Consumers here more optimistic about economy

But they are putting off buying high-end luxury items, say retailers

CONSUMER confidence is roaring ahead as Singapore's economy recovers, according to a new MasterCard consumer confidence survey.

Optimism here is back to the levels last seen in the first half of 2008, before the global downturn hit. And to put that in context, back then, confidence levels were at their highest point since 2000.

However, retailers say that although people are more willing to spend on items they had put off buying during the downturn, high-end luxury items are not flying off the shelves just yet.

The first signs of a recovery in consumer confidence came six months ago, the first increase since the downturn hit in the second quarter of 2008.

The poll asked 400 consumers to rank their optimism, on a scale of zero to 100, on their outlook on economic issues six months down the road.

In March last year, Singaporeans gave an average score of 31.2. The figure for a similar poll conducted six months later in September stood at 79.4. The latest poll, in March and April this year, shows even higher optimism: 86.6.

That makes Singaporeans the second most optimistic lot in the Asia-Pacific, behind only Vietnam, with a score of 93.7.

The results of the survey, released yesterday, showed one key factor in the higher index score was that Singaporeans were more upbeat about their income outlook. When asked about their income over the next six months, more than half (51 per cent) of respondents said it would be the same, while 41 per cent said it would be better, compared with 59 per cent and 28 per cent respectively late last year.

The index score for the other four indicators - the economy, employment situation, stock market and quality of life - also went up, with most saying that these would stay the same or get better.

Despite the optimism, a check with retailers showed that Singaporeans are still a tad wary. Consumers may be more willing to buy big-ticket essentials such as refrigerators, but few high-end luxury items are budging.

At 11 malls managed by CapitaMalls Asia, including Funan DigitaLife Mall and Raffles City, home furnishing sales increased 31 per cent in the first quarter of this year compared to the same time last year. Sales of telecommunication and IT products also went up 23 per cent and 13 per cent respectively.

Jewellery and watch sales, however, dipped 4 per cent. Shoe and bag sales also dropped, by 8 per cent.

Over at luxury pen store Elephant & Coral, business at its Orchard Road store has improved 'slightly', said managing director Herman Chan, who added that customers were returning, but only to buy the cheaper pens.

It is the same situation with Wing Tai Retail's brands - including Karen Millen and Warehouse. 'There are improvements but not huge ones,' said its executive director, Mrs Helen Khoo. 'Consumers are not spending on luxury items yet, but are buying either essentials or more affordable brands.'

However, sales at furniture chain Courts have returned to pre-downturn levels, said its CEO, Mr Terry O'Connor.

During the downturn, sales at its nine outlets fell by about 30 per cent.

Their hot items now: Beds, air-conditioners and refrigerators.

Said Mr O'Connor: 'Customers are not looking at major splurging, but are buying essential items that they had put off purchasing during the downturn.'

Source: Straits Times, 20 May 2010