Mr Lee Yi Shyan at the Singapore Retail Industry Conference 2009 – CEO Forum, 8 Sep 09

Speech by Mr Lee Yi Shyan, Minister of State for Trade & Industry and Manpower at the Singapore Retail Industry Conference 2009 – CEO Forum on 8 September 2009 at 9.00am at Suntec International Convention & Exhibition Centre, Function Rooms 301/303

RAISING THE STANDARDS OF SINGAPORE’S RETAIL SECTOR

Ladies and Gentlemen,

Good morning and a warm welcome to all.

I am pleased to join you this morning for the CEO Forum, to kick off the Singapore Retail Industry Conference 2009. The Conference is now in its 19th year, and I would like to commend the Singapore Retailers Association and its members for their continuous efforts in the development of the retail industry.

The Retail Sector in Singapore

The retail industry is a sector that is highly visible, and a very key part of our economy. More than business, it shapes the environment where Singaporeans live, work and play. It is a sector that impacts our day-to-day living. Last year, the retail industry’s 20,000 establishments generated about $35 billion in retail sales and employed some 100,000 workers.

Singapore has a very cosmopolitan retail scene. According to a study by CB Richard Ellis, Singapore (16th), China (6th), Japan (14th) and Hong Kong (18th) were the only Asian countries among the world’s top 20 to have a significant proportion of international retailers in their retail sectors. Over the past few years, established global brands like Massimo Dutti, Gap, Banana Republic and recently, Sephora, Uniqlo and TM Lewin, have set up identity stores in Singapore. These new brands, add to our many growing local brands, and with the opening of new malls like Orchard Central and ION Orchard, as well as the upcoming Marina Bay Sands, have evoked much excitement and affirmed Singapore’s position as a vibrant and ebullient shopping paradise for locals and tourists alike.

The retail sector has also benefited from developments in other lifestyle-related sectors. Growth in complementary sectors like education, healthcare, banking and hospitality has presented new opportunities for our retailers. As Singapore becomes the regional hub for these premier services and product offerings, we can expect more sophisticated and affluent visitors from the region and around the world to visit Singapore and make Singapore a regular stop-over. The many prominent international events that Singapore has successfully anchored, such as the F1 race and the inaugural YOG in 2010, would also raise the profile of Singapore, benefiting our retailers.

Despite these positive developments, there is no doubt that retail sales have taken a hit as a result of the global economic slowdown. Our question is: ‘What must the industry do to stay competitive and prepare itself for the upturn?’

Productivity-driven Growth is a Management Priority

Being a relatively labor-intensive operation, it is of concern that labor productivity in the retail sector has not been growing. This problem is further exacerbated by the difficulties retailers face in recruiting manpower.

Singapore's retail sector is only half as productive as that of the US and Britain; while our F&B is 60 per cent as productive compared to the US; and our hotels are only 75 per cent as productive. Why is this so? One reason has to do with how the industry operates - the industry structure, and the extent of outsourcing, for instance. We observed that retail sectors in Hong Kong, Japan, Australia and the US leverage on technology, innovation and flexible deployment of manpower to achieve higher productivity.

Can our retailers innovate and create business models driven by productivity? Can we effect a paradigm shift – for retailers to focus on innovation and explore ways to grow our companies without the need to increase manpower simultaneously? Can we have better retail staff, rather than more retail staff? Productivity must be a top management priority, and managers at all levels need to focus on productivity as a key outcome.

An Integrated Approach to Improve Productivity in the Retail Sector

In February this year, an inter-agency taskforce was set up to look into ways to boost labor productivity in three key services sectors, and Retail is one of them. The taskforce identified four main strategies to spearhead this productivity drive, namely:

-establishing research and benchmarking;

-leveraging on innovation;

-raising service standards; and

-enhancing HR management and practices.

The first strategy involves developing industry-specific productivity indicators to help companies benchmark themselves against competitions. This requires industry’s participation. I know one of the problems of understanding the productivity of the local industry is data collection. There is currently no open sharing of data which makes compiling of industry data difficult. To enable meaningful benchmarking and comparison among ourselves and with competition overseas, we need a more open-minded approach to share information. The collated aggregate data will allow us to study how we can improve the industry. SPRING will support efforts in this area by working closely with the industry to develop functional indicators of productivity. It will also develop a system that will allow companies to benchmark their productivity performance against their competitive set, in a manner that safeguards business confidentiality.

