Singapore market snapshot: Connected and convenient consumerism

Nielsen provides insight into Singapore's economic outlook and retail backdrop.

Singapore finished 2016 with higher than expected GDP growth of 1.8 percent in Q4 due to a strong performing manufacturing sector. Despite this, consumer confidence dropped eight points to 86 on the back of concerns about uncertainties in global trade and job redundancies across business sectors. Singaporeans have indicated they will focus more on saving and less on discretionary spending during the next 12 months. This conservative mindset is reinforced with only one in three (35 percent) consumers agreeing it is a good time to buy the things they want or need, considering the cost of living and the state of their personal finances.

While most retail channels continue to rationalise stores, supermarket retailers are looking to expand into neighbourhood areas with smaller store formats that cater to budget conscious shoppers who value convenience and proximity.

Singapore is one of the “oldest” nations in Asia Pacific and the “silver” generation accounts for 40 percent of the nation’s grocery shopping, making it an extremely important segment for the retail industry. While older consumers (aged 65 years or more) account for 8.9 percent of the population today (2015), that number will grow to 13.2 percent in 2025. At that point, the old age and young age dependency ratio will be equal for the first time.  This represents emerging opportunities for both manufacturers and retailers as currently shopping environments and grocery products are generally not designed with the elderly in mind, so their needs go unmet.

Old or young, convenience remains high on consumers’ radar and an increasingly connected society is fuelling this opportunity. Online grocery purchases grew notably during the year now accounting for 3 percent of FMCG in Singapore as retailers offered more delivery services to encourage usage. More players are expected to enter the online space during 2017 bringing new options and opportunities for Singapore consumers.

Singapore’s increasingly connected society is empowering consumers to demand a more customised experience to meet their individual preferences. The need for connectivity and the value of convenience has never been greater. However, manufacturers and service providers still need to keep a ‘human touch’ to create a more holistic  customer experience that ensures Singapore’s ageing population and even  today’s younger tech-savvy consumers develop an emotional connection to brands.

As the ASEAN agenda evolves and the importance of regional trade agreements are likely to grow in the Asia Pacific region, Singapore’s role as a center for professional services such as investment, banking and brokerage across the region is expected to sustain a buoyant outlook although one where consumer buying power and needs continues to fragment.

Sources: All population and urbanisation figures come from United Nations Urbanisation Prospects 2015.