RTS Link could cause significant retail value leakage, warns expert
DBS also expects a 3% to 4% impact on local retail sales.
The Johor Bahru-Singapore RTS Link could cause a 5.4% retail value leakage and a 3% to 4% impact on retail sales, pushing local retailers to enhance their offerings to stay competitive.
DBS underscored that the affordability of goods and services has increased in Johor Bahru due to weak MYR and GST hikes in Singapore. The reduced travel times with the RTS make it likely that Singaporeans seeking to “stretch the dollar” spend more in the neighbouring city than at home.
"We expect average spend could fall to as low as SGD100 per pax per day with increased trip frequency to JB," said DBS.
"Accordingly, we projected a range of total retail sales outflow between $1.5b to $2.1b, equivalent to 3-4% of total retail sales in Singapore in 2023," added DBS.
In the F&B space, DBS predicts sales could decrease by $450m to $620m, about 4%-5% of 2023 sales, with the RTS coming online.
Facing potential revenue loss, DBS suggested local establishments distinguish themselves from JB counterparts with premium offerings.
"Malls could onboard JB-famous eateries for those curious but hesitant about the commute," said DBS.
Facing potential losses of $580m to $820m, or 15%-21% of 2023 receipts, service providers will likely adopt attractive pricing strategies, said DBS, whilst high-end providers may improve service quality to remain competitive.
Supermarkets anticipating losses of $45m, or less than 1% of the projected 2024 modern grocery market, should focus on high-end offerings to appeal to less price-sensitive shoppers, according to DBS.
"Convenience can be sold further to the masses by marketing online services and providing free shipping, amongst other benefits.," DBS added.
Even with a relatively subdued impact from the RTS link, DBS advised Singaporean drugstores to enhance their offerings similar to established health and beauty stores like Guardian, which are present in major malls in JB, to stay competitive.
According to DBS, Guardian brought new-to-market Korean skincare brands into its stores.