The other three strategies on innovation, service and HR management pertain to the three critical areas of a company’s operations. Currently, there are various initiatives and schemes that retailers can tap on to address these aspects of their operations. These include the Technology Innovation Programme for upgrading technological capabilities; Go the Extra Mile Service (GEMS-UP) and the Customer-Centric Initiative to raise service levels; and Retail and Service Excellence Workforce Skills Qualifications (WSQ) for workforce training. In addition, the HR Capability Programme launched by SPRING in July this year allows retailers to engage qualified HR consultants to help them customize their HR Capability Package and formulate corresponding HR policies for their organizations.

To kick start this new integrated approach in addressing the productivity challenge, SPRING will engage retailers to embark on demonstrative projects. These retailers will then share their experiences and learning with the rest of the industry.

HR Strategies to Build and Maintain a Knowledge-based Workforce

Let me now talk about HR strategies. Knowledge and skills are key differentiating factors in establishing the competitive edge. During such downtime, retailers can tap on the Skills Programme for Upgrading and Resilience (SPUR) funding and the training programmes such as the Retail Certified Service Professional (Retail CSP), the Service Excellence and Retail WSQ to up skill and prepare their workers for the upturn.

In particular, WDA recently expanded the Retail WSQ to make retail training more accessible, focusing on product-specific training that is relevant to the various retail sub-sectors, such as beauty care, jewelry, fashion and apparel. This helps to ensure that besides general customer service skills, the retail workforce is equipped with relevant product knowledge. They can provide professional advice and deliver better service to customers. This would translate into higher sales turnover and a more productive workforce.

The Retail WSQ and Retail CSP further enabled new entrants to the industry to effectively transit into a retail career. A recent example is Sephora, which opened its largest store in Asia, second only to their store at France’s Champs-Elysees, and it offers a wide range of beauty products previously not available in Singapore. Sephora has made this possible by leveraging on the Retail WSQ to successfully turn non-retail workers into professional beauty consultants who are capable of providing advice on their new products. Some 200 retailers like Sephora are currently training their workers with the Retail WSQ and over 24,000 workers have been nationally-certified.

As we reshape the profile of our workforce, their job scope, salary structure and working conditions should also evolve to meet the expectations of a knowledge-based workforce in order to retain them in the industry. Retail companies can make use of MOM and WDA schemes which not only help them meet their recruitment needs, but also enable the companies to re-design jobs, so that they remain competitive and attractive.

Service Excellence for Greater Customer Satisfaction

In addition to recruiting and training staff, retailers also need to strive for service excellence to maintain Singapore’s reputation as a shopping haven. The consumers of today are well-travelled and internet-savvy. They have high expectations of the goods and services they consume. As such, retailers need to exercise their creativity and leverage on available technologies and develop innovative ways to enhance the customer experience.

Since the launch of the GEMS movement in October 2005, the service movement in Singapore has been gaining momentum, with retail companies like Metro reporting a 43 per cent improvement in their compliment-to-complaint ratio upon completion of two phases of CCI. Nevertheless, we cannot rest on our laurels or competition will soon catch up.

Yesterday’s launch of the second phase of the GEMS UP campaign marks yet another milestone in Singapore’s journey towards service excellence. This includes extensive plans to transform the service standards at Changi Airport, Sentosa and ION Orchard. I urge all our local retailers to follow their footsteps and tap on CCI to upgrade their service standards.

Conclusion

Let me share with you three short stories – all of which are my personal experiences, to illustrate some points about customer service:

a. Dragon Dance – who is the focus?

b. Chicago Sports Store – Customer’s interests is my priority

c. Dian Xiao Er Restaurant at Tampines One – Training for consistency

For retail sector productivity to increase, a number of things must happen at the same time: business must pay attention to value creation, through design, branding and differentiation.

Business can also look at process improvement and re-engineering to achieve quantum leap in productivity gain. Investments in technology can multiply the capabilities of good staff pool.

Service level must be raised. Employers must have processes in place to train workers for consistently high level of performance. Some examples include Sentosa’s wave, Japan’s train station ambassador’s smiles, and Metro’s customer greeters. The CEO’s hand-shake at the company’s door at 9am has also proven to raise punctuality.

Let us put our heads together to brainstorm more ideas to improve the retail sector’s vibrancy. Let’s adopt best practices, gleaned from overseas and local establishments. Let’s train our retail staff, to increase their professionalism, ability to delight customers and increase sales. Let’s work together.

On this note, I commend SRA and every one here in this room, for your leadership in moving the industry forward. With this, I wish everyone a fruitful and inspiring session at the conference. Thank you.