At first glance, Singapore's consumer culture presents a rosy climate to budding entrepreneurs venturing into the food and beverage (F&B) and retail industry. 6 out of 10 Singaporeans dine out at a daily basis, opening up demand in a cosmopolitan melting pot of local and expatriate flavours. The generally high disposable income is also a welcome sign for retailers introducing new products to the market.
A closer look, however, uncovers the real hardship of restaurants and retailers in a highly competitive industry. According to the Accounting and Corporate Regulatory Authority (ACRA), 575 new restaurants were set up while 435 closed down from January to November 2013. The brutal truth is that only one entrepreneur in four will survive. And those that do are not immune to the other challenges ahead.
Over the last few years, the domestic manpower crunch has become increasingly evident. The Singapore Department of Statistics reports labour productivity in the food services industry at a continuous decline since 2012, coupled with the highest turnover rate across all industries. Rising costs is another external factor. Landlords and malls can increase rentals by up to 140 per cent, given the market conditions in a land-scarce market.
In such a harsh landscape, what are business owners to do? Competition in these sectors are intense and profit margins are wafer thin. Many hope for instant revenue with a "star product" but in actual fact, businesses need to look at smart long-term decisions. They could continue to focus on keeping their costs lean to survive longer, fine-tuning goods and growing a customer base over time. For business owners operating multiple outlets (or with ambitions to do so), investments to trim processes and optimize staff allocation are crucial, but as business concepts continue to evolve, these measures are not sustainable. Businesses and entrepreneurs need to gain a competitive edge to stay ahead and flourish in Singapore's ever-changing F&B and retail setting.
Redefining Businesses with Technology
While there is no silver bullet, many of the issues can be managed with technology. Business technology today is redefining how we identify growth opportunities, operate our businesses, and manage risk. By adopting and utilizing technology effectively, business owners will be able to capitalize on improving business conditions.
The truth is that consumers are ready and eager for a new customer experience. In a survey of 100 Singaporeans between the ages of 20-30, conducted by Epson, it was found that 84 per cent think retailers should leverage technology to improve customer service. 37 per cent have used apps to order at restaurants, while another 47 percent are interested in doing so.
These insights alone should convince owners who might have previously not considered adopting technology into their business models to have a long, hard re-think. The latest retailing concepts and technologies can boost productivity by alleviating workload, thus helping owners focus on the very thing that consumers want - better customer service. With improved customer service, comes a surge of profits but only if businesses pump up productivity of their existing employees and operations as a whole.
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