Retail Outlets Are Worse Off Than F&B Outlets In Phase 2 (Heightened Alert), But Are Getting Less Government Support

Why the retail sector needs more support than F&B sector in Singapore

On 31 May 2021, Prime Minister Lee Hsien Loong gave a national address, stating that we’re not out of the woods yet for COVID-19. In all likelihood, some form of safe management measures will persist beyond the end of Phase 2 (Heightened Alert) on 13 June 2021

How stringent safe management measures remain will depend on how well Singapore copes with the current wave of COVID-19 infections.

National Address Came On The Back Of $800 Million Support Package

Monday’s national address came on the back of an $800 million package announced on Friday, 28 May 2021.

Before that announcement, only F&B establishment, gyms and fitness studios and taxi and private hire care drivers were provided with broad support packages. These covered employee salaries via the Jobs Support Scheme (JSS) and Sports Resilience Package for the F&B and gyms and fitness studios respectively, while the package for taxi and private hire car operators provided a cash payout in June via the COVID-19 Driver Relief Fund (CDRF).

Read Also: Here’s What You Need To Know About The Jobs Support Scheme (JSS)

What this also meant is that the retail sector would not have been provided financial support for employee salaries or rental rebates in Phase 2 (Heightened Alert) measures. In other words, this could be interpreted as retail outlets being better off compared to F&B establishments and the other sectors that were supported.

Even after the support measure for Phase 2 (Heightened Alert) was enhanced to include the retail sector, the F&B sector will still be receiving more support. F&B establishment will get 50% Jobs Support Scheme from 16 May to 13 June 2021. The retail sector will only be receiving 30% JSS support.

A new measure, the Rental Support Scheme, will be providing equal rent support for both F&B and retail sectors (as well as other affected sectors) in public and private-owned commercial spaces.

Read Also: Rental Support Scheme: Who Are The Qualifying Tenants Of Commercial Properties And How To Apply For It

Why Retail Outlet Owners Are Not Better Off Than F&B Establishments

When Phase 2 (Heightened Alert) measures were announced, the default work arrangement in Singapore reverted to work-from-home. This stopped many people from commuting and heading out in general.

Shopping malls in Singapore were also constrained with tighter capacity limits at the same time. Occupancy limits were reduced to 10 sqm per person from 16 sqm per person. On top of this, many of the shops within malls were also not allowed to operate at full capacity. F&B establishment could not accept dine-in patrons, many gyms and fitness studios had to shut, large tenants within shopping malls, such as cinema operators, public libraries, attractions and others had to halt or limit had to reduce capacities. Furthermore, only group sizes of up to two people were allowed in public. All of this would mean that there is less draw for people to head to malls.

Besides these government measures, Phase 2 (Heightened Alert) itself was announced because of increasing COVID-19 transmissions in Singapore. This would have naturally lead to more people taking extra precautions to avoid public areas. 

Read Also: Back To Phase 2 From 8 May 2021 To 13 June 2021: 9 Things Businesses Are Allowed (And Aren’t Allowed) To Do

A Case For Retail Outlet Owners Actually Being Worse Off Than F&B Establishments

While the above points highlight that retail outlet owners may be as badly affected by Phase 2 (Heightened Alert) measures, there’s also a case for why they may be even worse off.

First, in the general business outlook in April to September 2021, the Retail Trade was only one of two sectors that still had a negative outlook, almost on par with Accommodation – which was still facing prolonged border restrictions. 

This snapshot of the business sentiments was taken prior to the worsening COVID-19 transmission – which meant that most business sectors were on the mend. Despite being “on the mend” the outlook for retail was still very poor.

In contrast, Food & Beverage services was ranked only behind Information & Communications, Finance & Insurance and Wholesale Trade

Source: Department of Statistics Singapore

Besides having better business outlook, employment statistics were also favouring F&B sector. Again, despite being in recovery mode, Retail Trade was still forecasting 18% dip in revenue and a 1% dip in employment. This compares to the much more favourable outlook for F&B services.

Looking at another report, the March 2021 Retail Sales and Food & Beverage Service Index, we can further corroborate that not only is the outlook for the retail sector poorer than the F&B sector, it is indeed poorer from an empirical standpoint.

In the first quarter of 2021, F&B sales jumped 8% compared to the first quarter of 2020. In contrast, the retail sector, excluding motor sales, rose just 4.4%. Even including motor sales, it would have been poorer off.

As Phase 2 (Heightened Alert) reverts us back to staying home mostly, online sales can be the difference. In this regard, the F&B sector is also ahead of the retail sector.

23.5% of F&B transactions come from online sales channels by March 2021. This is likely due to F&B establishments pushing to go online after experiencing last year’s Circuit Breaker. Nevertheless, despite experiencing the same painful disruption to business in 2020, only 14.4% of sales come from online channels in the retail sector. Including the motor sector, it would have been even worse off.

This means that F&B establishments may be in a better position to ride out the COVID-19 disruptions to its business activities than the retail sector. This also highlights that the retail sector may be in dire need for greater support to pivot online than the F&B sector.

While the government has re-introduced both the Food Delivery Booster Package and the E-Commerce Booster Package, the retail industry may need even greater support in pivoting online. Its digital penetration is far lower than the F&B sector. Another consideration is that local retail players will be competing against the global e-commerce markets when they go online, while F&B players will not.

Read Also: Re-Introduced E-Commerce Booster Package: Why Businesses That Missed It The First Round Should Apply To Receive Up to $8,000 Grant To Start Selling Online In 2021

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