Singapore’s total retail sales value grew 25.8% y-o-y in June to $3.3 billion, marking the fifth straight month of growth, according to data from the Department of Statistics (SingStat) released on Aug 5.
The growth was attributed to the low base in June 2020 during Phase 1 measures, when physical stores also remained closed till June 18, 2020.
That said, the total value of retail sales, which increased 1.8% month-on-month (m-o-m) on a seasonally adjusted basis, continued to be below that of pre-Covid-19 levels.
The y-o-y growth in June was smaller compared to the 79.9% y-o-y increase posted in May due to the circuit breaker measures that were in place during the whole month in 2020.
Excluding motor vehicles, total retail sales grew 19.0% y-o-y and 0.4% m-o-m to $2.7 billion.
During the month, most of the retail industries, except for supermarkets & hypermarkets, cosmetics, toiletries & medical goods, as well as mini-marts & convenience stores, saw double-digit growth due to the low base in June 2020.
The growth in June was led by motor vehicles, watches & jewellery and department stores, which posted y-o-y growth of +80.6%, +78.4% y-o-y and +61.8% y-o-y respectively.
On the other hand, sales of mini-marts & convenience stores and supermarkets & hypermarkets fell 7.9% and 4.5% y-o-y in June due to the higher demand for groceries in June 2020.
On a m-o-m basis, motor vehicles topped the list of industries with a +10.8% growth, followed by furniture & household equipment (+6.4%) and recreational goods (+3.8%).
Computer & telecommunications equipment saw the highest m-o-m decline at -4.9%, followed by cosmetics, toiletries & medical goods (-3.9%) and wearing apparel & footwear (-2.7%).
Online retail sales made up 15.4% of the total sales value in the month of June, with the highest proportion of sales registered in the computer & telecommunications equipment industry at 57.5%.
The proportion of online retail sales in June was higher than the 13.8% recorded in May, and 4.2% higher y-o-y, which was due mainly to online promotional events such as the Great Singapore Sale (GSS).
Excluding motor vehicles, some 18.4% of the figure were contributed by online retail sales.
Meanwhile, total food & beverage sales grew 7.3% y-o-y to $529 million in the month of June despite stricter dine-in restrictions compared to June 2020.
The higher figure was largely attributable to higher demand for food deliveries, although the total sales value remained below that of pre-Covid-19 levels.
On a m-o-m seasonally adjusted basis, sales fell 11.3%, as dining-in was only allowed for groups of up to two for 10 days from June 21. In comparison, dining-in for larger groups of up to eight and five were allowed for two weeks in May.
Of the total sales in the food & beverage sector, online sales made up 47.7% of the amount, higher than the 38.7% recorded in May. This was due to more online food orders amid the stricter dine-in restrictions in June.
Within the food & beverage services sector, cafes, food courts & other eating places, as well as fast food outlets saw growth of 23.1% y-o-y and 23.0% y-o-y respectively due to higher demand for food deliveries.
However, turnover of food caterers plunged 44.5% y-o-y compared to June 2020 as there were higher demand for catered meals from foreign worker dormitories.
Sales in restaurants fell 7.3% y-o-y due to the stricter dine-in measures in June.
On a seasonally adjusted m-o-m basis, restaurants saw a 32.8% plunge while cafes, food courts & other eating places fell 3.6%, due to the stricter dine-in measures imposed during the month.
Conversely, sales of fast food outlets and food caterers increased 6.2% and 4.0% m-o-m respectively during the period.
To UOB economist Barnabas Gan, the rate of expansion for online retail sales is small compared to the 13.6% average marked in 2019.
"For the rest of 2021, we opine that the low base levels seen in the months between July and December 2020 will remain a strong factor in explaining the rebound in retail sales growth,' he writes.
"Note that retail sales had stayed in contraction territories till January 2021. Retail sales should also recover further into the year ahead on the back of domestic demand, given the likelihood for further improvement of Singapore’s labour market in 2H2021," he adds.
On this, Gan estimates that Singapore’s overall unemployment rate will fall to 2.6% at the end of 2021, down from 2.7% in June 2021.
"We keep our full-year retail sales outlook to a growth of 10.0% for the whole of 2021," he says.
See also: Services sector firms upbeat on business outlook for next six months: SingStat
To OCBC's head of treasury research and strategy Selena Ling, the monthly volatility is "par for the course" due to the low base effects from the circuit breaker that took place from April to June in 2020.
"Excluding auto vehicles, retail sales also rose 19.0% y-o-y (0.4% m-o-m), suggesting that consumer sentiments and hence spending did improve slightly compared to May 2021," she writes.
As the proportion of online sales rose in June compared to that in May, Ling says that the hybrid work model, together with the increase in Covid-19 infections, as well as the tightening of restriction measures may continue to underpin the online retail sales component.
Beneficiaries in the key retail segment, which included motor vehicles, furniture & household equipment and watches & jewellery suggested that "discretionary spending power remained resilient", notes LIng. "This is underpinned by the ongoing gradual improvement in the domestic labour market since the overall and resident unemployment rates have declined in recent months".
That said, the return to Phase 2 (Heightened Alert) measures from July 22 to Aug 18 may mean more volatility in the data ahead as work-from-home and the no dine-in restrictions may dampen actual footfall in shopping centres and, by that extension, consumer spending.
"Nevertheless, our full-year 2021 retail sales forecast should still reach double-digit levels at 10.5% y-o-y due to the low base last year and in anticipation of some relaxation of restriction measures from late August and potentially also some resumption of international travel towards the end of the year," says Ling.
The Singapore research team at RHB Group Research surmises that the y-o-y retail sales growth for July may moderate given the higher base relative to the months during the circuit breaker period in 2020.
In addition, the team notes that momentum for retail sales in terms of the monthly three-month moving average (3MMA) have been on the decline since May 2021 due to the introduction of the stricter Phase 2 (Heightened Alert) measures.
That said, it sees that the momentum may pick-up beyond August as restrictions are expected to ease beyond then, amid the increasing rate of vaccinations.
"On a month-on-month basis for July, retail sales spending is expected to improve slightly given the re-imposition of heightened restrictions had only begun in the latter half of the month. We expect monthly momentum to pick up in 3Q2021 as restrictions loosen further," it writes.
Photo: The Edge Singapore
