Retail industry must face the music on rising costs

I read about the diminishing number of shops selling CDs and DVDs in Singapore with great concern ("Music sales up on popularity of streaming services"; Monday).

At first glance, some may simply attribute this to the rise of digital downloads.

But there is more to it than this, and it would serve the entire retail industry well to take heed.

With cheaper discs available direct to our doorstep from places such as Amazon, and with iTunes and other online sources easily accessible, the modern consumer is spoilt for choice.

The superb customer service of online retailers also contrasts with the dour and unhelpful experience we can expect locally.

A brick and mortar store has three important components that determine its ability to survive.

First, the CD itself, which is only a small part of the cost. We are actually still competitive here, since many discs are made in Asia.

Second, manpower costs. The model of everyone clamouring for higher pay only adds to a spiral that decimates our desirability to shoppers.

The third component is rental. If we allow market forces and profits to drive up rental costs, then even large chains cannot survive.

The drive to increase prices has downstream effects on other costs. Wages seldom match these costs, and, in the end, everyone suffers.

Those who think it is just the music industry that is affected should observe the number of Singapore shoppers going to neighbouring countries such as Thailand for a better shopping experience.

Ultimately, the Government and the retail sector need to take a long, hard look at how we do business, and examine the issue of escalating costs, lest we become a shopping desert.

Peter Loon Seng Chee

A version of this article appeared in the print edition of The Straits Times on May 21, 2016, with the headline 'Retail industry must face the music on rising costs'. Print Edition | Subscribe