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Covid-19 spurs more brick-and-mortar retailers to go online

6th May 2020

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As part of “circuit breaker” measures implemented to combat further spread of Covid-19, it is now against the law to gather and loiter, visit another household and be outdoors without a mask.

As such, footfall in shopping malls has reduced to a trickle.

Safe distancing measures and work-from-home policies have caused many to turn to online shopping.

But regardless of the method of purchase, it is clear that discretionary spending has weakened as cautious shoppers are bracing for a recession. 

To make matters worse, the retail industry has already been suffering for a few years now.

The scenes of snaking queues outside supermarkets juxtaposed against that of empty shopping malls are a reflection of how consumers are spending differently in a pandemic. 

Sales are uneven online as well, as online shopping platforms and sites specialising in non-essential items are also struggling.

Online retailer Lazada, which also owns the popular online groceries store RedMart, is seeing strong growth in different areas. Lazada Singapore’s public relations manager Joel Chan says: “We have seen a corresponding increase in the number of weekly orders and customers during this period.

People are buying more products that support a stay-at-home lifestyle, such as home entertainment, fitness equipment, games and not to forget groceries.”

However, going online is still the only way for retailers to stay visible for consumers who are staying home during the circuit breaker period. Recently, statutory board Enterprise Singapore (ESG) has launched an E-commerce Booster Package to offer subsidies on up to 90% of costs related to selling online, particularly in the areas of content development, product listing and online advertising.

Retailers who are new to e-commerce can sign up with either Amazon, Lazada, Qoo10 or Shopee.

The one-time support is capped at $9,000 and the programme is open to sign-ups until Sept 30.

This booster package will also support 90% of the salary costs of three of their employees for three months.

The employees must be Singaporeans and permanent residents.

Going forward, consultants believe that e-commerce will become commonplace and retail real estate will have to reinvent themselves to stay relevant. Teh Seng Leong, global real estate, hospitality and construction M&A leader at EY, says: “Despite high online penetration, the proportion of online retail sales to overall retail sales at 5% to 7% is still quite little compared to China, where the figure is actually 30% to 40%. There is much more room to grow.”

He adds: “In the post-Covid-19 world, there needs to be more reinventing as consumer behaviour is changing. Fundamental assumptions such as: ‘We have a great space, tenants have no choice but to rent from us’ will have to change.”

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