Speech by Mr Lee Yi Shyan, Minister of State for Trade & Industry and Manpower at the Ministerial Visit to Robinsons on Tuesday, 19 April, 10.45am at Robinsons, Centre point
Distinguished Guests,
Ladies and Gentlemen,
Good morning. I am delighted to join you here this morning for a visit to Robinsons.
Retail Sector’s Key Role in Singapore’s Economy
The retail sector plays a vital role in Singapore’s economy. Comprising some 15,400 enterprises employing about 102,000 workers, the sector’s total operating receipts was about $26 billion and value-added (VA) was $3.8 billion[1].More importantly, the retail sector helps to shape Singapore as City Alive! to work, live and play in.
In a recent study of 22 major worldwide shopping destinations, Singapore was ranked the 7th shopping capital in terms of overall retail sales[2]. This is quite an achievement for us, and definitely a strong motivation for us to do better.
In 2009, the nominal VA per worker for retail was$37,000, which is only 40 per cent of that of the whole economy. Based on our survey, 280 enterprises (or 2% of 15,400 enterprises) account for about 2/3 of the value add created by the entire. The average VA/worker of the 280 enterprises that are larger than $10mil sales is $49,000; 2.45 times more the lowest group which has less than $1mil sales and 1.32 times more than the average of $37,000.
Another finding of our survey is that the higher the sales turnover of the retail establishments, the better its productivity in terms of VA/worker. The most productive sectors are: Departmental stores ($60,000), Jewelry and Time Pieces ($59,000), Furniture and Households ($43,000) and Fashion & Sporting Goods ($41,000). Given the sectoral characteristics, we clearly need a concerted but differentiated approach to raise the productivity of these sub-sectors.
SPRING Launches $86 million Plan to Boost Retail Productivity
To upgrade productivity of the retail sector, I am pleased to announce that SPRING will be rolling out a $86 million productivity improvement plan for the retail sector, under the overall effort spearheaded by the National Productivity and Continuing Education Council. The plan hopes to improve the retail sector’s value add per worker by 25 per cent to $46,000 VA/worker by 2015. This works out to be an average annual growth rate of 4.2%, higher than the national target of 2 to 3 per cent. Of course, for those already at $60,000 VA/worker such as Robinsons, I am afraid you can’t take a break but to aim higher.
The plan provides a holistic approach to guide the retailer’s productivity efforts in 3 broad areas, namely Process, People and Service. Let me elaborate on each of these areas.
Achieving Process Excellence
First, let me elaborate on Process. Process complexity is one productivity killer. Poorly structured or lack of efficient process can derail a company’s operations. It is obvious for a manufacturing company but equally crucial for any services company such as retailers.
Technology can simplify processes and make them human-error free. ICT applications such as Enterprise Resource Planning (ERP), Integrated Point of Sales (POS) and Customer Relationship Management (CRM) systems can greatly relieve retailers of manual labor, streamline processes and enable more effective use of customer data.
Mobile technologies too can help drive sales by empowering customers with purchasing information they need. Home-Fix (a DIY store), is planning to equip its sales team with tablets so that they can access product details, check stocks and complete the sale without leaving the customer’s. If you visit Apple Stores in America, the sales person will check stock, slide your credit card payment and issue receipts to you using an iPhone. You don’t even need to go to a cashier for payment.
Robinsons as an Exemplary Case
Supply chain integration is another area where retailers can generate a lot of efficiency and reduce wastage. To streamline processes, Robinson implemented a B2B E-Hub Project which greatly reduced human error and processing time for staff and suppliers. The project has been such a great success that another 100 suppliers will be coming onboard in Phase II.
Driving People Excellence
Next let me talk about the People aspect of productivity improvement.
Productivity improvement needs to be complemented by a supportive culture. Better still if it is an ingrained culture that reinforces the discipline of relentless pursuit of perfection.
Training and up-skilling therefore remains a key tool to achieve this. I would like to encourage every retailer to invest in your employees through retraining and job redesign your workforce Programmes such as the Certified Productivity Practitioner for Retail and others under the Singapore Workforce Skills Qualifications framework.
Besides skills development, optimal manpower scheduling can also dramatically improved a retailer’s productivity.
For example, Pet-Lovers Centre, a retailer of pet and pet accessories with 36 outlets, re-structured its work shifts. As a result, the company attained cost savings and optimized their workforce, resulting in an increase in VA per worker by more than 30 per cent from $30,000 to $40,000. Staff satisfaction also improved and the company was able to channel the savings back to staff with an average 25 per cent increase in pay.
Promoting Service Excellence
Next, let me touch on the topic of Service excellence. As Singapore competes internationally, and offer itself as a sophisticated shopping destination, we have to raise our service level commensurate with increasing customers’ expectation.
I am happy to report that since 2005, we have been able to mobilize 250 companies to embark on the Customer Centric Initiative (CCI) journey.
For example, Global Active Limited, the exclusive distributor of GNC in Singapore, took their service to the next level with the CCI. Global Active implemented a new Point-of-Sales system that allows employees to check a customer’s purchase history. This makes it easier for employees to provide personalized service and for customers to replenish their supplements. The company also introduced a new training programme and employees with potential will be sent to attend leadership courses and professional diploma course in retail management. As a result, the customer satisfaction levels increased and company was rewarded the Singapore Service Class certification. The company’s revenue also improved by 16 per cent. This is topline productivity growth – the same workforce is now able to generate more revenue for the company, making each worker more productive.
Tracking the progress of our productivity journey
We all know what doesn’t get measured is not tracked. The government recognizes that the industry lacks visibility of its productivity performance. Industry-wide indicators are important to help retailers benchmark themselves and identify areas for improvement.
To bridge this gap, SPRING Singapore has commissioned a study to develop local and international benchmarks for the retail sector. I encourage all of you to participate in this benchmarking exercise. By adopting a culture of information exchange, companies will be able to leverage on the findings, benchmark, learn and benefit from best practices, both locally and overseas.
Closing
Productivity is not about getting staff to work longer hours, or cutting manpower. It is about creating more value with the same or less resources creatively. The government is committed to help the industry adopt various technologies, innovate and adopt new processes to achieve productivity-led growth. A plan will remain a plan without the active participation of you, the industry players. I hope the exemplary retailers highlighted thus far will inspire you to want to participate in the various initiatives together.
I look forward to a great partnership between retailers and the various government agencies in creating an increasingly productive and dynamic retail industry. Thank you.
[1]Department of Statistics (2009). Figure excludes motor vehicles & petrol kiosks
[2]Kelkoo. (2011) Study of 22 major worldwide shopping destinations in 2010.Retrieved from Kelkoo website.