Singapore’s retail sales slid for yet another month in October, albeit at a smaller pace than the month before.
The total sales value was down 8.6% year-on-year in October, making this the metric’s eighth consecutive month in the red. Still, this is an improvement from September’s revised figure of a 10.7% fall, data released by the Department of Statistics (Singstat) on Dec 4 revealed.
The pattern of declines in October was similar to that in previous months, with sectors such as food and alcohol (-44.7%), department stores (-35.2%) and cosmetics, toiletries and medical goods (-30%), taking the worst hit on a year-on-year basis.
Other consumer sectors remained in the red too, with spending declining on apparel and footwear (-26.3%), watches and jewelry (-24.3%), computer and telecommunications equipment (-17.2%) and petrol station services (-12.4%).
By contrast, bright spots were seen in spending at supermarkets and hypermarkets (+22.3%), furniture and household equipment (+12.5%), recreational goods (+9.8%) and mini marts and convenience stores (+0.9%) amid heightened demand for these items as most consumers continued working from home and looked to adopt an active lifestyle
This was also followed by a 7.5% increase in the sale of motor vehicles.
Excluding motor vehicle sales, the decline in the total retail sales value deepened to 11.2% year-on-year, in October.
On a seasonally adjusted month-on-month basis, Singapore’s retail sales inched up by 0.2%. Excluding motor vehicles, the metric came in flat in October, as most industries expanded from the previous month.
To Selena Ling, head of treasury research and strategy at OCBC Bank, the month-on-month increase “marks a glimmer of light at the end of the tunnel”.
Still, she reckons retail sales may only recover with a positive year-on-year growth possibly during Chinese new Year in February 2021.
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The total sales volume came in at $3.3 billion, of which 10.5% of sales was made online. Excluding motor vehicle sales the volume came in at $2.7 billion in October.
A substantial portion – 46.4% - of online sales were of computer and telecommunications equipment. This comes as people sourced for IT and teleconferencing gadgets to support their work-from-home arrangements.
“Consumer preferences have been shifting rapidly to e-commerce and was further accelerated by Covid, so the pressure is on retailers, including department stores to continue to revamp their business model,” observes Ling.
With restrictions on overseas travel and sales such as 11/11 and 12/12, she expects e-commerce sales to increase month-on-month in November and December.
Meanwhile, the food and beverage services index – a separate metric- saw takings contract by 23.5% year-on-year to $692 million.
The slide in receipts were seen across the board, although food caterers were the hardest hit with turnover dropping an eye-popping 76.4% from the year before. This is a result of the lower demand for event catering due to the restrictions on large-scale events and gatherings.
Takings of other food services such as restaurants and fast food joints similarly dropped by 26.2% and 3.6% respectively.
On a seasonally adjusted month-on-month basis, the metric was up by 5.6% as patronage at food joints picked up in October.
With the festive season upon us, Ling says this number may just see a month-on-month increase as Singaporeans spend more on food, out of boredom.
Looking ahead, she believes Singapore’s retail sales could rebound to a 12.5% year-on-year dip this from the 15.7% year-on-year contraction expected previously. This is due in part to a low base year from the Covid-19 shock.
“The timing and strength of the retail sales recovery will also depend on the Covid vaccine prospects and deployment, which could in turn drive the re-opening of international borders, as well as the state of the domestic labour market conditions and consumer confidence,” she adds.