Decrease in Chinese tourists impacting retail sales
by Edmund O'Connell on Dec 30 2023
Singapore’s renowned retail boulevard Orchard Road has experienced a notable decrease in footfall from Chinese tourists according to a recent report in Nikkei Asia. The local business community is closely monitoring the situation. This change in consumer dynamics has been felt despite the continued presence of high-end shoppers in the area.
In an interview with Nikkei Asia, Markham Shaw, the chairman of the Orchard Road Business Association, shared insights into the current state of the shopping district. He explained that traditionally, the consumer base on Orchard Road was equally split between locals and tourists. However, the current situation reflects a significant shift.
"The balance between local and tourist spending on Orchard Road has been disrupted," Shaw observed. "With tourism not yet at its pre-pandemic levels, sales figures are understandably not where we would like them to be.”
The impact on tourism stemming from China's economic slowdown is palpable, and the current strength of the Singapore dollar also makes purchases more costly for visitors.
This year, the Chinese yuan has weakened by over 4% against the Singapore dollar, affecting spending patterns. The association, Shaw mentioned, is keeping a close watch on China's economic trends and is planning visits to China to better understand the market.
Tourism figures for November reveal a 28% decrease in total visitors compared to the same period in 2019 the last year before the Covid-19 lockdowns. Chinese tourists accounting for about 104,000 arrivals, saw a massive 58% drop from four years ago.
Despite these challenges, Shaw highlighted an unforseen upturn in tourism from India, with around 90,000 Indian tourists visiting in November. "The surge in Indian visitors was unexpected and strong," he said.
Orchard Road, internationally known for its array of high-end boutiques, shopping malls, and hotels, continues to see robust spending in the luxury sector. "While mid-range spending has dipped, luxury shopping remains vibrant, helping us to maintain a satisfactory performance level," Shaw noted.
He also discussed the impending increase in Singapore's goods and services tax (GST) from 8% to 9% in January, predicting it would impact local consumers more than tourists.
The Orchard Road Business Association is now focusing on sustainability initiatives, such as using renewable energy and reducing waste, to appeal to the evolving preferences of future tourists.
Shaw anticipates a new wave of environmentally conscious tourists, who will favour establishments that demonstrate a commitment to sustainability. "Travelers of tomorrow will seek out hotels and boutiques that are mindful of their environmental impact," he concluded.