini Toons Pte Ltd 7 298 0.0%
MJ Multimedia Holdings Pte Ltd 1 376 0.0%
Folli Follie Group 2 0 0.0%
Others 3,587 1,242 66.3%
Total 4,056 1,310 100.0%
Source: Euromonitor, DBS Bank
Industry Outlook Retail (Singapore)
Page 14 .
Furniture and household equipment The Singapore market for furniture and household products grew at a CAGR of 1.2% from 2011 to 2016 to S$2.2
billion. There were a total of 1,422 outlets in 2016. Sales of furniture and household equipment for the next five years
are expected to remain flat at S$2.2 billion. More notably, its non-internet retail component is expected to decline
marginally by a CAGR of minus 0.5% over the next five years, displaced by internet sales. Internet sales for 2016 made
up 3% of total sales and are expected to creep up to 5% by 2021. Homeware and furnishing sales peaked in 2013, in
tandem with the property market’s peak.
1.2% CAGR for Singapore furniture and household sales Remarks
1. Property cooling
measures introduced in
2013 have led to sales
decline in homeware and
home furnishing sales
2. Internet sales will make
up around 5% of total
sales by 2021
Source: Euromonitor, DBS Bank
Homeware and home furnishing stores are responsible for the majority (around 80%) of Singapore’s furniture and
household sales. A smaller proportion come from home improvement and gardening stores. Internet retail for furniture
and household products contribute 3% of total sales. The prevalence of internet shopping makes it necessary for
retailers with physical stores to evolve to provide a better shopper experience and provide a higher level of engagement
with customers.
Singapore furniture and household product categories 2016 Remarks
Source: Euromonitor, DBS Bank
1. With the rise of online
retailing, retailers will need
to look for more creative
methods to engage with
customers when they are
shopping in physical stores
2. Internet retailing comprises
of homewares and home
furnishings, home care
and home improvement
and gardening
1900
1950
2000
2050
2100
2150
2200
2250
2300
2011 2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F
S$m Home Improvement and Gardening Internet Retailing
Home Care Internet Retailing
Homewares and Home Furnishings Internet Retailing
Home and Garden Specialist Retailers
Homewares and Home Furnishing
Stores79%
Home Improvement
and Gardening Stores18%
Internet sales3%
Industry Outlook Retail (Singapore)
Page 15 .
Courts and IKEA are key furniture players in Singapore. Courts Singapore and IKEA are Singapore’s largest furniture
and household players and collectively dominate 35% of the market. Both have large flagship stores and total sales
area of 40,000 to 50,000 square feet. Courts has been deploying experiential in-store product displays to enhance
interaction with customers. It also has solutions-oriented services and high-definition LED screens, digital in-store
signage, modular display tables and magnetic panels for in-store displays as part of the package. Value added bolt-on
services (loyalty programmes, installation, connection, warranty, after sales service, etc.) and customer experience areas
enhance customer engagement and improve customer stickiness.
Singapore furniture and household market share 2016 Remarks
1. Furniture market is
dominated by just Courts
and IKEA
2. Newer entrants are
adopting a low cost model
by cutting warehousing
and store expenditure
while focusing on online
sales as their key
distribution channel
Source: Euromonitor, DBS Bank
Omnichannel marketing is becoming increasingly more important due to the market’s connectivity to online retail
channels. Market leaders are building up internet retail business to compete with newer entrants. The new generation
of retail stores need to also provide shopper experience and lifestyle elements. Store-based retailers such as Harvey
Norman and TT International have continued to expand selling space while developing their online business
simultaneously despite sluggish sales. For the more established retailers entering the online space, their logistical and
fulfilment functions will need to develop over time if they decide to insource. As online players are able to pass on cost
savings to consumers, pricing should, therefore, become more competitive over time.
Singapore store count 2016 Remarks
1. Property cooling measures
introduced in 2013 have
led to store count decline
from 2012
2. Expect less aggressive
store area increase while
internet retailing of home
products is expected to
increase
Source: Euromonitor, DBS Bank
Courts Asia Ltd23%
Inter Ikea Systems BV
12%
TT Int'l. Nobel Design, Home-
Fix DIY3%
Others62%
Industry Outlook Retail (Singapore)
Page 16 .
Department store Department stores grew by a flat CAGR of 0.7% from 2011 to 2016. Growth was much higher over 2011 to 2014 at
3.5%. However, in 2015 and 2016, outlets were rationalised with store closures by Metro, Robinson’s, Isetan and
Marks & Spencer. The market size of department stores in Singapore in 2016 was S$2.7 billion with 39 outlets.
