Singapore Retail Market Outlook to 2030

Singapore Retail Market Overview

• The Singapore retail market was valued at USD 53.89 billion in 2023. The market witnessed steady growth with a CAGR of 6% from 2018 to 2023. This underscores the market's resilience and adaptability to changing consumer behavior and economic conditions.
• Prominent players in the Singapore retail market include Dairy Farm International Holdings, Sheng Siong Group, NTUC FairPrice, Mustafa Centre, and Courts Singapore. These companies dominate the market due to their extensive product ranges, strong brand loyalty, and strategic locations.
• NTUC FairPrice's ongoing digital transformation efforts, such as the development of their online grocery platform, implementation of automation and AI-powered features like "Scan-and-Go", and the company's focus on providing a seamless omnichannel experience.

Singapore Retail Current Market Analysis:

• The Singapore retail market is experiencing vigorous growth, fashion and apparel dominate the retail market, followed by electronics and groceries. The luxury goods market remains significant, particularly because of the e-commerce sector, which has seen a substantial boost due to the pandemic. In 2022, e-commerce sales reached USD 7.5 billion in Singapore.
• Consumers in Singapore prefer brands that offer quality, convenience, and a seamless shopping experience, electronics particularly smartphones and laptops, are among the bestselling products in Singapore. With a high smartphone penetration rate of 90%, the demand for these gadgets is driven by the necessity for remote working tools and continuous technological advancements.
• Central region, particularly Orchard Road, is the dominant retail hub, accounting for approx. one third of retail sales. Its strategic location, high foot traffic, and concentration of luxury brands make it a prime shopping destination for Singapore locals and tourists.

Singapore Retail Market Segmentation

By Product Type: In the Singapore retail market segmentation by product type is divided into fashion, electronics, groceries and home living. In 2023, fashion remains the dominant segment within the Singapore retail market. This dominance is attributed to the diverse consumer base that prioritizes fashion as a key aspect of their lifestyle. Frequent fashion seasons ensure a steady stream of new product releases.

By Distribution Channel: In 2023, the Singapore retail market segmentation by distribution channel is divided into Online, Supermarkets, Department Stores and Specialty Stores. In 2023, online retail channels have gushed ahead due to the unparalleled convenience they offer. The pandemic played a significant role in accelerating the shift towards online shopping, as safety concerns and restrictions limited physical store visits.

By Region: In the Singapore retail market segmentation by region is divided into North, South, East and West. In 2023, Southern region dominates the retail market due to its strategic location in the Central Business District (CBD) and major tourist attractions like Marina Bay Sands and Sentosa. The influx of high-spending tourists and affluent local consumers drives luxury and high-end retail sales, making it a retail powerhouse.

Singapore Retail Market Competitive Landscape

• Sheng Siong's Expansion: Sheng Siong's opening of two new stores in 2023, bringing its total to 68 outlets, targets the burgeoning demand in Singapore's suburban areas. This expansion enhances accessibility for a wider customer base, solidifying its market presence in local retail competition.
• Dairy Farm International's AI Customer Service Platform: Dairy Farm International's introduction of an AI-driven customer service platform in 2023 revolutionizes personalized shopping experiences in Singapore's retail sector. This innovation aims to boost customer satisfaction and operational efficiency.
• Harvey Norman's Sustainability Initiative: Harvey Norman's 2023 commitment to reduce carbon emissions by 20% by 2025 aligns with global environmental goals and addresses rising consumer preferences for sustainability in Singapore's retail market. This initiative underscores the brand's dedication to eco-friendly practices.

Singapore Retail Industry Analysis

Singapore Retail Market Growth Drivers

• Tourism Boom: Tourist spending on retail in Singapore has increased reaching $26.0 billion in 2023, highlighting the pivotal role of tourism in the retail market. Events such as the Singapore Grand Prix and cultural festivals attract millions of international visitors annually, significantly boosting retail sales. Tourists contribute substantially to luxury retail and souvenir purchases.
• Ongoing Digital Transformation: Singapore's Smart Nation initiative has spurred rapid digitalization in the retail sector. The adoption of digital payment systems and e-commerce platforms has grown by 20% annually since 2018. This transformation has improved convenience for consumers and expanded market reach for retailers.
• Infrastructure Development: Ongoing infrastructure projects, including the expansion of Mass Rapid Transit (MRT) lines and the development of iconic shopping destinations like Jewel Changi Airport, have significantly enhanced accessibility to retail outlets across Singapore. These developments attract both local residents and tourists, boosting footfall and retail spending in strategic locations.

Singapore Retail Market Challenges

• High Operational Costs: Retailers in Singapore contend with exorbitant rental expenses, particularly in prime locations like Orchard Road, where rents reached USD 430 per square foot per month in 2023. This high cost of leasing retail space squeezes profit margins and challenges sustainability for businesses.
• E-commerce Competition: The rapid growth of e-commerce has intensified competition for traditional brick-and-mortar stores in Singapore. To remain competitive, traditional retailers are investing in omnichannel strategies, integrating online platforms with physical stores to enhance customer experience and retain market share.
• Changing Consumer Preferences: Singaporean consumers are increasingly prioritizing sustainability and ethical sourcing when making purchasing decisions. There is a growing willingness among consumers to pay a premium for eco-friendly products, reflecting broader global trends towards environmental consciousness. Retailers must adapt their product offerings and operational practices.

Singapore Retail Market Government Initiatives

• Digital Economy Framework: The Digital Economy Framework in Singapore supports retailers in integrating advanced technologies, with more than 5.3 million internet users in Singapore in 2023, this framework is fostering digital transformation and innovation. This framework is pivotal in driving the growth of e-commerce, it encourages retailers to adopt digital solutions.
• Support for SMEs Go Digital: The Go Digital initiative has benefited SMEs in Singapore by facilitating their digital transformation. This support enables SMEs to modernize their operations, enhancing efficiency and competitiveness in the retail market. By leveraging digital technologies, SMEs can streamline processes, improve customer experience, and compete effectively with larger players.
• Tax Incentives: Singapore offers tax incentives to encourage retailers to invest in new technologies and enhance their competitiveness. The Productivity Solutions Grant, for instance, provides up to 70% funding support for the adoption of IT solutions and equipment. These incentives reduce the financial barrier for retailers looking to upgrade their technological capabilities, fostering innovation and productivity in the sector.

Singapore Retail Market Future Outlook:

The retail market is expected to grow exponentially by 2028. This growth is driven by technological advancements, changing consumer preferences, and government support.

Future Trends

• Grants and Subsidies for SMEs: Programs like SMEs Go Digital have assisted over SMEs in modernizing their operations. This support will enable SMEs to leverage digital technologies for improving efficiency and customer engagement, allowing them to compete effectively with larger retailers.
• Productivity Solutions Grant: The Productivity Solutions Grant offers up to 70% funding support for adopting IT solutions and equipment by retailers in Singapore. These incentives will encourage investments in new technologies, boosting operational productivity and competitiveness.
• Efforts to Revive Tourism: In 2022, tourism receipts amounted to USD 23.7 billion, underscoring the sector's importance to the economy and its potential for future growth. Events, such as the Singapore Food Festival and the Great Singapore Sale will draw substantial international visitor spending in the coming years too.