President, Singapore Retailers Association

Distinguished Guests,

Ladies and Gentlemen

Good Evening

It is a real pleasure to be here with you tonight.

The retail sector is a major employer and an important part of the Singapore economic landscape. Taken by itself, the retail sector employs about 75,000 people, or 4% of the workforce. It also accounts for 1.7% of GDP. This may not seem large. But the figure understates the importance of the retail sector. We have to keep it the sector healthy and vibrant, for a number of reasons that go beyond its direct economic contributions.

First, the health of the retail sector has a bearing on other sectors in the economy. A sluggish and unproductive retail sector will mean higher wages all round and higher costs of doing business in Singapore. It will undermine Singapore�s attractiveness as an investment destination.

Second, the retail sector serves as a natural cradle for domestic entrepreneurship. Retail is often the first venture for aspiring entrepreneurs due to its relatively low barriers to entry and exit, and the low initial capital outlays required. Lessons learnt from exposure to the retail business � in customer service, book-keeping, negotiations with suppliers and landlords, and business planning � equip budding entrepreneurs with a foundation of skills they will need to succeed in future endeavours. For every Olivia Lum, whose early start in business was in selling birthday gifts and smoke detectors, there are many others.

The third role of the retail sector is less tangible, but ultimately most important. The retail scene helps shape the character of any modern, contemporary city. Vibrant and varied retail neighbourhoods and clusters will add to Singapore�s attractiveness as a cosmopolitan city. It matters not just in attracting tourists but in positioning ourselves as a major Asian hub for talent, business and the arts. A satisfying shopping experience is also important for Singaporeans. Some people even believe it is good for the soul, after a difficult day in the office.

The immediate outlook for the retail sector is challenging. After a slight contraction last year, the retail sector was showing tentative signs of recovery in the first half of the year. However, hopes of a stronger upturn have been dampened by the tragic turn of events in Bali. The full extent of the resulting cut down in tourism and in the economic outlook for the next twelve months is not yet known. It will of course depend on how events play out in the region in the next few months.

Even as we brace ourselves to ride out this immediate setback, we must push ahead with strategies to build vitality in Singapore�s retail sector. Beyond current economic certainties, the retail industry faces fundamental challenges which we must address to secure a vibrant future. I will highlight three key challenges.

The first challenge is stronger regional competition. Singapore�s attractiveness as a regional shopping destination has seen gradual and continuing erosion. The reduction in import duties in competing destinations has narrowed the price advantage that we once enjoyed. The development of high quality shopping districts in many regional cities has also made the shopping experience in Singapore less unique. Shanghai for one is emerging as a new shopping destination. It is rapidly narrowing the gap in terms of product range and service standards. Spending patterns by tourists and Singaporeans alike reflect these trends. Between 1995 and 2000, visitor expenditure on shopping in Singapore fell by 6% per year notwithstanding a 1.5% annual growth in visitor arrivals. Similarly, while domestic spending on retail increased by 2% per year over this period, overseas shopping expenditure by Singapore residents rose annually by 5%.

The second challenge is the changing profile and preferences of tourists. One important aspect of this is the change in the mix of visitors to Singapore. Arrivals from China and Korea are up sharply, while tourists from Japan and Taiwan have declined, reflecting the state of confidence and spending power in these economies. More Indian visitors are also finding their way to our shores. It is estimated that over the next five years, visitor arrivals from China and India will increase by 16% and 6% respectively each year on average. Our retailers will have to respond to the shopping needs of this changing mix of tourists, with their distinct tastes and preferences.

A further challenge arises from higher customer expectations. Consumers, both locals and tourists, have become more discerning. . Retailers have to ensure that their customers have a memorable shopping experience, not least of all by delivering impeccable service. They also have to provide customers with the untried and the unexpected.

We can respond to these challenges. The retail industry can regain the hearts and wallets of consumers, and to reestablish Singapore as a preeminent Asian shopping destination. I will highlight three areas which are essential for the successful rejuvenation of the retail sector. These are: strengthening manpower development, promoting innovative retail concepts, and enhancing supply chain management.

A vibrant retail sector must be underpinned by a core of retail professionals with the skills and intuition that enables them to not only meet but exceed the expectations of customers. Sales personnel at the front line must be courteous, personable and have good knowledge of their products. Executives and managers must have a keen understanding of shifting consumer trends, retail strategies, and procurement and inventory management.

The statistics that track the performance of our retail workforce have not been flattering. In 1999, an average retail worker in Singapore generated sales worth US$121,000. This was about 11% lower than that generated by the average retail worker in Hong Kong and 32% less than that of the average American retail worker. We must redress this weakness and put ourselves on par with international standards.

Manpower training and capability development is key to raising the productivity of the retail workforce. We have to put in place a proper infrastructure for retail training and education. I am therefore glad that the Singapore Retailers�Association (SRA), the Retail Promotion Centre (RPC), and The Association of Shopping Centres (TASC) have come together to establish The Retail Academy of Singapore (TRAS).

