Prices: to raise or not to raise? That is the question facing the shopkeepers and suppliers of non-essential goods even as their own costs go up.
As it is, consumers are already baulking at the higher prices of staples such as rice, cooking oil and vegetables.
'The things we sell are not essential, so people will think twice before buying,' said Mr Peter Lee, 46, the supervisor of a games and electronics store in Ang Mo Kio Central.
His shop has not increased its prices despite the cost of supplies having gone up by 20 per cent since last year, he said. Profits have dipped by 40 per cent as suppliers demand more in payment and fewer customers spend.
A check with 20 shops located in housing estates such as Ang Mo Kio, Toa Payoh and Jurong and which sold non-essential goods like clothes, toys and skincare products showed that half of them had increased their prices by 10 to 30 per cent. The other half have maintained them.
All but one said that the cost of goods, both imported and from local suppliers, had gone up. Net profits have dropped between 5 and 40 per cent compared to the same period last year.
Soya bean snack chain Jollibean upped the price of its regular-sized drinks by 10 cents to $1.60 and the price of its pancakes from 70 to 90 cents on June 1. It said that it had been absorbing rising raw material, manpower, transportation and rental costs.
'We were observing the situation, hoping that prices would stabilise. But the situation has not improved even after 11/2 years,' said its executive director Pengene Lee.
Jollibean had not raised prices till now.
'We need to maintain profitability to ensure that our staff are fairly paid,' Ms Lee said. She could not say if Jollibean's takings were hit as its prices had been adjusted only recently.
Businesses insisted that price tweaks were not decided on a whim. One big fear was that consumers would switch loyalties.
Mr Tom Toh, the sales and marketing manager of Hock Seng Food - the producer of the Hosen canned fruit that are supplied to shops and supermarkets - said: 'We don't have a monopoly on our products. When we increase prices, we've to consider what other brands will do and how supermarkets will react.'
Its prices have gone up incrementally in the past 12 to 18 months, with the higher cost of fruit, tin cans and transportation.
Said one local food manufacturer: 'To increase prices now is very difficult. No supermarket is willing to raise prices first. Everyone is waiting for everyone else.'
He added that some supermarkets, before agreeing to a price increase, would first ask a supplier for receipts from a rival store to prove that it had adjusted its prices.
Supermarkets had bargaining power as they also carried house brands, Mr Toh added: 'We rely on them to sell our products. If they stop carrying them, we lose a big chunk of our sales.'
Shopkeepers said that consumers also knew they were king when it came to non-essentials and asked for discounts.
'A lot of shops sell the same things, so customers will not buy from you if you increase your price by even 10 cents,' said Mr Michael Ang, 48, the owner of a hardware store in Ang Mo Kio.
Eight out of 10 shoppers interviewed by The Sunday Times said that inflation had made them more cautious about spending on non-essentials such as clothes, shoes, cameras and taxi trips.
'Normally, I would buy electronic games for my son, but now I won't buy as many,' said accountant Annie Neo, 32.
The Consumers Association of Singapore (Case) said that it had received few complaints of profiteering by traders of non-essential goods.
'There's no price control in Singapore for products and services,' said Case executive director Seah Seng Choon. 'Businesses can price their products differently provided they do not misrepresent. Consumers have to do their homework when they shop for certain products.'
But some businesses are actually slashing prices. L.D. Waxson, which produces skincare products Ginvera and Bio-essence, cut the prices on two of its items to coincide with the Great Singapore Sale. It said that it would extend the promotion beyond the sales period.
Its Bio-essence Freckles Fading Day Cream and Night Cream went from $38.72 to $29.90.
The fuel-price hike and higher taxes in Malaysia - where it has a production line - have jacked up L.D. Watson's production costs, but it has no plans to pass them on to consumers yet.
Said its marketing communications executive Zou Xinyi: 'Ultimately, in this very competitive market, if you increase prices too much, people may just switch brands.'
This article was first published in The Straits Times on June 17, 2008.
