Retail (Singapore) Industry Outlook - DBS Bank
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Industry Outlook
Retail (Singapore)
Refer to important disclaimers at the end of this report
DBS Group Research . Asian Insights Office 17 September92015
March 2017
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
Growth %
16 1. GDP growth is set to
accelerate to 2.8% in 2017
14
12 2. 2016 fourth quarter driven
by semiconductor and
10
pharmaceutical
8 manufacturing
6
3. Services sector is improving
4 – led by financial and
2 trade-related services
0
-2
-4
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F
Source: ThomsonReuters, DBS Bank
.
Page 1Industry Outlook
Retail (Singapore)
Singapore retail sales (ex-motor vehicles) Remarks
% chg
1. Overall retail sales (ex-
15
motor vehicles) have, since
2012, trended on a gentle
10
decline. This is largely in
line with decelerating GDP
5
growth
0
2. Retail sales growth
negative in 2016, in line
-5
with lower private
consumption and higher
-10
unemployment rate
-15
Mar-12
Mar-15
Mar-16
Mar-13
Mar-14
Sep-12
Sep-14
Sep-15
Sep-16
Sep-13
May-12
May-13
May-16
May-14
May-15
Jul-13
Jul-14
Jul-12
Jul-15
Jul-16
Jan-13
Jan-14
Jan-15
Jan-12
Jan-16
Nov-12
Nov-13
Nov-15
Nov-16
Nov-14
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
.
Page 2Industry Outlook
Retail (Singapore)
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
Growth %
5.0 1. Increase in private
consumption in 2015 was
4.5 led by the transportation
4.0 sector
3.5
2. In 2015, the number of
3.0 new vehicle registrations
2.5 increased 54% while
vehicle transfers increased
2.0 20% at a time when COE
1.5 prices ranged between
S$54,000 and S$78,000
1.0
0.5
0.0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F
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
S$
1. Vehicle population
100000 growth rate is currently
90000 0.35%
80000
70000
60000
50000
40000
30000
20000
10000
0
Source: Bloomberg Finance L.P., DBS Bank
.
Page 3Industry Outlook
Retail (Singapore)
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
th th
between the 25 and 75 percentile generally draw a monthly salary of between S$2,000 and S$6,999 per month.
Mean gross monthly income (RHS) and real wage increase (LHS) Remarks
Growth % S$
6% 4800 1. Real wage growth was
3.1% from 2010 to 2016
5% 4200 and 3.3% from 2015 to
2016
4% 3600
3% 2. Average bonus between
3000 2005 and 2015 was 2.2
2% months
2400
1%
1800
0%
-1% 1200
-2% 600
-3% 0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
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
%
90% 1. Higher than Taiwan,
Philippines, Indonesia,
80% India Hong Kong and
China
70%
60% 2. Lower than Malaysia,
Thailand, and Korea’s
50% debt-to-GDP ratio
40% 1.
30%
20%
10%
0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: Singstat, DBS Bank
.
Page 4Industry Outlook
Retail (Singapore)
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
Index 2000=100
160 1. ABSD currently ranges
150
from 7-15% depending
140
on citizenship status and
the number of properties
130
already owned
120
110 2. TDSR cannot exceed 60%
100 of buyer’s net income
90 while MSR cannot exceed
80 30% of income for new
70 properties
60
Dec-94
Dec-97
Dec-00
Dec-03
Dec-06
Dec-09
Dec-12
Dec-15
Mar-94
Mar-00
Mar-03
Mar-09
Mar-97
Mar-06
Mar-12
Mar-15
Jun-99
Jun-05
Jun-08
Jun-14
Sep-95
Jun-96
Sep-98
Jun-02
Sep-04
Sep-07
Jun-11
Sep-13
Sep-01
Sep-10
Sep-16
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
Index 1998=100
4.5 1. Interest rates expected to
4.0
increase in view of four
rate hikes in the US this
3.5
year
3.0
2.5 2. Interest rate increase had
2.0
led to sluggish retail sales
in 2015
1.5
1.0 3. Low interest costs also
0.5 fuelled the property
0.0
market from 2009 to
2013
Source: Bloomberg Finance L.P., DBS Bank
.
Page 5Industry Outlook
Retail (Singapore)
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
>84 Male 1. There were close to 4
80 - 84 million Singapore
Female
75 - 79 residents in 2016
70 - 74
65 - 69
60 - 64 2. Over 50% of Singapore’s
55 - 59 population is between 30
50 - 54
45 - 49
and 60 years of age
40 - 44
35 - 39 3. Gender split is 51% to
30 - 34 49%, in favour of females
25 - 29
20 - 24 2.