A key role of the Retail Academy is to increase the professionalism of the retail workforce by providing opportunities for continuous upgrading of skills. It will focus on developing courses specific to the retail sector such as merchandising strategies and retail business planning. On top of its role as retail educator, the Academy will promote best practices, certify performance standards, and facilitate linkages with world renowned retail institutions. The Academy will also work with companies and agencies providing market intelligence and analysis of consumer trends, to help retail players innovate and decide on strategies on the most informed basis.

I am confident that the Retail Academy will raise the professionalism of our retail workforce and boost the image of the industry. A pro tem board of directors, co-chaired by SRA President Mrs Jannie Tay and SPRING Singapore Chief Executive Mr Lee Suan Hiang, has been appointed to oversee the establishment of the Retail Academy. I understand that the Academy will soon be incorporated and its programmes rolled out to the industry thereafter.

Besides the retail sector, other service industries have also embarked on training initiatives. The International Hotel Management School will be set up next year to offer post-graduate and executive courses in hospitality management. The idea of an academy for the tourism industry has also been mooted. While each industry will require specialised courses tailored to its own needs, there are likely to be generic training requirements that cut across various service industries. One such example is service quality training, which all service workers � whether in retail or hospitality � should undergo. MOM and MTI are therefore studying how best we can ensure that training in generic skills is provided for all service industries without unnecessary duplication. This will allow industry academies to focus on honing industry-specific skills, while leveraging on a common provider, or a common network of training providers, for generic training in service skills.

The second priority area is the fostering of innovative retail concepts. Too many of our shopping malls look alike, offer the same products and target identical consumer groups. Too many lack the spark.

The retail scene needs an injection of fresh ideas and innovative retail concepts, to stimulate new domestic demand and recover tourist spending. The question we have to ask ourselves is: "What helps us stand out, distinguish ourselves from the rest and gain sustained advantage?"

On important form of innovation is the idea of differentiated retail destinations or hubs within a city. These destinations focus on serving a well-defined segment of customers, with unique and innovative strategies tailored to meet the particular needs and desires of such customers. These destinations are able to establish an identity that feeds on itself, and command a loyal following.

There are several examples of differentiated retail destination overseas. Via Montenapoleone in Milan, which caters to the well heeled and fashion conscious; Tokyo�s Akihabara for electronic gadgetry; or Harajuku which caters to the young and not so affluent, are well known.

Some of our shopping malls are already differentiating themselves, for example by catering to the young and trendy - places like The Annex at the Heeren, edge> at Parco Bugis Junction, and LevelOne at Far East Plaza, with a focus on avante-garde streetwear fashion. But we need greater and deeper differentiation in the retail space in Singapore, if we are to re-establish ourselves as a leading shopping destination.

The third priority in rejuvenating the industry is to improve supply chain efficiency. A retailer�s ability to effectively manage acquisition, storage and delivery processes has a profound impact on operating costs and ultimately on customer satisfaction.

Walmart in the US is the archetypal case � an outstanding example of a retailer that has honed its supply chain practices to attain a dominant market position. It uses e-commerce linkages with its vendors to simplify and accelerate the ordering process. A satellite network system enables its network of stores, distribution centres and suppliers to share information and coordinate procurement and inventory management.

One of the ways in which our retailers can reduce procurement costs is to come together to purchase items in bulk. Bulk or aggregated purchases allow for economies of scale and often allow for quantity discounts. Sizeable retailers such as Carrefour and Giant are able to reap such benefits by virtue of their large turnover, but other retailers can also enjoy similar advantages if they band together to carry out purchases. SPRING Singapore will partner SRA and the industry to study the viability of this strategy.

The retail industry has to transit to a new level. The challenges facing the industry are not trivial. How we respond to them, collectively, will determine the sector�s vitality in the future. If we succeed, a vibrant and varied retail scene will also contribute to shaping Singapore as a leading global city, a natural junction for people and ideas.

We can remake our retail and tourist environment, as some others have done. I am told Las Vegas for example has remade itself, over just 5 years, from being primarily a gambling destination into a sparkling shopping and holiday destination appealing to a wide range of visitors.

With vision, drive and a willingness to take a few risks, we can overcome the turbulence we see before us and see good growth again.

Tonight we honour those who have brought distinction to the retail industry over the past year.

The five awards to be given out (Best Retail Concept of the Year, Best New Entrant of the Year, Best Retail Event of the Year, Retail Executive of the Year, and Young Retailer of the Year) characterise the qualities we need in any industry � innovation, vitality, meticulousness, resourcefulness and verve. All of this year�s nominees evidently carry these qualities and I congratulate them for this.

The scholarships for Diplomas in Retail Management reflect the commitment of the retail community to nurture talent and to upgrade the professionalism of the industry. I wish the recipients all the best in their studies, and I am confident that they will help spur our efforts to bring the industry to new heights.

Thank you and have a pleasant evening.

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