KUALA LUMPUR, Aug 16 — Retailers in Singapore will need to elevate their offerings, including providing value-added services, as the upcoming rapid transit system with Johor Baru, slated to begin in 2026, will put them in direct competition with the more affordable options in Malaysia’s second-largest city.
According to Singapore Business Review, DBS expects Singaporean retailers to lose as much as 4 per cent of their sales — equivalent to S$2.1 billion (RM7.05 billion) in 2023 — as more citizens are expected to make more trips to Johor Baru to shop.
Food and beverage sales could drop by as much as 5 per cent or S$620 million as the Johor Baru-Singapore Rapid Transit System Link goes online, it said. Supermarkets may face S$45 million in potential losses.
“Try not to hold back consumers from what is going to be, ultimately, normal behaviour in the future,” Mário Braz de Matos, managing partner at Flying Fish Lab, told Singapore Business Review.
“We’re not going to prevent people from going over to Johor. We have to live with it.”
He said Singaporean retailers need to change their mindset and perspective to stay competitive, by attracting both Johoreans and locals, with additional services.
Januel Koh, a digital marketing and branding lecturer at Singapore Polytechnic, told the business magazine that while Singapore cannot compete with Johor Baru on price, retailers can focus on the value of their goods and services, as consumers don’t make decisions based on price alone.
He pointed to the example of the Chinese hot pot chain Hai Di Lao, which, despite not being the most budget-friendly option, still draws long queues in Singapore every weekend.
“The main reason for that is people are purchasing an experience,” he explained.
“Consumers look at the quality of value that exceeds their expectation of perceived value than just purely prices. They want to buy something worth it and not just buy cheap stuff,” he told Singapore Business Review.
The business magazine reported that DBS analysts Geraldine Wong and Zheng Feng Chee have advised Singaporean retailers, particularly food and beverage establishments and supermarkets, to focus on selling premium products and improving service quality to remain competitive.
They also suggested that malls in Singapore could bring in popular eateries from Johor Baru to attract those curious but reluctant to make the commute. At the same time, supermarkets should concentrate on offering premium brands to cater to shoppers who are less concerned about price.
The magazine also added that Braz de Matos said Malaysian competition can present opportunities for Singaporean retailers. Singaporean businesses could divide the production of goods and services across both borders by establishing supply chains that reduce overall costs, he suggested.
He highlighted Gleneagles Hospital as an example, where consultations take place in Singapore, while backend work is carried out in Johor Baru.
“This is a natural integration that will happen as communication and movement across countries and borders is made easier,” he said.