July retail sales surge after phase two reopening

Turnover up 27.4% from June as dept stores' revenue sees biggest rise; expert says data reflects pent-up demand

Shoppers at Raffles City mall on July 22, after Singapore entered phase two of its reopening. Low tourist arrivals kept department store sales and the sales of wearing apparel, footwear, watches and jewellery down between 21 per cent and 32.1 per cent year on year. ST PHOTO: DESMOND WEE

Retail sales shot up in July as the beleaguered sector continues its recovery from the Covid-19 crunch.

Turnover surged 27.4 per cent over June levels on a seasonally adjusted basis, helped in part by a lower base in that month, the Department of Statistics (SingStat) noted yesterday.

Most physical stores were closed from April 1 to June 18 due to the circuit breaker imposed to prevent the spread of the coronavirus.

The biggest winners in July were department stores, where revenue rose 109.4 per cent, while motor vehicle sales surged 100.3 per cent as certificate of entitlement bidding resumed that month.

Wearing apparel and footwear sales jumped 82.7 per cent month on month, watches and jewellery added 66.3 per cent, recreational goods were up 62.2 per cent and furniture and household equipment advanced 36.2 per cent.

If motor vehicles were excluded, seasonally adjusted retail sales would have increased 19.5 per cent.

Maybank Kim Eng Securities economist Lee Ju Ye said the data reflects pent-up demand driving a broad-based improvement as the country entered phase two of its reopening on June 19.

Sales fell 8.5 per cent in July compared with the same month last year, well under a revised 27.7 per cent decline in June.

Excluding motor vehicles, sales fell 7.7 per cent year on year.

Economists in a Bloomberg survey had expected a 15 per cent year-on-year slide.

Sales at supermarkets and hypermarkets surged by 28.6 per cent year on year, while computer and telecommunications equipment sales grew by 27.4 per cent.

"Marked improvement in certain discretionary items such as watches and jewellery, wearing apparel and footwear, recreational goods, motor vehicles and department store sales, all recording the highest levels since January, suggests some pent-up demand," Ms Lee said.

SingStat estimated retail sales hit $3.3 billion in July, with online turnover making up 11 per cent.

United Overseas Bank economist Barnabas Gan said online sales in real terms - adjusted for inflation - grew 79.8 per cent year on year in July, far higher than last year's average of 12.8 per cent.

However, low tourist arrivals kept department store sales and the sales of wearing apparel, footwear, watches and jewellery down between 21 per cent and 32.1 per cent year on year.

Mr Gan said: "Overall retail sales may still be unable to surpass 2019 levels, given the sharp declines already seen in the first half of 2020 amid the lack of tourism-related demand."

He expects full-year sales to contract by 15 per cent.

Sales of food and beverage (F&B) services fell 25.4 per cent year on year - an improvement from the 43.6 per cent decline in June.

On a seasonally adjusted basis, sales of F&B services increased 29.2 per cent from June. The month-on-month growth was mainly due to the lower base in June when F&B outlets operated on a takeaway or delivery basis until June 18.

F&B services racked up an estimated turnover of $665 million in July, with online sales accounting for about 21.1 per cent.

Ms Lee of Maybank Kim Eng said: "We remain cautious on our outlook for retail sales as the pent-up demand may be temporary, with the economy in steep recession, the labour market seeing large losses and household incomes falling.

"Consumer sentiments will likely remain subdued for the rest of the year, which will weigh on big-ticket purchases and discretionary items."

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A version of this article appeared in the print edition of The Straits Times on September 05, 2020, with the headline July retail sales surge after phase two reopening. Subscribe