0.7% CAGR for Singapore department stores from 2011 to 2016 Remarks
1. Spending in department
stores has tracked GDP
growth closely, peaking in
2013
2. Weak economic
fundamentals and growth
of online retailing have
resulted in poor
profitability and store
closures in recent years
Source: Euromonitor, DBS Bank
The combination of a slowing economy, high operational costs, a tight labour market, the strong Singapore dollar and
the growing popularity of the online retail scene have led to lower retail sales at department stores. Firms like Al
Futtaim, which owns Robinson’s, Marks & Spencer and John Little, for example, are consolidating and closing off loss-
making stores while looking to expand in lower-cost markets outside of Singapore. Metro closed its Compass Point and
City Square outlets due to their underperformance. Smaller players like BHG and Yue Hwa have instead expanded
between 2011 and 2016.
Singapore department stores market share 2016 Remarks
1. Market share evenly
distributed among key
department store players in
Singapore
2. Smaller-scale players are
expanding while larger and
more established players
with more outlets are
downsizing
3. Players with single flagship
locations continue to grow
their sales per square foot
Source: Euromonitor, DBS Bank
2500
2600
2700
2800
2900
3000
2011 2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F
S$m
Takashimaya21%
Mustafa19%
Isetan13%
OG11%
CK Tang10%
Al Futtaim9%
Metro6%
Beijing Hualian5%
Marks & Spencer5%
Yue Hwa 1%
Industry Outlook Retail (Singapore)
Page 17 .
Number of department store outlets has fallen Remarks
1. Store closures from
Metro, Al Futtaim
Robinson’s, Marks &
Spencer and Isetan in
2015 due to difficult
operating environment
2. Those which expanded in
2013 – Isetan, Al Futtaim
Robinson’s and Marks &
Spencer – ended up
downsizing by 2016
Source: Euromonitor, DBS Bank
In recent years, retailers have been facing the challenge of drawing traffic to their stores to improve sales, as customer
traffic is spread across various malls located in suburban areas and in the city. While promotions help to drive volume
sales, more competitive pricing also lowers margins. Competition with online retailers is also thinning out sales. As such,
retailers such as Yue Hwa, Robinson’s, Marks & Spencer and Tangs have ventured into online retail. The challenge for
these retailers is to integrate their physical and online stores. New retail experiences in stores include interactive in-store
features such as virtual fitting rooms, which allow customers to preview their looks with their selected apparel.
Key department stores’ market share in 2016
Store Outlets Sales psf $ Share
Takashimaya 1 1,974 21%
Mustafa 1 3,746 19%
Isetan 5 1,342 13%
OG 3 799 11%
CK Tang 2 1,043 10%
Al Futtaim (Robinson’s) 4 810 9%
Metro 3 8,69 6%
Beijing Hualian 6 2,363 5%
Marks & Spencer 9 1,378 5%
Yue Hwa 5 321 1%
Total 39 1,305 100.0%
Source: Euromonitor, DBS Bank
34
35
36
37
38
39
40
41
42
43
44
2011 2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F
Industry Outlook Retail (Singapore)
Page 18 .
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
2011 2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F
S$m Convenience stores Independent grocers
Minimart & Convenience Store Singapore’s market for convenience stores and independent grocers was S$975 million in 2016, split at 54% to 46%
in favour of convenience stores. There were 607 convenience stores and 583 independent grocers in 2016. The market
size for this segment has shrunk by a 1.2% CAGR between 2011 and 2016, undermined by supermarkets in Singapore.
The alcohol restriction in Little India and after-hours has contributed to the decline in convenience store sales in the
past few years.
Minus 1.2% CAGR from 2011 to 2016 for convenience store and independent
grocer sales
Remarks
Source: Euromonitor, DBS Bank
1. Market size is undermined
by growth of
supermarkets, due to their
increasing convenience
2. Split between convenience
stores is 54% to 46%
independent grocers
We expect convenience stores to decline over time due to the emergence of supermarkets, which carry a wider variety
of items and can be found conveniently at high-traffic locations. Some even open 24 hours. Supplementing purchases
from convenience stores can now be commonly carried out at supermarkets.
Outlets expected to shrink in favour of supermarkets Remarks
Source:
Source: Euromonitor, DBS Bank
1. Independent grocers,
generally owned by senior
citizens, are expected to
decline in the coming
years
0
100
200
300
400
500
600
700
800
900
1,000
1,100
2011 2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F
S$m Convenience stores Independent grocers
Industry Outlook Retail (Singapore)
Page 19 .
Convenience stores like 7-eleven have moved into more ready-to-eat food and services. They also offer cash
withdrawals, e-commerce payments and collection points for online retail orders. Seating areas have been created in
some stores in addition to the introduction of fresh food items, chilled ready meals and a range of premium products.
