Good news for retailers

Jo-ann Huang

joannhuang@mediacorp.com.sg

SINGAPORE

With a higher yuan, Singapore will be a less costly tourist destination for the Chinese, said Mr Liu Jinshu, investment analyst at Sias Research.

“Chinese tourists already accounted for 9.7 per cent of total arrivals in 2009. With a stronger yuan, we can expect more visitors from China,” he said.

About 72,000 Chinese tourists touched down on Singapore shores in May, making them the fourth-largest country in terms of visitor arrivals.

The top three countries in terms of tourist arrivals in May are Indonesia with 186,000 visitors; India with 116,000 visitors; Malaysia with 82,000 visitors and Australia taking fifth place with 64,000 visitors.

Mr Liu said with most visitors coming from Asia, the European debt crisis is not yet a mounting concern.

“The euro zone debt crisis will have a relatively smaller impact on Singapore retail trade as a whole,” he said.

“Hence, our retailers are less reliant on European customers.

Reduced takings from them will probably be more than offset by higher receipts from other nationalities and local spending,” he continued.

With the Singapore economy hitting 15.5-per-cent growth on-year in the first quarter, retail sales excluding motor vehicles grew only 7.4 per cent in the same period.

But Mr Liu is sanguine on the retail sector for the second half of this year, despite a slower performance compared to broad economic growth.

“I believe that consumption will increase towards the  end of 2010, as employers become more willing to increase wages and bonuses in view of what I expect to be stronger profit numbers for 2010,” said Mr Liu.

Ms Sng Ngoi May, chairwoman from the Orchard Business Association, said retailers are cautiously optimistic as the global economy undergoes a patchy recovery and effects from the Integrated Resorts are only beginning to seep in.

However, with rising operation costs, retailers are also looking at thinner margins, said Ms Lau Chuen Wei of the Singapore Retailers Association.

“Singapore has moved up a rung in global retail rents ranking to be the 17th most expensive city in the world, even though more retail space has been added to Singapore stock,” she said.

Labour costs are also set to increase with foreign manpower regulations tightening.

“As these two cost components make up a good 70 per cent of a retailer’s operating costs, it is unlikely that profit margins will rise any time soon, even if top line sales figures show an upward trend,” she added.

She maintains that retailers have to remain innovative in an increasingly competitive market and relook manpower strategies to minimise costs.— Singapore retailers can look forward to higher expenditure from an influx of Chinese tourists. That is if policy-makers decide to tighten the yuan, said analysts.

Chinese tourists already accounted for 9.7 per cent of total arrivals in 2009.

Mr Liu Jinshu, investment

analyst at Sias Research

With a stronger yuan, we can expect more visitors from China.

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