Starting a business may not be a big deal. The city-state of Singapore is well aware of how to cater to the needs of young entrepreneurs that have great business ideas. Some hard work, a few meetings, and a little of perseverance and the business idea can convert into a reality. SMEs of Singapore has, time and again, symbolized why small businesses lie at the very heart of any economy. These SMEs have thrived and in the process generated employment and enabled development. They indeed got it right when they started the business. The 3 Ps as they call it- product, price, and place- were all in their favor, and hence they could encourage other dreamers to pursue new goals. But things have changed. Until some time ago, this pace of change wasn’t steady enough. It was only when technology entered into how people made buying decisions that the scene saw disruption. Slowly but steadily, tech came into every aspect of business- from online shopping to digital marketing – and the challenges that faced the companies of yesterday acquired new dimensions.
What happens that businesses compel to shut shops? Does the demand for the product disappear overnight? No. Most of the companies that go out of business have their competitors continuing and thriving in the same field. Failure of any enterprise, therefore, can be attributed to that enterprise alone.
The Singaporean Market
Singapore is a great market. It offers its businesses a good consumer base that is ready to spend money. Many SMEs of the city-state has made it to the global supply chain and are earning handsome revenues. Despite all the luster, however, there is also a dark chapter. No, this chapter can never be a deterrent to the dreams of would-be-entrepreneurs. But at the same time, it has many lessons that businesses can learn to stay afloat in the long-run. This chapter relates to those businesses that decide to shut shop due to some reason and end their dream run of becoming a market leader one day. Sasa Singapore, for example, a popular name in the beauty and healthcare market, has declared the intention to close all stores in Singapore. The well-known firm had more than 20 outlets in the city-state, and the consumer base was also healthy. Despite this, the firms been losing money; the only option left was to exit the business.
It takes time for any profitable business to slide to a level where profits become elusive, and any chance of revival is lost, as seen in Sasa’s case. Course correction, to run the business successfully on a sustainable basis in the long run. The market is in a weird state. While on the one hand, some businesses are failing due to rising rental costs and competition from e-commerce players, there are some others, including Love Bonita and Habitat-by-Honestbee, that are opening new physical concept stores. Although there cannot be just one best business strategy- since if there were one, every business would readily adopt it- basic understanding of some of the elements that are adversely impacting the health of enterprises in Singapore is necessary. Let’s take a look.
The Reasons Behind Failures
Although not all reasons can be covered in their totality because a particular business has its own set of threats and weaknesses, some of the factors that lead to the eventual collapse of concern are common.
Change in Consumer Preferences
A consumer is even more aware of the changes in the market than the competing businesses. Yes, they know what they exactly want. For example, in the case cited above, Sasa Singapore could not acknowledge the demands of the consumer. Beauty products are so essential in today’s world that they can rarely go redundant. Most of the women prefer using at least some products that can enhance how they look. But what happened with Sasa Singapore that compelled to go entirely out of business in the city-state? One of the reasons is that the company could not differentiate itself from other players. While on the one hand, a competitor, Sephora, focusing on the premium market range, the others undercut Sasa with more reasonably priced goods. That ultimately meant that consumers went to Sephora to purchase premium products, or they opted for the value-for-money range of other competitors.
Branding and Positioning of the Product
The very first P of the three Ps is all about the product, and it is to do with how well you make a brand out of it. Customers can prefer either a premium product given that the value it brings matters genuinely, or they can settle for a mid-range product, but even this should bring some value. All this makes branding and perfect marketing strategy, the basics in today’s retail market. Sephora scored when they brought the famous popstar Rihanna to one of their outlets for a promotional visit. It made Sephora a class-apart from other sellers in the segment. Add to this the brand’s recognition that comes from it being a part of the internationally-acclaimed LVMH group. Marketing strategy plays a crucial role in how the business fares in the long run. Sasa Singapore’s failure is a perfect example of how a business can lose customers when they cannot place the brand in a particular segment- premium, mid-range, or economical. Any product can create its demand in the already-populated market, given that it gets positioned well, and the buyers can relate to it.
The Advent of Technology
Tech has, beyond doubt, shaken the market of today. MPH Bookstores last year announced the closure of its remaining two stores, and the news was abuzz that they would open a new books-and-lifestyle concept store to appeal to the disenchanted masses. Not only MPH, other physical stores selling books have gone out of business, thanks to the technology that has disrupted this market segment. Here’s a simple question. Would someone prefer buying and carrying a physical book or find it more convenient to have multiple titles stored in a single gadget? Indeed, the latter makes sense. E-books have brought such a change in the market that any business selling physical books has to have a great marketing strategy to compete with the trend. E-books can be carried in a single device and are accessible round-the-clock. Not only this, but e-commerce websites also offer great deals on the purchase of e-books, making them even more appealing to the mass.
Another example is the Metro, the departmental store, decided to shut down The Centrepoint store due to changes in the market conditions. Indeed, the market has revolutionized. Lesser number of consumers are stepping into shopping malls to make purchases. And why not? When one can save both time and money by just tapping on the mobile app for household items, why would someone bother? Tech has been the biggest disruptor in retail. Physical businesses are now adopting tech and using it to make their offerings more appealing. The Luiga store, at Causeway Point, is a one-of-a-kind physical store that has intertwined tech with brick-and-mortar outlets. Here, customers can view detailed information of any product and the reviews posted online on a big display available in-store. Even the checkout is made easier and faster through self-scanning and online payments without having to wait in queues.
Examples of how changes in consumer preference and tech disruption have led to the shutting of some businesses in Singapore are many. The British beauty firm, Crabtree & Evelyn, declared its intent to shut all physical stores and instead move to being an online seller only. SMEs ought to be familiar with the changing scene and adjust to this to sustain. As stated earlier, starting a business may be comparatively more straightforward, but running a successful business in an environment where several companies are competing with one another requires acquaintance with the latest developments.
The market of today inundated with several players producing and selling similar products and services. Borders are virtually open, and a firm from anywhere in the world can enter the Singaporean market. Singaporean SMEs have to not only fare better than domestic peers but also players that come from abroad and bring to the table better expertise and deep pockets. The city-state has a high penetration of the internet, and consumers are well-aware of the international scene. They compare products and look for reviews by users posted online, and this determinedly shapes their buying decisions. SMEs compel more than ever to know what the consumer wants and to brand the product correctly, besides making the best use of available tech that includes artificial intelligence and data analytics.