15 - 19
10 - 14
5-9
0-4
200,000 100,000 0 100,000 200,000
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
% chg
10
1. Slump in oil prices led to
negative inflation in 2015
8 and 2016
6 2. Inflation increase in 2008
due to food, transport and
4 housing, before declining
to a negative figure in
2 2009 due to the global
financial crisis
0
-2
3. 2010 inflation was largely
due to increasing COE
-4 prices
Dec-04
Dec-11
Mar-03
Mar-10
Jun-08
Jun-15
Apr-07
Apr-14
Sep-06
Sep-13
May-04
May-11
Jul-12
Jul-05
Jan-02
Jan-09
Jan-16
Nov-07
Nov-14
Feb-06
Feb-13
Oct-03
Oct-10
Aug-16
Aug-02
Aug-09
Source: Bloomberg Finance L.P., DBS Bank
.
Page 6Industry Outlook
Retail (Singapore)
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
m
18 1. 2014 decline in visitor
arrivals due to decline in
16 Chinese visitors over loss of
MH370 aircraft
14
12 2. 2015 visitor arrivals picked
up due to events such as
10 South East Asian games
8 and lower 2014 base
6 3. 2016 saw a recovery in
4 Chinese visitors
2
0
2009 2010 2011 2012 2013 2014 2015 2016
Source: Singapore Tourism Board, DBS Bank
.
Page 7Industry Outlook
Retail (Singapore)
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$1.3 billion in 2016. The luxury retail segment grew at a five-year CAGR of 2% between 2011
and 2016. Growth was dominated by luxury bag and luggage specialists (up 2.2%), luxury department stores (up
2.5%), and luxury jewellery and watch retailers (up 2.2%). Luxury apparel and footwear declined by 1.1%. The
number of outlets has moderated from the peak of 83 in 2014 to 79 in 2016. Luxury retailing peaked in 2014 and has
dipped in recent years, mainly attributed to the falling numbers of inbound tourists, the strength of the Singapore
dollar, locals spending overseas and reduced shopping expenditure.
Singapore’s luxury retail market breakdown 2016 Remarks
Jewellery and Apparel and 1. Department stores and bags
watch retailers footwear
11%
and luggage specialists
12%
dominate the Singapore
luxury retail market with
close to 80% share
2. Department store
Bags and contribution was largely by
Luggage Takashimaya
specialist
33%
Department
stores
44%
Source: Euromonitor, DBS Bank
2.0% CAGR for Singapore’s luxury retail market from 2011 to 2016 Remarks
S$m
1600 1. Growth led by department
stores, jewellery and
1400 watches, and bag and
1200
luggage specialists
1000 2. Luxury apparel and
800
footwear declined, losing
growth to mid- to low-end
600 luxury apparel and
footwear retailers
400
200 3. Weakening tourist spending
has also a resulted in lower
0
2011 2012 2013 2014 2015 2016 luxury sales in recent years
Apparel and footwear Bags and Luggage specialist
Department stores Jewellery and watch retailers
Source: Euromonitor, DBS Bank
.
Page 8Industry Outlook
Retail (Singapore)
Four players dominate around 70% of Singapore’s luxury retail market Remarks
Others
1. Luxury department store
13%
segment is dominated by
Burberry Group
Takashimaya
Plc
5%
Kering SA 2. Market share is fragmented
5% Takashimaya Co
Ltd across other luxury retail
45% players who are mainly
Tiffany & Co luxury bag retailers
6%
Prada SpA
7%
Hermès
International
SCA LVMH
7% 12%
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 Remarks
retail floor area
1. Takashimaya has the
Others biggest selling area in
26%
Singapore
Takashimaya
39% 2. Luxury retail companies
take up an estimated
800,000 square feet of
selling space in Singapore
LVMH
15%
Burberry Group
20%
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
.
Page 9Industry Outlook
Retail (Singapore)
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$3.8 billion in 2016,
comprising of luxury apparel and footwear retailers and internet retail. The share of internet retailing for apparel and
footwear has crept up to 8% of the total market, growing at a CAGR of 6.4% over the past five years. There were
3,348 apparel and footwear specialist retail outlets and 23 luxury apparel and footwear retailers in Singapore in 2016,
lower than the total of 3,386 outlets five years ago.
