SPEECH BY MR CHEE HONG TAT, SENIOR MINISTER OF STATE, MINISTRY OF TRADE AND INDUSTRY, AT THE SINGAPORE MANAGEMENT UNIVERSITY RETAIL CENTRE OF EXCELLENCE’S ASIA RETAIL LEADERS CONFERENCE 2018 AT CONRAD CENTENNIAL SINGAPORE ON FRIDAY, 19 OCT 2018, 12:00PM
1. Good afternoon. The Retail Centre of Excellence (RCoE) is a joint initiative between SMU, Enterprise Singapore and the Economic Development Board. It is supported by Founding Members which comprise DBS, DFS, Decathlon, Harvey Norman, Ikea, Microsoft, Popular Holdings, Tiffany & Co., and Visa, all of whom have played a key role in developing the centre.
2. The Asia Retail Leaders Conference aims to build a community of business leaders, policy makers, researchers and students to identify, create and adopt best practices in retail. Through such platforms, we hope that our retail industry can build stronger capabilities and become more competitive.
3. The retail sector contributed about 1.3% of Singapore’s GDP in 2017, and provided more than 140,000 jobs. It supports the growth of other sectors like tourism, and contributes to the overall dynamism in our society and the quality of life in Singapore.
4. Our retail sector is facing challenges from a tight labour market, rising operating costs and increasing competition from overseas and online rivals. The rise of e-commerce is a double-edge sword, there is more competition but also new opportunities. Credit Suisse has forecasted a 32% compounded annual growth rate (CAGR) in ASEAN e-commerce spending, rising to about US$90 billion by 2025. With e-commerce, it has become easier and more convenient for local brands to reach consumers in other markets. Consumer preferences are also changing. For example, it is now the norm for consumers to read multiple reviews before committing to a purchase. Others may follow the advice of brand pages and influencers on social media. To benefit from these developments, retailers have to ride the waves of change and find new ways of upping their game through the smart use of technology and innovation.
5. For example, retailers can now collect data on existing and potential customers in ways they could not have done before, to allow for greater personalisation and prediction of customer behaviours. Retailers will need to integrate their back-end infrastructure with frontline operations, and put in place the right systems and capabilities to effectively capture, analyse and use data, in order to enhance customer experience and increase customer retention.
Working together in partnership
6. Retail is a diverse industry with uneven productivity across firms. The average value-add per worker for the top 10% of retail firms is more than five times higher than the median firm - $131,000 per annum versus $24,000 per annum. At the top-end, we have highly productive and competitive retailers, and we want to help them to build up their brands, further enhance their productivity and expand their presence in overseas markets.
7. At the same time, we need to improve the productivity of our retail companies in the middle and lower bands through a combination of market forces and government measures. It is unavoidable that some of the low-productivity firms will lose market share to their competitors and be driven out of business. This is a painful but necessary process in any well-functioning economy, to reallocate resources to other more productive firms or sectors.
8. To help prepare our workers for a changing retail landscape, Enterprise Singapore and Workforce Singapore have worked together with the Singapore Retailers’ Association to develop a Retail Job Redesign Framework in June this year.
9. Retail companies like Benjamin Barker, along with six other pilot companies – namely, Charles & Keith, Gain City, Robinsons, Sheng Siong, Star International and Soo Kee Group – have used the framework to achieve tangible results. In the case of Benjamin Barker, their job redesign efforts have led to job simplification, enrichment and upskilling for its frontline retail staff. The company has also improved its point-of-sale system with product images, which allows their Fashion Advisors to make product recommendations to customers in a timely and effective manner.
10. As consumers increasingly discover products through digital channels, retailers should leverage on such platforms to increase their brand exposure and engage with their customers. Faire Leather Co. is an example of a local company which used the Kickstarter crowdfunding platform for the launch of its first product line, generating a lot of exposure for the brand locally and abroad. Post-launch, Faire Leather continued to engage its Kickstarter backers on social media platforms like Instagram to convert customers into advocates for its brand.
