Retail Body Chief Calls For Lower Rents As Sales Droop

Source : The Business Times, September 3, 2008

Jannie Tay suggests talks with landlords to tackle issue

HIGH rental levels are the biggest challenge faced by retailers in Singapore today and the problem is compounded by inflation, weakening global economies as well as lower than anticipated spending by overseas visitors.

Mrs Tay: Yearly rent increases in shop leases are not representative of the real economic environment

Jannie Tay, president of the Singapore Retailers Association, stressed the need for a drop in retail rents, in light of weaker sales. For June, some sectors in the retail industry saw sales fall 10-20 per cent.

'Landlords factor in what they claim will be rent increases year on year in the shop leases we sign but such increases are not representative of the real economic environment,' Mrs Tay emphasised, adding that evidence is beginning to suggest that the retail economy is unable to sustain such hikes.

'We must continue to meet the challenges of high operational costs, stiffer competition, a limited consumer base and more demanding and price conscious consumers.'

Mrs Tay cited organising a dialogue session with landlords as one plausible means of tackling the issue.

Senior Minister of State for Trade and Industry S Iswaran highlighted that local retailers for their part needed to adapt operations to capitalise on new opportunities such as the upcoming Formula One race, as well as to strive for the highest standards in service excellence.

He was speaking at the Singapore Retail Industry Conference 2008 yesterday, which was also co-organised by Spring Singapore and The Retail Academy of Singapore.

And, while retail sales for the first half of the year grew 8 per cent year on year, Mr Iswaran noted that the 'global economic slowdown has begun to have an impact on Singapore's retail scene'.

Charles Wong, founder of local shoe retailer Charles and Keith, said that while the slowdown would have some impact, the brand still had its overseas stores to fall back on.

Out of its 130 stores worldwide, only 26 are located in Singapore. However, local stores account for about 50 per cent of revenue.

A study conducted by Media Research Consultants also showed that Singaporeans were increasingly spending on shopping overseas.

Respondents highlighted customer service as one key area for improvement here, as well as a need for greater diversity of stores.