Retailers struggling although turnover gets boost from strong car sales

Potential buyers browsing cars at the Honda showroom at Alexandra Road on Jul 19, 2015.
Potential buyers browsing cars at the Honda showroom at Alexandra Road on Jul 19, 2015.PHOTO: ST FILE

Beleaguered retailers continued to struggle in October as sales fell broadly across segments.

Retail turnover was up 2.7 per cent over the same month last year, but that was due mainly to strong car sales. If vehicles were excluded, turnover would have fallen 4.6 per cent.

The car market has been getting a lift from those looking to replace vehicles bought between 2004 and 2008, when the supply of certificates of entitlement was high.

Sales at car showrooms surged 61.8 per cent in October compared with the same month last year, according to the Department of Statistics yesterday.

Department stores, supermarkets and sellers of medical goods and toiletries also recorded an uptick in turnover over last year, but other retailers fared less well.

LONG-TERM ISSUES

There are also longer-term structural issues affecting the retail industry, like online sales.

UOB ECONOMIST FRANCIS TAN, who also noted that lacklustre tourist arrivals have been a drag on retail sales

Takings at petrol stations plummeted 16.7 per cent over last year, partly because of lower fuel prices.

Sales of food and beverages, recreational goods, clothing and footwear, furniture and household equipment, optical goods and books, telecommunications apparatus and computers also declined.

Experts have noted that retail sales trends point to consumers cutting back on discretionary spending amid slowing economic growth. For instance, while supermarkets have sold more goods, registering positive growth in six out of the first 10 months this year, minimart and convenience store sales have been negative for eight out of the first 10 months.

Yesterday's data also showed that sales of food and beverage services fell 3.8 per cent in October compared with the same month a year ago.

Restaurants experienced a 5.8 per cent slide in takings over last year, alongside other eating places such as cafes, which saw sales fall 4.3 per cent, and caterers, whose takings dipped 0.2 per cent.

Fast-food outlets did better - their sales rose 2 per cent over October last year.

Lacklustre tourist arrivals have been a drag on retail sales, said UOB economist Francis Tan. Total tourist arrivals slid 0.3 per cent from January to September compared with the same period a year ago.

Many of Singapore's top sources of tourist arrivals - including Indonesia, China, Malaysia and Australia - have also seen their currencies depreciate significantly against the Singapore dollar this year, Mr Tan added.

"There are also longer-term structural issues affecting the retail industry, like online sales," he said.

A version of this article appeared in the print edition of The Straits Times on December 16, 2015, with the headline 'Retailers struggling although turnover gets boost from strong car sales'. Print Edition | Subscribe