The western world fears for the safety of physical malls since e-commerce and online stores now sell anything you could ever want.
Countless cities across the globe are already having e-commerce overtake the physical means of shopping. However, research into the shopping behavior of Singaporean consumers shows that physical store performance is still improving.
In short, malls are here to stay with e-commerce in Singapore actually augmenting sales. There are four reasons why shopping malls in the city state will remain strong – and why Singapore is one of few developed markets on the planet where online stores aren’t yet taking over.
Online and Offline Retail Aren’t True Competitors
Singapore, in several ways, isn’t that different from most other countries in the world. Their e-commerce sector is booming with the advent of the digital age.
Boasting immense growth of nearly 30% in the past two years, Singapore’s online retail market enjoys an estimated worth exceeding SG$5 billion as of 2019.
Singapore’s far smaller e-commerce retail scene (at least compared to malls) might showcase incredible growth rates. Yet physical, in-store sales are the champion in this matchup.
An enormous market now valued at SG$60 billion, Singapore’s in-store retail sales have shown strong CAGR growth of 8%+ during the past few years. And there aren’t any signs of it slowing down.
Putting things into perspective, only 4% of household spending is done online in Singapore. It’s arguably the world’s sole developed market where e-commerce noticeably lags behind malls.
Singapore is home to more than a hundred malls despite a population of barely over 6 million. It’s a testiment to Singaporean shopping culture.
E-Commerce in Singapore Still at an Early Stage
Singapore is home to a very late e-commerce scene. Fewer things are done online relative to other countries such as the US and UK. The research looked at three key metrics to measure how advanced Singapore e-commerce is.
First off, just 49% of Singaporeans book their flights online. That number falls way behind the UK’s 80%.
Secondly, the proportion of hotel bookings was examined. In comparison to the 73% in the US, only 40% of Singaporeans are using the internet to book their hotel rooms.
Lastly, apparel purchases online are at an alarmingly weak 4% of all purchases. It’s a significant indicator because the majority of online shops on the market are selling apparel.
Shopping a Huge Part of Singaporean Culture
According to Letty Lee, CBRE’s former Retail Director and an expert on Singaporean real estate property, “Singapore is a shopping nation. Shopping isn’t just about purchasing something. It’s about socializing and experiencing.”
Singapore has developed its own shopping culture to an extent that many of its citizens prefer spending time in malls rather than browsing on the internet. It’s not just about buying an item, but the experience of “shopping” as well.
85% of all Singapore denizens shop in stores at least once per month. This is compared to 49% of consumers who shop online.
Likewise, Singapore claims two times the retail space per person compared to Australia. That’s despite Singapore being 10,000 times smaller in terms of land size.
Singapore E-Commerce Can’t Replace Crucial Features
Neither the internet or our current level of technology can replace social interaction and other main draws of a shopping mall.
Physical locations offer shoppers the opportunity to socialize with their friends and enjoy the atmosphere of a mall. This simply can’t be replicated for a person just browsing through the web.
Singaporean malls themselves are aware of the fact they’re here to stay. As such, management is looking for ways to augment the strength of malls with the technology of online shops. Their goal is to create an “omnichannel” that integrates both online and offline shops.
Some of the projects retailers started include “magic mirrors” where a shopper can virtually try on items.
“Click-and-mortar” stores place QR codes on their wares so shoppers can scan them, and later add them to their online shopping carts to buy, is also a focus.
The point is: online shopping is highly disruptive to physical stores in most markets across the world. Yet e-commerce in Singapore will co-exist with the nation’s megamalls.
Skip the Next Western Recession
Learn the best places to invest – and where to avoid – by downloading our free Investment Cheat Sheet.
- Buying a Condo in Ho Chi Minh City: The Ultimate Guide - February 17, 2020
- Buying a Condo in Manila: The Ultimate Guide - January 14, 2020
- How to Profit from Frontier Markets and China’s Rise - January 14, 2020
- Best Countries to Invest in Asia for 2020 - January 3, 2020
- Massive Debt in Thailand Burdens its Economy - December 19, 2019
- Buying a Condo in Singapore: The Ultimate Guide - November 22, 2019
- 3 Weak Emerging Markets That Are Barely Growing - October 29, 2019
- How to Open a Thai Bank Account: A Foreigner’s Guide - October 25, 2019
- 3 Most Stable Currencies in a Recession - October 12, 2019
- Myanmar Stock Exchange: Is it Failing? - October 5, 2019