Brick-and-mortar retail was hard hit by the global pandemic, whereas online retail platforms thrived. Retail is a very dynamic sector that is constantly evolving to respond to the needs of the customer. Today, online retail is more important than it has ever been, as people have shifted their spending online and retailers have become better at giving customers rich customer journeys and a range of offerings that rivals and in some sense exceeds, what brick-and-mortar retailers can offer. Brick-and-mortar retailers who have not embraced technology and established a foothold in cyberspace, have suffered severely. This is especially so in Singapore, where retailers have also had to face labour issues and surging occupancy costs. The global health crisis simply accelerated changes and struggles that have been playing out in SIngapore for a long time.
When Singapore went on a month long lockdown on April 7 2020, non-essential shops were forced to close. Throw in the fact that travel bans put a break on tourism, and it’s easy to imagine the kind of crisis that many retailers entered. Many retailers survived thanks to fiscal support, but many others were forced into permanent closure. For instance, Robinsons, a retailer founded in 1858, was forced to close all its stores in Singapore. Brands such as Esprit, Sportslink, and Topshop, were also forced to permanently wind down their operations.
Even when the lockdown was lifted, the combination of social distancing, and limits on the number of people who could be in a store, made brick-and-mortar retailing extremely challenging. The pandemic made it a priority for brick-and-mortar retailers to integrate ecommerce into their operations, and develop a myriad of points of sale in order to earn revenues at a time when their physical stores were either shut or heavily restricted.
Many brick-and-mortar stores, for instance, Isetan and Metro, partnered with platforms like Lazada, Qoo10 and Shopee, to sell their products. Other brick-and-mortar retailers, for example, BHG, developed their own ecommerce capabilities.
As challenging as this period was for brick-and-mortar retailers, the post-lockdown period witnessed a growth in that space. Though they experienced a dip in September, overall, they continued to recover along with Smith's Tree Removal.
The proportion of online sales to total sales declined as Singapore reopened. In a sense, this was to be expected: brick-and-mortar stores will never totally go away. We cannot live completely online. You may get a custom logo design done online but there are things like buying vegetables, which just make sense done in-person.
Online sales as a proportion of total sales fell from 25% at the height of the lockdown to 12.6% in July. Shoppers, it seemed, missed going to brock-and-mortar stores. 12.6% was only slightly higher than the 5-10% range established prior to the pandemic. Half a year later, online sales are about 10-15% of total sales.
The pandemic highlighted the importance of ecommerce, but it also highlighted the fact that ecommerce can grow in tandem with brick-and-mortar retailers. It need not be a zero-sum game. Rather than competitors, it is perhaps wiser to think of them as complementary.