1.5% CAGR growth for Singapore’s apparel and footwear market Remarks
S$m Apparel and Footwear through Internet Retailing
1. Internet apparel and
Luxury Apparel and Footwear Retailers
4500 footwear is now 10% of
Apparel and Footwear Specialist Retailers
the market
4000
3500 2. CAGR growth of internet
retailing versus brick-and-
3000
mortar retailers was 6.4%
2500 to minus 1% over the past
five years
2000
1500 3. While luxury footwear and
apparel declined from
1000 2011 to 2016, mid- to
500 low-end apparel and
footwear retail sales
0 increased
2011 2012 2013 2014 2015 2016
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
A&F Internet
Retailing 1. Market size of S$3.8 billion
Luxury Apparel
8%
and Footwear
Retailers
4%
2. Approximately 88% of
sales are through specialist
retailers even though the
internet channel is
growing
A&F Specialist
Retailers
88%
Source: Euromonitor, DBS Bank
.
Page 10Industry Outlook
Retail (Singapore)
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
Uniqlo Fast Retailing Co Ltd 23 660 5.6% fragmented with market
H&M H&M Hennes & Mauritz AB 10 1,090 4.6% leaders holding market
Mango Punto Fa SL (Mango) 13 2,910 2.9% share of less than 6%
Zara Inditex, Industria de Diseño Textil SA 8 1,688 2.6%
Burberry Burberry Group Plc 3 395 1.8% 2. Largest chain stores have
Giordano Giordano International Ltd 41 1,287 1.6% over 20 outlets
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
S$m A&F Specialist Retailers A&F Internet Retailing 1. Growth is expected to
4500 continue being led by
online retailing
4000
3500 2. Expect new retail
experiences to kick in to
3000 sustain growth in store
2500 retailing
2000
1500
1000
500
0
2016 2017F 2018F 2019F 2020F 2021F
Source: Euromonitor, DBS Bank
.
Page 11Industry Outlook
Retail (Singapore)
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
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
Source: Euromonitor, DBS Bank
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
Other Leisure
and Personal 1. 80% of Singapore’s leisure
Goods Specialist and personal goods market
Retailers is dominated by jewellery
12% and watches, bags and
Sports Goods
Stores luggage, media and sports
8% goods
2. Other leisure and personal
Media Products goods segments include
Stores Jewellery and toys and games, pet shops,
12% Watch Specialist stationery shops
Retailers
57%
Bags and
Luggage
Specialist
Retailers
11%
Source: Euromonitor, DBS Bank
.
Page 12Industry Outlook
Retail (Singapore)
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
.
Page 13Industry Outlook
Retail (Singapore)
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$2.2 billion. More notably, its non-internet retail component is expected to decline
marginally by a CAGR of minus 0.5% over the next five years, displaced by internet sales. Internet sales for 2016 made
up 3% of total sales and are expected to creep up to 5% by 2021. Homeware and furnishing sales peaked in 2013, in
tandem with the property market’s peak.
1.2% CAGR for Singapore furniture and household sales Remarks
S$m Home Improvement and Gardening Internet Retailing
1. Property cooling
Home Care Internet Retailing
measures introduced in
2300 Homewares and Home Furnishings Internet Retailing
2013 have led to sales
Home and Garden Specialist Retailers
2250
decline in homeware and
home furnishing sales
2200
2. Internet sales will make
2150
up around 5% of total
2100 sales by 2021
2050
2000
1950
1900
2011 2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F
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
Internet sales 1. With the rise of online
Home 3%
Improvement retailing, retailers will need
and Gardening to look for more creative
Stores
18% 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
Homewares and
Home Furnishing
Stores
79%
Source: Euromonitor, DBS Bank
.
Page 14Industry Outlook
Retail (Singapore)
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
Courts Asia Ltd 1. Furniture market is
23%
dominated by just Courts
and IKEA
2. Newer entrants are
adopting a low cost model
by cutting warehousing
Inter Ikea
Systems BV
and store expenditure
Others 12% while focusing on online
62% sales as their key
TT Int'l. Nobel distribution channel
Design, Home-
Fix DIY
3%
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
.
Page 15Industry Outlook
Retail (Singapore)
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$2.7 billion with 39 outlets.
