Singapore retail sales shrink 8.6% in Feb with outbreak

Singapore

SINGAPORE'S retail sales continued sliding in February due to the decline in tourist arrivals and lower domestic consumption arising from the deepening coronavirus pandemic.

Takings at the till shrank by 8.6 per cent year on year in February, extending January's 5.3 per cent decline, according to the Department of Statistics on Friday.

Excluding motor vehicles, retail sales fell 10.2 per cent year on year in February, compared to the 0.6 per cent growth in January. Overall retail sales fell 5.3 per cent year on year in January.

Total food and beverage (F&B) sales saw a contraction of 16.6 per cent in February, reversing the 9.1 per cent growth seen in January.

The estimated total sales value reached S$3.1 billion in February, down from S$4.1 billion in January. February also saw online sales take up a larger proportion of total sales at 7.4 per cent, compared with 5.8 per cent the previous month.

The online sales proportion for supermarkets and hypermarkets grew 8.5 per cent in February, up from 7.8 per cent the previous month.

For computer and telecommunications equipment, 30.4 per cent of sales in February came from online transactions, up from 25.9 per cent the previous month. Within the furniture and household equipment category, online sales comprised 14 per cent of all sales in February, up from January's 10.9 per cent. The online sales proportion for F&B was up 12.5 per cent from 9.8 per cent in January.

Selena Ling, chief economist at OCBC Bank, said these numbers reflect the growing work-from-home arrangements and preference for food delivery due to social distancing measures.

On the whole, while most categories in the industry saw a decline in sales, supermarkets and hypermarkets, furniture and household equipment, petrol service stations and motor vehicles were among the only ones that saw growth.

The wearing apparel and footwear category saw the biggest plunge at 41 per cent year on year, followed by the food and alcohol category, and department stores.

Barnabas Gan, economist from United Overseas Bank, noted that retailers in consumer discretionary items were hit the hardest, while the shift towards telecommuting has increased demand for household necessities as well as furniture and household equipment.

These figures were logged before the World Health Organization declared Covid-19 a pandemic on March 11, resulting in border closures and national lockdowns across the world that have brought the travel industry to a standstill.

Singapore closed its borders to short-term visitors on March 24, and in the week that followed, authorities began implementing increasingly strict safe-distancing measures while encouraging Singaporeans to stay at home.

Mr Gan said these measures are likely to keep retail sales in negative territory in the coming months. He estimates that 2020 full-year retail sales could contract 5 per cent with downside risks.

OCBC's Ms Ling has a more pessimistic view, predicting that the stricter measures may slash second-quarter retail sales by 14.4 per cent year on year, although online sales are likely to continue to increase as a proportion of total retail sales. "For the full year of 2020, we tip retail sales to contract 7.1 per cent year on year."

She said if that happens, it would mark the worst year for the retail sector since the 7.8 per cent full-year contraction seen during the Global Financial Crisis.