Businesses urged to innovate as RTS Link set to reshape cross-border shopping
Industry leaders say retailers should focus on customer experience and partnerships, as easier travel between Singapore and Johor Bahru is expected to shift spending across the Causeway.
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SINGAPORE: Businesses should innovate and collaborate to stay competitive as the Johor Bahru-Singapore Rapid Transit System (RTS) Link is expected to shift consumer spending across the Causeway, experts said.
The rail link – set to open in January 2027 – will make it faster and easier for Singaporeans to travel to Johor Bahru for shopping, dining and services, with retailers in northern Singapore expected to be among the most affected.
COMPETING BEYOND PRICE
Association of Small and Medium Enterprises (ASME) president Ang Yuit said businesses in Singapore face structural cost pressures that are unlikely to ease.
“The challenge in Singapore is that we have a very high constraint on costs, which means that our baseline cost cannot really go down.”
With rentals and manpower costs remaining high, businesses cannot rely on lowering prices to stay competitive, he said.
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“For businesses, we have to value add in terms of variety of products, the innovation in terms of what you do, the quality of the food, the quality of your experience,” he said.
He added that the overall experience – from the moment a customer walks into a shop until they leave – will become increasingly important in retaining customers who may otherwise head across the border.
National University of Singapore Business School real estate professor Sing Tien Foo said retailers would also need to rethink how they compete.
With higher operating costs and an unfavourable exchange rate, matching Johor Bahru on price would be difficult, he said.
Prof Sing said merchant associations and retailers could also work together to reduce costs through initiatives such as bulk procurement and joint promotions, while continuing to improve the quality and variety of their offerings.
Businesses should focus on products and services that are harder to replicate, such as customised offerings, healthcare and wellness services, and unique dining experiences, he added.
These could also attract customers from Johor seeking specialised services that are less readily available there.
PARTNERSHIPS ACROSS THE CAUSEWAY
Rather than viewing Johor Bahru as a competitor, businesses should also see it as an opportunity, the experts said.
Prof Sing said Singapore firms could diversify their operations by partnering businesses across the border.
“One way is for the business to collaborate with partners over the other side. They may even open some outlets or even franchise … because of lower cost of rental and labour. This can help the businesses to diversify some of the risk.”
Mr Ang said Johor Bahru gives businesses more room to experiment with new concepts.
One example, he said, is cafes featuring free-roaming alpacas and capybaras, which would be harder to launch in Singapore because of higher costs and the risks involved.
Businesses could work together to develop and test new ideas there before bringing proven concepts back to Singapore.
ASME has begun organising engagement sessions to help businesses from Singapore and Johor Bahru better understand each other’s operating environment and identify potential partnerships.
“The way businesses here operate, the permit licensing, the regulations are not the same as Singapore … learning from the locals, and learning how they actually do it is really quite critical,” Mr Ang said.
COMPETITION LIKELY TO EASE OVER TIME
While businesses in northern Singapore could face pressure when the RTS Link opens, Prof Sing said the impact is unlikely to be permanent.
Drawing parallels with Hong Kong and Shenzhen, which are linked by road and rail border crossings, he said the cost gap between Singapore and Johor Bahru could narrow over time.
“In the long term we’ll probably see a kind of equilibrium. This is what we also observe between Hong Kong and Shenzhen, where a lot more people go to Shenzhen to do their shopping.”
But businesses in Singapore will first have to weather the initial impact of the RTS Link, he said.
“They have to be able to hold on to their business, at least in the medium term. In the short term, definitely there will be some impact, especially the leakage of consumers to the other side.”
PRICE GAP REMAINS A DRAW
For now, Johor Bahru’s lower prices are expected to remain a major draw for Singaporeans.
A CNA check of selected grocery prices at major supermarket chains in Singapore and Johor Bahru last week found that several everyday essentials were between 30 and 40 per cent cheaper across the Causeway.
The comparison was based on prices at FairPrice and AEON, using an exchange rate of S$1 to RM3.15 (US$0.80).
Rice, diapers and toothpaste were among the items that cost about 40 per cent less in Johor Bahru, while eggs, oyster sauce and coconut water were roughly 30 per cent cheaper.
The price gap narrowed for some products when Singapore neighbourhood shops were used for comparison instead of supermarkets.
Toilet paper, for instance, was priced similarly on a per-roll basis, while a tray of 30 eggs cost only about S$0.50 more in Singapore.
Some shoppers also visit discount chains such as 99 Speedmart or local wet markets, where prices for selected products can be even lower.
Despite the expected competition, Mr Ang urged local businesses to look for the silver lining.
“If you think about what opportunities it opens up, I think then you will frame the problem slightly differently,” he said.
Source: CNA/mp(ca)
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