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The global economy slowed down in the year 2011 in a number of leading economies in the world. The Euro crisis that hit the continent brought about negative effects in the financial market. As a result, most of the countries considered tightening their tax regimes in order to raise adequate taxes to run the huge economy thereby threatening the consumers’ confidence (Deloitte 2013). The retail industry has experienced mixed performance across different economies. Australia and Singapore are examples of such economies with wide retail industries.
The retail environment in Australia has been a miserable one for a long time. During the period of 2010 and 2011 alone, the retail real per capita declined to leave the economy in a mess (Deloitte 2013). Australia’s growth in retail sales has been slow in the preceding years; this slow growth rate is attributed to both the cyclical factors and changes in consumer buying habits. Consumers tend to spend a smaller share of their income on retail goods because, in the past, there had been a tendency among consumers to save more and spend the greater share of their expenditure on services like rent, finance and education (Productivity Commission 2011).
On the other hand, Singapore has experienced a strong rate growth in terms of retail sales, with a nominal growth averaging 5.6 per cent in the period between 2004 and 2011. This is in line with the decline in consumer sentiments of 2009 as a result of the global financial crisis which contracted retail sales by 1.7 per cent. However, strong growth in retail sales was experienced in the year 2010 with a growth 6.8%. Currently, the nominal retail sales growth stands at around 6.1 as per the year 2011 (Holland 2012).
It is important to note that productivity levels of the retail industry in both Australia and Singapore have been growing at slow rate compared to other countries in the pacific. Labor productivity estimates, as indicated in the statistical yearbook, 2011 demonstrates a sudden decline in the Singapore’s wholesale and retail productivity. This represents a decline of about 5percent during the given year (Productivity Commission 2011& Lee 2012). However, over the past two decades, the growth rate of productivity in retail has been similar to the average rate for nearly all Australian industries (Productivity Commission 2011). Therefore, in order to achieve productivity growth, the retailers have devised a method of increasing the capital intensity of their operations and adoption of information and communication technology (Productivity Commission 2011).
Sales in different stores in Australia have not been well, this was evident especially in the past few years. Clothing retailers have seen an improvement in the retail sales. However, there has been a welcome rise in the sales of household goods; this was propelled by the low interest rates. Food retailers, on the other hand, have maintained solid sales growth over the years (Deloitte 2013). Divergences in retail condition have also been witnessed across the Australian states, with the retail conditions stronger in the mining jurisdiction. On the other hand, Singapore is heavily dependent on food imports; this is due to its limited agricultural output. More than 90% of the Singaporean food supplies are from overseas. The numbers of total imports, as well as the numbers of supply sources, are expected to continue in an upward trend in the near future. With the introduction of the food diversification program, it is expected that Singapore’s reliance on a narrow group source of food will reduce (Kong 2010).
Online shopping system has gained momentum in the Australian economy. In fact, according to the statistical estimates, the domestic online share of total retail sales in Australia ranges between 3 and 7 percent (Productivity Commission 2011). The online retail sales across the boarders account for around a third of the total online sales, this implies that 2 percent of these sales go to the websites across the boarders (Productivity Commission 2011). In the year 2010 alone, online retail sales contributed roughly 6 percent to Australia’s total spending. By comparison, market analysts estimate the online share of retail sales in Singapore at 4.4 in the year 2011. The Australian online sales are projected to grow by about 15 percent by the year 2014; this is stimulated by the use of new electronic devices like phones with the internet capability (Productivity Commission 2011).
In comparison, online access to retail sales in Australia seems to be greater in the service sector than in the manufacturing sectors. Food retailing is the only sector within the retail industry that is least likely to be in the international online competition (Productivity Commission 2011). Unlike Australia, the recent Singapore’s development in the airline industry has earned it a worldwide recognition. This is simply because of their affordable tickets, enabling it compete in the global market, hence offering different opportunity to travel abroad. This is also attributable to the constant revaluation of its dollar against the major trading currencies, thereby making economic sense while shopping abroad (Price Waterhouse Coopers 2004).
In terms of retail channels, Singapore’s local retail sector is well developed, comprising of a wide range of retail outlets, that is, the hypermarkets, supermarkets as well as small specialist stores and chains. Singapore usually attracts international tourists as well as the domestic tourists who enjoy doing their shopping in the country, this is due to the high number of retailers in the country (Price Waterhouse Coopers 2004). In Australia, the retail pattern has changed to a multi-prolonged approach that embraces both the channels. However, it serves as a link between the customers and retailer’s brand (Deloitte 2013).
It is evident that, price differences across different retailers and retailer-types vary in every economy, this is usually attributable to drivers such as, rents and occupancy costs, wages and labor costs, both wholesale and distribution costs and government taxes and profit margins. International effects may include changes in the exchange rate, as well as the regional pricing strategies. In Singapore, the traditional retail stores are the dominant in the Singapore’s retail food sector, trade sources point out that traditional retails constitute about 70% of the country’s food retail scene (Productivity Commission 2011& Kong 2010).
In conclusion, it is clear that, in both economies, retail industry is a significant contributor to the GDP, with the Australia’s retail contributing about 4.1 percent of the GDP and about 10.7 percent of employment. Singapore’s retail industry, on the other hand, expanded at a faster pace at a rate of 5.6 percent, this is because of expansion in both the wholesale and retail segments.
References
Deloitte, 2013. Global Powers of Retailing 2013: Retail Beyond. Web.
Kong, B 2010, Singapore Retail Food Sector Report, Global Agricultural Information Network. Report no SN0002. Web.
Lee, B L 2012, “Productivity performance of Singapore’s Retail Sector: A two-stage non-parametric approach”, Economic Analysis and Policy. Web.
Holland, P 2012, Capita Mall Trust Report to Unit Holders 2011.
Price Waterhouse Coopers, 2004, Singapore. Web.
Productivity Commission, 2011, Economic Structure and Performance of the Australian Retail Industry, Report no. 56, Canberra. Web.
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