Singapore’s total retail sales value increased 79.7% y-o-y to $3.3 billion in May according to data from the Department of Statistics (SingStat) reported on July 5, beating consensus forecasts of 63.6% according to Bloomberg.

The jump follows the 54% y-o-y increase recorded for April. The increase is attributable to a low base from the previous year when Circuit Breaker measures were in place due to Covid-19, with physical stores closed for the entire month.

However, retail sales continue to be below pre-Covid levels with a m-o-m decline of 6.8% on a seasonally adjusted basis, larger than the 1.3% decline recorded in April. The larger decline is due to the implementation of Phase 2 (Heightened Alert) measures from May 16.

Excluding motor vehicles, retail sales amounted to about $2.8 billion, increasing 61.6% y-o-y, but falling 5.2% m-o-m on a seasonally adjusted basis.

All retail industries except for Supermarkets & Hypermarkets and Mini-marts & Convenience Stores recorded significant y-o-y increases due to the low base in May 2020.

Watches & Jewellery saw the highest growth y-o-y at 2,090%, followed by Department Stores (+513%), Wearing Apparel & Footwear (+447.1%), Motor Vehicles (+421.2%), and Optical Goods & Books  (+296.5%).

On the other hand, sales of Supermarkets & Hypermarkets and Mini-marts & Convenience Stores fell 12.1% and 9.2% y-o-y respectively, due to higher sales of groceries last year as more people stayed at home during the Circuit Breaker period.

On a seasonally adjusted m-o-m basis, most retail industries recorded declines in sales in May following the Phase 2 (Heightened Alert) period. Sales of discretionary industries such as Department Stores, Wearing Apparel & Footwear and Watches & Jewellery fell between 21.1% and 27.9%.

In contrast, retailers of Computers & Telecommunications Equipment and Supermarkets & Hypermarkets reported higher sales of 18.9% and 12.3% respectively during this period, due mainly to higher demand for computers and groceries. 

Online retail sales made up 13.7% of total retail sales in May, or 16.1% of total retail sales excluding motor vehicles. Online retail sales of the Computer & Telecommunications Equipment, Furniture & Household Equipment and Supermarkets & Hypermarkets industries made up 54.4%, 30.7% and 12.1% of the total sales of their respective industry.

Meanwhile, total food & beverage sales grew 46.4% y-o-y to $617 million, but fell 14.1% m-o-m on a seasonally adjusted basis. In comparison, total food & beverage sales had grown 73.8% y-o-y in April while falling 1.3% m-o-m on a seasonally adjusted basis.

All food & beverage services industries with the exception of Food Caterers recorded significant y-o-y growth, attributed to the low base last year when food & beverage establishments operated on a takeaway or delivery basis for most of the month. 

Restaurants saw 89.5% growth y-o-y in sales,  while Cafes, Food Courts & Other Eating Places grew 54.4% and Fast Food Outlets grew 37.2%.

On the other hand, sales of Food Caterers declined 52.3% y-o-y in May as the previous year saw higher demand for catered meals from foreign worker dormitories.

On a seasonally adjusted m-o-m basis, all food & beverage services industries saw a decline due to Phase 2 (Heightened Alert) measures. Turnover of Fast Food Outlets declined 1.5% m-o-m in May, while Food Caterers declined by 3.6% and Cafes, Food Courts & Other Eating Places declined by 8.3%. Restaurants saw the biggest m-o-m decline of 26.4%.

Online food & beverage sales made up an estimated 38.8%, higher than the 24.6% recorded in April as more people ordered food online when dine-in was not allowed during the Phase 2 (Heightened Alert) period. 

While May’s retail sales beat consensus forecast, analysts note that demand has not recovered to pre-Covid-19 levels, which UOB economist Barnabas Gan attributes to the continued absence of tourism-led demand. “From the index perspective, the retail sales index clocked 84.8 points in May 2021, a level lower compared to April’s index of 85.3 and the 5-year average of 98.0 points in the period between 2015 and 2019,” Gan highlights. 

Looking ahead, Gan believes that the low base effect will continue to propel retail sales growth figures in the coming months, while the ease in restrictions should also contribute to expansion. “With the recent decline in locally-transmitted Covid-19 infections in Singapore to single-digit amid a gradual improvement in the labour market, retail sales growth should continue to expand for the rest of the year,” he adds. To that end, he keeps his full-year retail sales outlook at a growth rate of 10%.

Meanwhile, Selena Ling, head of treasury research & strategy at OCBC Bank believes that while retail sales data will continue to show y-o-y growth, the low base effects may start to wear off after June. “[Note] for 2H2020, only October saw a double-digit y-o-y contraction whereas the rest of the months recorded milder single-digit y-o-y declines,” she points out.

Nonetheless, she is hopeful that retail sales may return to pre-Covid levels by end of the year or early 2022. “Hopefully, with the transition to Phase 3 (Heigtened Alert) in mid-June, and the pickup in vaccination, and if international borders start to gradually re-open for travel corridors, then there may be more respite for the retail sector,” she says. Her 2021 retail sales growth forecast now stands at 11%.

The Singapore research team at RHB Group Research holds similar views. “In our view, the low base effect should continue to influence y-o-y retail sales growth for June before moderating in 3Q2021. Month-on-month retail sales performance will improve slightly in June given that pandemic related restrictions were only gradually eased in the second half in June. Nevertheless, we expect monthly momentum to pick up in 3Q2021 as restrictions loosen further,” the team says.