Singapore's retail sector is going through a rough patch. As the economy slows, shops are being boarded up and retail rents are falling.
And yet, amid this gloom, consumers continue to spend - though there is a shift in the pattern and quantum of their spending.
In June, the first month of the Great Singapore Sale, retailer sales were down 3 per cent compared with the same month last year. It is not just tourists who are staying away, but local consumers are also looking more closely at price tags.
The mood has not been helped by the fact that about 4,800 people were laid off in the second quarter, 48 per cent more than in the same period last year.
Landlords are feeling the pinch as well. Average monthly gross rents for prime first-storey speciality retail shops dipped 1.2 per cent in the three months to September from the previous quarter, said property consultancy Edmund Tie & Company recently.
Vacancies in the Orchard planning area rose again in the second quarter to 9.2 per cent, after reaching what was then a five-year high of 8.8 per cent in the first quarter.
ANZ economist Ng Weiwen pointed out that home prices have fallen for 12 consecutive quarters, while bank lending has shrunk for 11 straight months. This has translated into weaker spending.
However, the decline has been gentle across the board and there have been some bright spots. Those who find this surprising should look at the unemployment rate. While it rose from 1.9 per cent in March to 2.1 per cent in June, it remains quite low. Said OCBC economist Selena Ling: "When unemployment rate is anything below 3 per cent, it is effectively at full employment."
It could be one reason why consumers continue spending on mid-range goods and services, such as travel and at cafes, even as they cut back on luxury items and seek better deals for necessities.
ANZ's Mr Ng said: "For the different tiers of consumer spending, the high-end consumer segment will be more sensitive to changes in consumer income, so it's not surprising.
"The mid-range segment will still hold up in the near term as wages are still holding up."
In fact, more are paying their credit card bills on time. Only 32.25 per cent of card holders did not pay their bills in full for the second quarter, down from 33.91 per cent in the first quarter. Ms Ling said: "People have been turning slightly more cautious with spending."
They may spend less on fashion. And malls could take a hit if their offerings are the same as the ones available on Taobao and the like, she added.
But cheaper options like house brands at supermarket chain FairPrice are seeing stronger demand.
This is what a slowing economy looks like - in Singapore.