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SINGAPORE: With the retail industry “severely affected” by COVID-19, there is a need for retailers to “break new ground” and transition to a new business model in order to survive, the Minister of Commerce and Industry said on Monday. , Chan Chun Sing (October 12).
Speaking to the media after a visit to SK Jewelery Group, Chan noted the “tremendous pressure” in the retail industry, with e-commerce changing the traditional business model and retailers around the world able to promote their products even without a physical store. front.
“What COVID-19 has accentuated are the structural and cyclical forces affecting the retail industry,” Chan said.
He said that cyclical forces will continue to impact the retail industry in the short term amid lower consumer confidence and limited purchasing power.
The online shopping boom, as well as changes in consumer behavior and technological innovation are also shaking the industry.
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“The structural problems we are talking about have to do with people’s ability to promote their products online, without a physical showcase. It also allows consumers to compare prices among a wide range of sellers, without even having to leave home, “said Chan.
These have “serious and serious implications for the retail sector,” he added.
Given that the retail sector contributes 1.6 per cent of Singapore’s Gross Domestic Product (GDP) and employs around 4.1 per cent of the total workforce, any impact on the industry can have “very serious consequences” on job prospects for workers in Singapore, said Mr Chan.
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As such, the previous model of relying “primarily” on the domestic market “will necessarily remain, but insufficient in the future.”
“We need to work together to help our retailers break new ground. And by this we mean that we must go beyond the domestic market to the regional market, taking advantage of digital initiatives to help us reach new markets and promote new products and services ”.
He added that retailers need to go beyond the current arbitrage model and be intermediaries, and focus on adding value to products and services.
“If we just rely on the traditional model … it will be very, very difficult for our retailers to survive and prosper,” Chan said, pointing to the impact of high fixed costs like rent at retailers.
As such, the Government seeks to help retailers transition to a new business model and expand their revenue through digitization, which can help retailers expand into the international market.
Furthermore, the combination of service, digitization and design would help retailers compete in a changing retail environment, he said.
“If fixed space rental is an important component, the question is how can we reduce it?
But more importantly, how do we increase the top line? That is why we have been encouraging our retailers not only to focus on minimizing fixed costs, what they should continue to do, but more importantly, how to have a new business model. “
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