Retail businesses and consumers may have thought about the same thing \u2014 higher prices \u2014 after the recent announcement of the Progressive Wage Model (PWM), which will be expanded to the retail sector from 1 September 2022.<\/p>\n\n\n\n
Local workers in firms hiring foreign workers for the roles of cashier\/retail assistant, senior cashier\/senior retail assistant, and assistant retail supervisor, will see an increase of about 8.4% to 8.5% per year for the next three years. These retail workers can expect to receive a baseline salary of $1,850 or a gross hourly wage of $9.70.<\/p>\n\n\n\n
For the 29,000 retail enterprises in Singapore, these are added costs in the face of rising inflation and supply chain disruptions, which many may not be able to absorb. In light of this, is raising prices of retail goods the only option for businesses to stay profitable?<\/p>\n\n\n\n
Read Also: <\/em><\/strong>Progressive Wage Model: How Much Will Singapore Employers Have To Pay Their Workers<\/em><\/strong><\/a><\/p>\n\n\n\n Businesses are not immune to rising costs like the higher cost of goods & materials, energy prices, and rental costs due to high inflation and supply chain shocks. Adding a rise in manpower costs to this mix may make it even tougher for businesses to stay profitable.<\/p>\n\n\n\n While increasing prices on retail goods is one way to reduce the cost incurred, it may also affect businesses that target consumers who are price sensitive. Consumers who might be less inclined to spend on elastic goods may look for close substitutes for any price increase on such items.<\/p>\n\n\n\n These businesses may need to rethink their response to cost increases by evaluating their cost control measures and reducing the impact of volatility on their operations. Such measures may include growing and diversifying their supply chains and markets.\u00a0\u00a0<\/p>\n\n\n\n The current business model adopted by most retail businesses might be one of arbitrage. Enterprises adopting this model would source goods at a low cost and sell them at a higher price in another market by being the middleman.<\/p>\n\n\n\n However, this model may not be sustainable in the long-run, especially with the growing e-commerce trend. Furthermore, consumers’ preferences have also changed over time as they seek a more seamless shopping experience and more environmentally-friendly options.<\/p>\n\n\n\n As such, businesses may need to continually refresh their sensory offerings by providing more experiential and personalised shopping. This also includes using less packing and sourcing products from sustainable sources. These factors will help businesses differentiate their store experiences and better engage shoppers who want something beyond the cookie-cutter stores.<\/p>\n\n\n\n Read Also: <\/em><\/strong>What Businesses Should Know About Singapore\u2019s Economic Outlook For 2022<\/em><\/strong><\/a><\/p>\n\n\n\n Globalisation and the coronavirus pandemic have rapidly evolved the retail landscape and the adoption of e-commerce. In Singapore, the ecommerce market is expected to grow from US$5.9 billion to US$10 billion by the end of 2026, according to a report by Facebook and management consultancy Bain & Company.<\/p>\n\n\n\n Given the evolution of the retail landscape, retail businesses cannot rely on their brick-and-mortar shops and should pivot to online platforms to find new avenues for growth. This includes adopting the omni-channel approach by encompassing physical and digital storefronts.<\/p>\n\n\n\n Retailers can tap on government schemes such as the Enterprise Development Grant<\/strong><\/a>, which supports businesses venturing overseas, and the Productivity Solutions Grant<\/strong><\/a> scheme, which supports companies keen on adopting IT solutions and equipment to enhance their business processes. Both schemes have been extended till 31 March 2023 to help companies rejuvenate themselves.<\/p>\n\n\n\n Read Also: <\/em><\/strong>Guide To Applying For The Digital Resilience Bonus (DRB) For F&B And Retail Companies<\/em><\/strong><\/a><\/p>\n\n\n\n Despite the rising cost pressures and difficulty in hiring workers in this tight labour market, retailers must continually push for innovation and workforce transformation as part of achieving the country\u2019s 2030 economic vision.<\/p>\n\n\n\n To achieve this, businesses need to develop indigenous capabilities and technologies that can keep them ahead of competition and reduce their demand for labour. This requires commitment and investment from companies and the willingness of workers to upgrade and acquire new skills.<\/p>\n\n\n\n Companies keen on these approaches can tap on the various government grants and schemes. One such example is the Jobs Resign Framework for Retail, which guides retailers in reviewing their employees\u2019 job scopes, enabling them to improve productivity and efficiency, optimise workforce, and improve job attraction and retention. Additionally, companies can also tap on the SGUnited Mid-Career Pathways Programme<\/strong><\/a> and the Career Conversion Programmes<\/strong> to attract and retain local talent.<\/p>\n\n\n\nRaising Price Of Good The Easiest Option But Is Not The Only Option<\/strong><\/h3>\n\n\n\n
Businesses Need To Change Their Existing Business Model<\/h3>\n\n\n\n
Businesses Need To Pivot To Digitalisation And Omni-Channel Approach<\/h3>\n\n\n\n
Businesses Must Improve Firm-level Productivity<\/h3>\n\n\n\n