0.7% CAGR for Singapore department stores from 2011 to 2016 Remarks
S$m
1. Spending in department
3000 stores has tracked GDP
growth closely, peaking in
2013
2900
2. Weak economic
2800
fundamentals and growth
of online retailing have
resulted in poor
2700 profitability and store
closures in recent years
2600
2500
2011 2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F
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
Marks & Spencer Yue Hwa
Beijing Hualian
5% 1% Takashimaya 1. Market share evenly
5% 21% distributed among key
Metro department store players in
6% Singapore
Al Futtaim 2. Smaller-scale players are
9% expanding while larger and
more established players
with more outlets are
Mustafa downsizing
CK Tang 19%
10% 3. Players with single flagship
locations continue to grow
OG their sales per square foot
11% Isetan
13%
Source: Euromonitor, DBS Bank
.
Page 16Industry Outlook
Retail (Singapore)
Number of department store outlets has fallen Remarks
44 1. Store closures from
43
Metro, Al Futtaim
Robinson’s, Marks &
42 Spencer and Isetan in
41 2015 due to difficult
operating environment
40
39 2. Those which expanded in
2013 – Isetan, Al Futtaim
38
Robinson’s and Marks &
37 Spencer – ended up
downsizing by 2016
36
35
34
2011 2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F
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
.
Page 17Industry Outlook
Retail (Singapore)
Minimart & Convenience Store
Singapore’s market for convenience stores and independent grocers was S$975 million in 2016, split at 54% to 46%
in favour of convenience stores. There were 607 convenience stores and 583 independent grocers in 2016. The market
size for this segment has shrunk by a 1.2% CAGR between 2011 and 2016, undermined by supermarkets in Singapore.
The alcohol restriction in Little India and after-hours has contributed to the decline in convenience store sales in the
past few years.
Minus 1.2% CAGR from 2011 to 2016 for convenience store and independent Remarks
grocer sales
S$m Convenience stores Independent grocers 1. Market size is undermined
1,100 by growth of
1,000 supermarkets, due to their
increasing convenience
900
800 2. Split between convenience
700 stores is 54% to 46%
600 independent grocers
500
400
300
200
100
0
2011 2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F
Source: Euromonitor, DBS Bank
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
S$m Source:
Convenience stores Independent grocers
1. Independent grocers,
1,400 generally owned by senior
1,300
citizens, are expected to
1,200
decline in the coming
1,100
1,000
years
900
800
700
600
500
400
300
200
100
0
2011 2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F
Source: Euromonitor, DBS Bank
.
Page 18Industry Outlook
Retail (Singapore)
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
1. 7-eleven is the largest with
close to 500 stores
2. Cheers has 90 stores and
Independent iEcon has 29 outlets
grocers 7-Eleven
46% 46%
3. There are 583
independent grocers
iEcon Cheers
3% 5%
Source: Euromonitor, DBS Bank
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.
.
Page 19Industry Outlook
Retail (Singapore)
Online Retail
Singapore's internet retailing market was estimated to be worth S$1.5 billion in 2016. Growth has been robust at a 22%
CAGR for the past five years and the market is set to grow further by another 18% CAGR from 2015 to 2021. Growth
has been led by apparel and footwear, personal accessories and food and beverage. Going forward, the growth of the
internet market is expected to be driven by apparel and footwear, food and beverage, and media products.
22% CAGR growth for Singapore online sales from 2011 to 2016 Remarks
S$m
1. Internet retail is expected
3500 to grow exponentially at a
CAGR of 18% from 2015
3000 to 2021
2500 2. Growth to be led by
apparel and footwear,
2000 and media products
1500
1000
500
0
2011 2012 2013 2014 2015 2016F 2017F 2018F 2019F 2020F 2021F
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
Others 1. Market dominated by less
26% than ten players
Giosis Group
33%
2. Giosis Qoo10, Rocket
Internet’s Zalora, and
Apple’s online sales
dominate over 50% of
Asos Plc Singapore online sales
3%
RedMart Pte Ltd
3% 3. Rakuten shut its Singapore
website in 2016 and
Amazon.com Inc
7%
moved into a consumer-
Apple Inc to-consumer business
Reebonz Pte Ltd 12%
7% Rocket Internet model
GmbH
9%
Source: Euromonitor, DBS Bank
.
