Lean times for S'pore retail industry

By Angela Tan

SINGAPORE (Reuters): The fluttering banners of "The Great Sale" draping facades of malls along Singapore's main shopping belt of Orchard Road scream for attention, but fail to excite the almost zombie-like crowd.

Banker Adeline Tan plucks a pants suit off the rack of the upscale Donna Karan boutique, looks at it longingly, flinches at the four digit price and leaves without buying.

"Times are hard. You don't know when it is your turn to get retrenched," said Tan, who used to buy apparel by U.S. or Italian designers without giving a second glance to price tags.

Retailers in Singapore, a city promoted as a shoppers' paradise, are reeling from the triple-whammy of weak domestic consumer demand, falling visitor arrivals and the regional economic crisis.

Two of Singapore's biggest sources of tourist money have been laid low in the past year. Indonesia's rupiah has plummeted, making Singapore prices highly unattractive, while Japan has fallen into recession, wiping out consumer confidence.

Not so long ago, Singapore's formidable economy was the envy of its neighbors. Now, like them, it is suffering. More than 25,000 people could lose their jobs this year compared with 9,784 last year, according to the Minister of State (Manpower) Othman Haron Eusofe.

The government is warning workers of wage cuts if the economic situation worsens.

And next year may be worse.

Prime Minister Goh Chok Tong has said that while a recession was unlikely this year, the possibility of one in 1999 was "fairly high".

Earlier this month, citing the Asian crisis, Singapore cut its 1998 growth forecast to between 0.5 and 1.5 percent from the previous 2.5 to 4.5 percent. Last year the economy grew by 7.8 percent.

Crowded Orchard Road seemingly belies the pain retailers are suffering. Many flock into the malls but few actually buy.

The mood is somber. At the Chanel counters sales assistants are busy painting their faces and nails.

Singapore designer stores are experiencing a difficult time too, with many either closing or scaling down. They include Bill Blass, Emmanual Ungaro, Istante and Byblos.

Nor has high fashion mogul Christina Ong's Club 21 chain been spared from Asia's crisis. The company closed its store in Melbourne's Crown Casino and is reassessing operations in Thailand.

Upmarket fashion retailer FJ Benjamin Holdings is also considering closing some stores.

Veteran retailer CK Tang suffered a full-year loss of nearly S$47.6 million (US$28 million) in the year to March, the biggest in its history.

Early in July, retailer Emporium Holdings and five of its subsidiaries filed petitions for judicial management orders in Singapore's High Court. A company under judicial management cannot be forced to pay its debt.

Property consultants say more than 75,000 square metres (800,000 square feet) of new retail space is expected to become available in Singapore this year, threatening the already fragile market share of existing retailers.

"We have requested certain assistance from the government," Teh Ban Lian, president of the Singapore Retail Association, told Reuters at the "Shopping 2000" conference and exhibition this month.

That help included government rebates and shortening the time for which motorists had to pay peak period fees to enter the city center on Saturdays.

"These off-budget measures have been approved," Teh said.

"Next is for landlords to see how much they can pass back to retailers in terms of rebates," he said. A cut in personal income tax to boost spending would also help, he said.

Industry sources said the government, recognizing the seriousness of the situation, had been meeting major retailers regularly to confront the problems.

It had also implemented a S$80 million plan to help tourism- related companies, hoping to lift Singapore into the ranks of world class destinations, Edmund Cheng, chairman of Singapore Tourism Board (STB) said.

While the fear is almost palpable amongst Orchard Road retailers, Swedish furniture store Ikea seems to be defying the retail agony due to what its general manager Philip Wee calls "good, honest pricing all year round".

Other contrarians include British furniture retailer Courts, book and music store Borders, Robinsons & Co and watch retailers like Sincere Watch Ltd.

"All these people have established niches for themselves," Teh said.

Analysts predict Robinsons and Courts will actually post better profits this year.

"In good times, a rising tide lifts all the boats; in poor times, it seems to lower them unequally," Jack Schafer, principal of Jack Schafer Associates said.

"I think right now Singapore may become the beneficiary of some of the major troubles besetting neighboring countries. Indonesian shopping centers are far less of a threat now; Indonesians now living in Singapore may become unexpected customers and some stores may shut down," Schafer said.

"The trick for the other retailers who are not doing well is to find that second wind," said a retail executive.

Window: Early in July, retailer Emporium Holdings and five of its subsidiaries filed petitions for judicial management orders in Singapore's High Court.