Singapore convenience stores’ market share 2016 Remarks
Source: Euromonitor, DBS Bank
1. 7-eleven is the largest with
close to 500 stores
2. Cheers has 90 stores and
iEcon has 29 outlets
3. There are 583
independent grocers
Consumer behaviour. Most consumers among the older generation, with the luxury of time, will purchase fresh
products from wet markets. However, because wet markets operate in the mornings, the grocery shopping alternative
for the working crowd is supermarkets. Supermarkets in Singapore are conveniently located across multiple locations
and enable people to shop after office hours. The role of convenience stores is typically for consumers to supplement
their purchases of grocery and food items – including snacks, medication, personal care items, tobacco, packaged food,
etc. – after-hours. Convenience stores these days have moved away from being publication, alcohol and tobacco
businesses to offer more services, fresh/ready-to-eat/packaged food and other necessities.
Convenience stores in Singapore are mainly controlled by large grocery retailers that also operate other formats of
supermarkets and hypermarkets. These groups have distribution centres and centralised purchasing that enables them
to gain economies of scale and price their products higher at their convenience stores than at their supermarkets for
better margins. Due to the scale of these large players and the credit days given to them by suppliers, it is often difficult
for the large minimarts to compete in terms of pricing and working capital generation. Unlike listed players, smaller
independent grocery retailers do not have economies of scale in terms of volume. They are typically offered poorer or
no credit terms by the suppliers.
7-Eleven46%
Cheers5%
iEcon3%
Independent grocers
46%
Industry Outlook Retail (Singapore)
Page 20 .
Online Retail Singapore's internet retailing market was estimated to be worth S$1.5 billion in 2016. Growth has been robust at a 22%
CAGR for the past five years and the market is set to grow further by another 18% CAGR from 2015 to 2021. Growth
has been led by apparel and footwear, personal accessories and food and beverage. Going forward, the growth of the
internet market is expected to be driven by apparel and footwear, food and beverage, and media products.
22% CAGR growth for Singapore online sales from 2011 to 2016 Remarks
1. Internet retail is expected
to grow exponentially at a
CAGR of 18% from 2015
to 2021
2. Growth to be led by
apparel and footwear,
and media products
Source: Euromonitor, DBS Bank
Market leaders in Singapore include Giosis Group’s Qoo10, which recorded sales of S$500 million in 2016 and
completed close to 15 million transactions in 2015. At the end of 2016, Qoo10 had a total of 2.2 million registered
shoppers, becoming the largest online marketplace in Singapore. The majority of Qoo10 customers are women, with
an average age of 27. Others like Lazada have 5.7 million daily visitors to their sites.
Singapore online market share 2016 Remarks
1. Market dominated by less
than ten players
2. Giosis Qoo10, Rocket
Internet’s Zalora, and
Apple’s online sales
dominate over 50% of
Singapore online sales
3. Rakuten shut its Singapore
website in 2016 and
moved into a consumer-
to-consumer business
model
Source: Euromonitor, DBS Bank
0
500
1000
1500
2000
2500
3000
3500
2011 2012 2013 2014 2015 2016F 2017F 2018F 2019F 2020F 2021F
S$m
Giosis Group33%
Apple Inc12%
Rocket Internet GmbH9%
Reebonz Pte Ltd7%
Amazon.com Inc7%
RedMart Pte Ltd3%
Asos Plc3%
Others26%
Industry Outlook Retail (Singapore)
Page 21 .
The Singapore online market will be driven by the consumer’s ease of access to (i) cheaper and wide-ranging products;
and (ii) convenience of payment and delivery services. Retail brands are increasing their collaboration with platforms
such as Lazada and Qoo10 as an alternative channel to target customers. Retailers including Watsons, Samsung,
Xiaomi, Lenovo, HP, Best Denki, Gain City and Audio House have partnered with Lazada to have their products sold
through the platform. There has been an increase in importer/online retailer type start-up companies fuelled by higher
demand for online shopping. These companies put their products up for sale at online marketplaces and fulfil
purchases via a delivery or self-pick-up mechanism. Marketing through social media has also grown in importance as
consumers increasingly conduct reviews, feedback, recommendation and research through this mode. Larger retailers
and brands tend to have their own websites through which they conduct e-commerce, unlike smaller start-ups that
leverage online marketplaces to trade.
Singapore online category breakdown 2016 Remarks
1. Marketplace platforms
like Lazada offer 17
categories of goods
including apparel and
footwear, and
consumer electronics,
from over 5,000
merchants
Source: Euromonitor, DBS Bank
Our In-House Experts
Andy Sim
SVP, Group Research [email protected]
Alfie Yeo AVP, Group Research
Please note that DBS Bank Ltd may have research coverage in the companies mentioned in this industry report, that
have been produced prior to or subsequent to its publication. Please refer to the links below for the latest specific
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interest in the companies mentioned in the respective reports.
Apparel and Footwear
21%
Media Products16%
Personal Accessories and
Eyewear10%
Food and Drink9%
Consumer electronics
4%
Consumer Health
3%
Others37%
Industry Outlook Retail (Singapore)
Page 22 .
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Industry Outlook Retail (Singapore)
Page 23 .
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