Singapore losing reputation as shopping haven

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Singapore's reputation as a shopping haven could be at stake as rising prices and growing regional competition threaten to erode the city-state's allure as one of Asia's best retail destinations.

Latest figures from the Singapore Tourism Board showed tourists' expenditure on shopping falling 6 percent during the first three months of 2014 to S$1.1 billion ($900 million).

This pales in comparison to the entertainment and gaming sector, which surged 19 percent and raked in S$1.6 billion.

As Singapore's retail industry relies heavily on its tourism sector, a 14 percent annual decline in the number of Chinese visitors over the first quarter of 2014 may have contributed to the slump in spending. Shoppers from China are the biggest spenders among tourists in the Southeast Asian city.

"Singapore is part of a group holiday itinerary for the Chinese, together with Malaysia and Thailand. The MH370 tragedy, along with the March protests in Bangkok, took the winds out of the sales for many retailers," said Alan Cheong, senior director of Research & Consultancy at Savills Singapore.

One of the industry's weakest links is its pricing power, which, according to analysts, lacks competitiveness in the region.

"Rising rental, labor and transportation costs add up to the higher cost for products and that makes shopping in Singapore less attractive for tourists," Savills' Cheong told CNBC.

A stronger currency, which hit a nine-month high of 1.2359 against the U.S. dollar last month, is also to blame.

30-year-old Lu Xi from Guangzhou has lamented about how unfavorable exchange rates has forced up the cost of her trip.

"As this is not my first trip, I had a budget in mind but when we arrived, we realized things have become more costly," Lu said.

Apart from rising prices, the increasing popularity of e-commerce, as well as the preference by some brands to set up shop elsewhere in Asia, has significantly reduced the need for people to travel to Singapore to shop.

"Due to [Singapore's] small market size, many popular brands are not keen to bring their brands here. They'd rather bring it to bigger markets like China," said Dr Michael Chiam, senior lecturer at Ngee Ann Polytechnic's Tourism and Resort Management.