11. Another example is sneakers retailer Limited Edition, which elevated the retail experience in its premium stores through the use of interactive digital displays. Customers can now virtually try on exclusive sneakers and share the images on social media. This has become a conversation starter and a souvenir for customers when they visit the store. The digital displays also function as a balloting kiosk for highly limited releases, and Limited Edition could leverage the data collected through these displays to re-engage its customers for future launches.
12. These examples illustrate how retailers can invest in innovation to build their brands and enhance their customer service, which strengthens their capabilities for internationalisation.
13. To support business growth, our government agencies and government policies must be pro-enterprise and pro-innovation. A simple and business-friendly regulatory system will help our companies to innovate and compete more effectively. This can be one of Singapore’s competitive advantage when we compete with other cities for talent and investments.
14. Let me share one example. Resorts World Sentosa, which has several fine-dining restaurants, wrote to our Pro-Enterprise Panel to ask if the procedures to import wagyu beef from Japan can be streamlined, so that more beef slaughterhouses in Japan can be accredited.
15. The PEP worked with AVA to look into this suggestion. Previously, to import wagyu beef from a new production facility in Japan, AVA would have to conduct a documentary evaluation and a physical inspection of the establishment in Japan. After the review, AVA has simplified the process to import wagyu beef from Japan. Companies will no longer have to wait for AVA to conduct an inspection trip in Japan before you import wagyu beef from a Japanese supplier. This helps our companies to save time and money. It will also allow restaurants in Singapore to have a wider choice of suppliers, and obtain their wagyu beef supplies at more competitive prices. So the next time you go to a restaurant to enjoy your wagyu beef shabu-shabu or teppanyaki steak, please remember our friends from RWS and AVA for their help to improve the regulations in this area.
16. To further support our local retail industry, RCoE is well placed to be a partner for retailers through its three key pillars of Talent, Research and Community Building.
17. First, on talent. The RCoE’s talent development efforts target different groups of individuals. At the undergraduate level, this is done through the Retail and Services Management Track under SMU to groom future retail leaders and build capabilities in areas such as digital marketing, data analytics and management of overseas markets. At the executive level, the RCoE’s Asian Retail Leaders Programme provides senior retail leaders with opportunities to explore challenges in a dynamic retail environment and learn about the best practices and strategies of top retailers. The Programme has completed two successful runs in 2018, with around 30 senior executives.
18. Next, on research. With its focus on retail-specific research, RCoE can partner retailers to address their business challenges and provide actionable insights. For example, SMU faculty is working closely with a local retailer on optimising shelf displays by understanding how consumers interact with products on the shelf. This project uses state-of-the-art visual analytics technology to study consumer behaviour such as dwell time and number of products examined or picked up.
19. The RCoE has also written case studies for companies like Paris Baguette, a Korean confectionery chain. I have tried their bread and buns when I visited Seoul, they are very good. The company has successfully expanded, first domestically in Korea, then internationally, by leveraging large-scale centralised kitchens and technical innovations such as the use of a ‘cool pack’ which does away with the need for dry ice. Importantly, the study found that the company was always open to adapting its offerings to local tastes. For example, in China, Paris Baguette had a pork floss bread, while in Vietnam, they introduced the Bahn Mi Baguette Sandwich. Such case studies provide valuable insights for our local retailers who are looking to expand beyond Singapore.
20. Last but not least, on community building. We are here today because of RCoE’s commitment to bring retail leaders together, to share best practices and ideas, and to discuss practical challenges and possible solutions. For example, how to expand in markets like China and India, how to nurture future retail leaders or how to integrate design thinking into your business processes. I hope that the insights from this conference and the personal connections you have made will help you to address these and other challenges.
21. Let me conclude by thanking the SMU RCoE team for organising this conference. I wish everyone a fruitful discussion, and every success in your transformation journey.
22. Thank you.