Retail sales crashed 52.1% in May

The last full month of the Circuit Breaker came worse, but is expected to lighten by June.

Retail sales plunged 52.1% YoY to $1.8b in May, which showed a much steeper decline compared to the 40.3% YoY fall in April, according to data from the Department of Statistics (SingStat). This marks the lowest recorded decline since 1986 when growth rate data was first compiled.

The lower sales were due mainly to the Circuit Breaker measures that were in place for the month of May, SingStat stated. Excluding motor vehicles, retail sales fell 45.2% YoY over the same period.

On a MoM basis, seasonally adjusted retail sales crashed 21.5% in May.

Online retail sales made up about 24.5% of the total retail sales value. The computer and telecommunications equipment, furniture and household equipment, and supermarkets and hypermarkets industries made up 94.3%, 93.6% and 9.6% of the total sales of their respective industry.

Further, all retail industries registered YoY declines except the supermarkets and hypermarkets and mini-marts and convenience stores segments. Sales of the watches and jewellery, department stores and wearing apparel and footwear industries fell between the range of 89.1% and 96.9% physical stores were closed during May. 

Supermarkets and hypermarkets and mini-marts and convenience stores, which remained open, recorded jump in sales of 56.1% and 9.1% respectively, due to higher demand for groceries.

“With the re-opening of stores during the Phase 2, we can expect some improvement from June onwards with a potential initial snapback in pent-up demand, but the test of the pudding is whether the momentum can sustain into H2, especially since the domestic labour market conditions are likely to remain soft and there has been an emergence of second wave of COVID-19 infections globally, as well as the hesitation to resume international travel may mean that demand conditions remain muted in the coming months,” said Selena Ling, head of treasury research & strategy at OCBC Investment Research.

She added that even an initial June retail bounce may not be enough to counter the shortfall seen during the Circuit Breaker period. Ling forecasts that retail sales in June will show a more relaxed contraction of 10.5% YoY and will likely push back into positive growth territory by Q4.

“That said, retail sales are still likely to contract by 9.5% YoY for the whole of 2020, signifying a COVID-19 induced recession for Singapore,” Ling said.

Meanwhile, sales of food and beverage (F&B) services also slid 50.1% YoY to $430m in May, which eased slightly compared to the 52.7% crash seen in April, as it continued to be affected from having only allowed to operate on a takeaway or delivery basis. Online food & beverage sales made up an estimated 44.6%, whilst F&B services sales on a MoM basis inched up 4.1%.

Within this sector, the turnover of restaurants and food caterers plunged 68.7% and 45.1% YoY, respectively in the same month. Cafes, food courts and other eating places and fast food outlets posted lower sales of 41.4% and 20.5%, respectively as well.

Ling is also expecting an improvement in F&B sales in June with dining-in allowed in Phase 2.

“However, there has been some reconsideration of dining-in options with the second wave cases in other parts of the world and may still lend a bit of caution for the F&B sector going forward. Moreover, a significant portion of the Singapore workforce is also still working from home at the moment,” she commented.