Page 20Industry Outlook
Retail (Singapore)
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
Apparel and 1. Marketplace platforms
Footwear
like Lazada offer 17
21%
categories of goods
Others including apparel and
37% footwear, and
consumer electronics,
from over 5,000
merchants
Media Products
16%
Consumer
Health
3% Personal
Consumer
Accessories and
electronics Food and Drink
Eyewear
4% 9% 10%
Source: Euromonitor, DBS Bank
Our In-House Experts
Andy Sim
SVP, Group Research
andysim@dbs.com
Alfie Yeo
AVP, Group Research
alfieyeo@dbs.com
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
equity research reports published on below-mentioned companies and the accompanying disclaimer/disclosure of DBS’
interest in the companies mentioned in the respective reports.
.
Page 21Industry Outlook
Retail (Singapore)
GENERAL DISCLOSURE/DISCLAIMER
The information herein is published by DBS Bank Ltd (the “Company”). It is based on information obtained from sources believed to be reliable, but
the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any
particular purpose. Opinions expressed are subject to change without notice. Any recommendation contained herein does not have regard to the
specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the
information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal
or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct,
special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein
(including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other
person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell
any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their
directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also
perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not
intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or
regulation.
RESTRICTIONS ON DISTRIBUTION
General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or
located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be
contrary to law or regulation.
Australia This report is being distributed in Australia by DBS Bank Ltd. (“DBS”) or DBS Vickers Securities (Singapore) Pte Ltd
(“DBSVS”), both of which are exempted from the requirement to hold an Australian Financial Services Licence under the
Corporation Act 2001 (“CA”) in respect of financial services provided to the recipients. Both DBS and DBSVS are regulated
by the Monetary Authority of Singapore under the laws of Singapore, which differ from Australian laws. Distribution of this
report is intended only for “wholesale investors” within the meaning of the CA.
Hong Kong This report is being distributed in Hong Kong by DBS Vickers (Hong Kong) Limited which is licensed and regulated by the
Hong Kong Securities and Futures Commission and/or by DBS Bank (Hong Kong) Limited which is regulated by the Hong
Kong Monetary Authority and the Securities and Futures Commission. Where this publication relates to a research report,
unless otherwise stated in the research report(s), DBS Bank (Hong Kong) Limited is not the issuer of the research report(s).
This publication including any research report(s) is/are distributed on the express understanding that, whilst the information
contained within is believed to be reliable, the information has not been independently verified by DBS Bank (Hong Kong)
Limited. This report is intended for distribution in Hong Kong only to professional investors (as defined in the Securities and
Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and any rules promulgated thereunder.)
Indonesia This report is being distributed in Indonesia by PT DBS Vickers Securities Indonesia.
Malaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received from
ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection with this
report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advised
that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected
and associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any
of them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or
seek to perform broking, investment banking/corporate advisory and other services for the subject companies. They may
also have received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory
and other services from the subject companies.
Wong Ming Tek, Executive Director, ADBSR
Singapore This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No.
198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the
Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign
entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial
Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert
Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons
only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arising
from, or in connection with the report.
.
Page 22Industry Outlook
Retail (Singapore)
Thailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd. Research reports distributed are only
intended for institutional clients only and no other person may act upon it.
United Kingdom This report is being distributed in the UK by DBS Vickers Securities (UK) Ltd, who is an authorised person in the meaning of
the Financial Services and Markets Act and is regulated by The Financial Conduct Authority. Research distributed in the UK
is intended only for institutional clients.
Dubai This research report is being distributed in The Dubai International Financial Centre (“DIFC”) by DBS Bank Ltd., (DIFC
Branch) having its office at PO Box 506538, 3rd Floor, Building 3, East Wing, Gate Precinct, Dubai International Financial
Centre (DIFC), Dubai, United Arab Emirates. DBS Bank Ltd., (DIFC Branch) is regulated by The Dubai Financial Services
Authority. This research report is intended only for professional clients (as defined in the DFSA rulebook) and no other
person may act upon it.
United States This report was prepared by DBS Bank Ltd. DBSVUSA did not participate in its preparation. The research analyst(s) named
on this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The research
analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a subject
company, public appearances and trading securities held by a research analyst. This report is being distributed in the United
States by DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major U.S.
Institutional Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as
DBSVUSA may authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities referred
to herein should contact DBSVUSA directly and not its affiliate.
Other jurisdictions In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified,
professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.
DBS Bank Ltd
12 Marina Boulevard, Marina Bay Financial Centre Tower 3
Singapore 018982
Tel. 65-6878 8888
Company Regn. No. 196800306E
.
Page 23You can also read
