'Tis the season of cheer for local retailers?

'Tis the season of cheer for local retailers?

By: 
Benjamin Cher
26/12/17, 11:01 am

SINGAPORE (Dec 25): This year’s Orchard Road light-up runs 2.88km — from Tanglin Mall to Plaza Singapura. It features a Christmas village, a 20m fairy lights passage and a Christmas countdown clock. According to the Orchard Road Business Association, this year’s Christmas decorations took 76,800 hours to make. And an additional 15,120 man hours are likely to be spent to get the famous shopping street ready for Christmas.

As e-commerce eats into their earnings, physical retailers are making a greater effort to attract shoppers. The Christmas season can be particularly important. A recent survey by supermarket operator Giant shows that most Singaporeans are likely to spend $100 to $300 just on gifts this year, and one in five Singaporeans is putting aside more than $500 for their festive shopping.

The survey polled 500 Singaporeans and found that children (53%) are top gift recipients, followed by close friends (49%), significant others (43%) and colleagues/bosses (40%). Surprisingly, professional relationships sometimes trump personal ones: About 10% more respondents are likely to buy gifts for colleagues and bosses versus siblings or parents.

Sydney Teo, executive director of Mayson Bakery, says order sizes at his retail arm Kopi and Tarts rise when the year-end approaches. Most of them come from companies that want his bakery items for staff parties or as gifts for clients. “In November, we will see some enquiries, but I think the peak is early- to mid-December. At our outlet, they come and can order up to eight log cakes at one shot,” he says. “Christmas is one of the more celebrated occasions. Although budgets are lower, there is still demand. Companies still have orders.”

Seasonal limitations
Christmas is not always a huge spending season, though. Selena Ling, head of treasury research and strategy at OCBC Bank, points out that statistics do not show a marked increase in spending associated with the Christmas season.

“Looking at the November-December retail sales growth for the past five years, Christmas does not appear to have a distinct seasonal pattern,” Ling says. Spending rose from 2014 to 2016, but fell from 2012 to 2013. “Some contributing reasons could be because many Singaporeans travel during the school holiday period, as well as the advance of e-commerce,” says Ling.

Ling says retailers typically see a greater uplift during the Chinese New Year period instead. “The seasonal pattern appears more marked for the Chinese New Year period, where there could be bigger month-on-month changes in January and February, depending on which month Chinese New Year falls in,” she says.

Prem Shamdasani, associate professor at NUS Business School’s department of marketing, says the Christmas season is more appropriately viewed as part of the build-up to the Chinese New Year period. Retailers would tend to launch sales and promotions to take advantage of this festive period.

“Singaporeans are so exposed to the Singles day, Black Friday and Cyber Monday sales, which soak up a lot of shopping dollars globally. Retailers here have to work really hard to build excitement around Christmas discounts and raise it up slowly until Chinese New Year,” says Shamdasani. “Hence, the November, December and January period is key for retailers to get as much excitement around shopping for customers.”

The downside to ramping up promotions during the festive season is the rush in orders. Teo of Mayson Bakery says his company will typically run promotional events ahead of Christmas, offering early-bird discounts so that it can better control demand. This is to give the company’s central kitchen lead time to cope with demand during festive seasons.

Shamdasani says some retailers opt instead to spread out their promotional activities over the year. “Retailers want to clear their inventory and create footfall, and it is a safer bet to have promotions and sales throughout the year rather than wait for the year-end,” he explains. “Retailers don’t want to wait until the end of the year. The Great Singapore Sale captures the pent-up demand for shopping in the mid-year, and with the growth of e-commerce, customers are already getting great deals and value throughout the year.”

Online value
Few retailers can afford to ignore the Christmas season, though. The growing popularity of online shopping means that local retailers face global competition. And e-commerce marketplaces tend to be particularly active during the year-end festive period. It will become increasingly more difficult for bricks-and-mortar stores to generate seasonal excitement as online retailers grow more effective in their marketing efforts.

According to SAP Hybris’ Singapore Christmas Shopper Survey 2017, 53% of Singaporeans look to chatbots for help with holiday shopping. Among this group, 74% actually acted on the recommendations of the chatbots.

“To capture that demand, retailers have to shift to providing online platforms for shoppers,” says Shamdasani. “Retailers can count on Christmas and Chinese New Year, leveraging on the seasons to prop up demand, but the demand today will increasingly come from e-commerce.”

Creating the right mood and atmosphere for the season is central to capturing footfall, he says. And a festive shopping experience can give physical retailers a small advantage over their online competitors. However, the key issue is still translating footfall into sales.

“Shoppers are going to offline retailing for the experience, but ordering online for shopping. Retailers now need to provide offline-to-online or online-to-offline [services] in order to capture shoppers,” he says.

Shamdasani adds, however, that e-commerce is yet to draw as much demand as most would think. Online retail accounts for less than 10% of the total retail pie. The Singapore Retailers Association claims that online retail absorbs less than 5% of shopping dollars.


This story first appeared on Issue 811 of The Edge Singapore (week of Dec 25), available at newsstands now.

Click here to subscribe

Next stop: The interchange of public and private good

SINGAPORE (May 20): Two-minute intervals between trains. Fewer breakdowns. Clean, new buses running at a higher frequency. Bright LED screens displaying details of stops on both buses and trains. To many commuters who are enjoying these benefits, the meltdown of Singapore’s transport system in December 2011, and again in July 2015, is a distant memory. Certainly, services have improved significantly. There are new trains and buses, while existing ones have been spiffed up. There has been an overhaul of the older rail systems, presumably including fixing the grips for the electricity rail ....
Read More >>
Moving from compliance to accountability

While the collection, use and disclosure of data is regulated by the Personal Data Protection Act, b

Failed Innopac deal portends mining magnate Gutnick’s woes in Australia

SINGAPORE (May 20): The Australian Securities and Investments Commission (ASIC) is seeking judicial permission to wind down mining company Merlin Diamonds. The regulator is also probing into whether its chairman Joseph Gutnick failed in his duties. Gutnick, who is known as “Diamond Joe”, is under investigation for a A$13 million ($12.3 million) loan made by Merlin to AXIS Consultants, a private company linked to him. Merlin shares have been suspended from trading since October 2018. ASIC is seeking an order to appoint Deloitte to liquidate Merlin, owner of the Merlin Diamond Mine Pro....
Read More >>