Study shows heartland shops continue to play a key role in the daily lives of residents

The Housing & Development Board (HDB) and Enterprise Singapore (EnterpriseSG) have unveiled the key findings of the Heartland Shops Study (HSS) today. More than 2,800 stakeholders gave their views through the course of the study. The findings reflect Singaporeans’ shared vision of heartland shops that are vibrant, inclusive and imbued with local character. HDB and EnterpriseSG have in place a slew of existing and enhanced initiatives that will bring this vision to life, and ensure that heartland shops remain relevant and competitive businesses which are also social nodes that endear to the community.

2 The study’s findings were announced by Minister for National Development Desmond Lee at the launch of Heartlands Festival 2022 earlier today, where he also highlighted enhancements to existing initiatives for HDB shops. The changes are in response to feedback from the Heartland Shops Study, where participants requested for a better curation of shops in the heartlands to meet residents’ needs. Minister Lee also underscored the Government’s commitment to help heartland shops remain competitive through greater digital adoption, and to improve the vibrancy of the heartlands through the upgrading of the hardware and enriching the “software” through better placemaking.

Charting the way Forward for Heartland Shops

3 There are currently about 15,200 shops serving the heartlands, spread across town centres, neighbourhood centres and precinct clusters. Beyond providing convenient and affordable goods and services to residents, heartland shops serve as social nodes for residents to mingle, just a stone’s throw from their homes. In recent years, HDB shops have faced various challenges. The business environment has been evolving due to changing consumer habits and preferences, and most recently, the COVID-19 pandemic has exacerbated challenges for these heartland shops. With the ever-evolving retail landscape in mind, it was timely to review and take stock of the important roles our heartland businesses currently play and imagine what they would look like in the future.

4 With this in mind, HDB and EnterpriseSG embarked on the Heartland Shops Study in September 2021, to better understand how we can help heartland shops to innovate and transform, while retaining their unique culture and character. This would enable them to better serve the evolving needs of the community. Over 11 months, the study engaged over 2,800 stakeholders, including residents, business owners, workers and merchants’ associations, through surveys, interviews and focus group discussions.

Key findings of the Heartland Shops Study

5 The key findings of the study fall broadly into three pillars that encapsulate Singaporeans’ shared vision of heartland shops:

i. Heartland shops are key activity nodes that inject vibrancy to the neighbourhood.

7 out of 10 residents surveyed visit heartland shops at least once a week. About one-third of their total monthly expenditure is spent at heartland shops.
6 out of 10 residents surveyed would like to see more adoption of e-payment.
any residents surveyed would like to see more local small businesses and festival promotions in their neighbourhood.

ii. Heartland shops serve the community and build inclusiveness.These shops provide a variety of goods and services at affordable prices, as well as employment opportunities for Singaporeans. They also serve as social spaces to facilitate interaction among the residents.

About 3 out of 4 residents surveyed feel that heartland shops facilitate the interaction of Singaporeans across different demographics and backgrounds.
Close to 7 out of 10 residents surveyed agree that heartland shops provide more affordable goods and services to help reduce the cost of living.
Both residents and business owners surveyed support the active curation of trade mix in heartland shop clusters to increase the variety of goods and services.
Some also provided feedback that the heartland shops provided jobs for seniors and others who may need or prefer to work near their homes.

iii. Heartland shops play a significant role in our collective memory of HDB living, through reflecting heritage and amplifying local character

8 out of 10 residents surveyed agree that heartland shops are part of the culture and heritage of Singapore.
Many residents surveyed spoke fondly of heartland shops that embody and enhance the local character of their neighbourhoods.

6 Many participants thus called on the Government to do more to make heartland shops more vibrant, respond better to the needs of the local community and sharpen the local character through retaining certain shops or trades with heritage value.

Supporting the Heartland Shops

7 Following the conclusion of the Heartland Shops Study, HDB and EnterpriseSG have reviewed the findings and will enhance our programmes and initiatives to better support the heartland shops through challenging periods, and also help them transform and be future-ready.

a) Enhancing the Price-Quality Method (PQM) Tenders for HDB shops

8 HDB introduced Price-Quality Method tenders in 2018 for shops owned by HDB. Instead of assessing tenders purely on rent, Price-Quality Method tenders are reviewed holistically based on considerations that are important to residents and business operators. Currently, the Quality of Proposal accounts for 50% of the scoring criteria, which considers aspects such as affordability of goods and services, good track record and community initiatives. The tender price (i.e. rental bid) accounts for the remaining 50%.

9 To better meet residents’ needs, HDB will adjust the scoring criteria for Price-Quality Method tenders to focus more on areas such as affordability, especially for basic goods like food and beverages, and the types of shops and services that residents want. This will be done by reducing the weightage given to tender price to 40% and according a higher weightage of 60% to the Quality of Proposal. Within the Quality of Proposal, the PQM scoring criteria will also differ by trade types. For example, tenders for shops with heritage value or shops which are returned to HDB at the end of their leases will also be scored on their local track record and local character, which make up 20% of the total score. In line with the study’s observations that heartland shops embody the heritage and culture of their neighbourhoods, this enhanced PQM scoring criteria will help preserve the local character of each commercial cluster.

10 Findings from the study also show that affordability of goods and services, and the types of trades offered by heartland shops are key considerations for residents. Hence, we will also enhance the weightage for the business concept and affordability criteria, from the current 25-30% to 35-45%, where the highest weightage of 45% will apply to supermarkets, minimarts and coffeeshops at precinct shop clusters. The changes to the Price-Quality Method tenders will apply to new tenders starting in 1H2023. (Refer to Annex for more details)

b) Extending the Price-Quality Method Tenders to more HDB shops

11 In addition to enhancing the Price-Quality Method tenders, HDB will also extend the tenders to more HDB shops. These include shops with high heritage value, such as shops located in conservation areas like Tiong Bahru; and precinct minimarts at selected locations, such as areas where supermarkets or minimarts are limited, or in precincts with a higher concentration of elderly residents. The Price-Quality Method tenders will also apply to shops on 30-year leases which will expire progressively over the next 20 years or so, starting from 2024. Since 1998, HDB has stopped selling shops to enable better curation of trade mix to meet resident needs. Today, around 40% are rented out by HDB and 51% have been sold on 99-year leases. Around 5% are sold on 30 year leases which will progressively end from 2024 to 2045. In line with HDB’s approach today on renting out shops, these shops will also revert to rental tenancy with HDB upon expiry of their leases. Subject to redevelopment plans for the area at the time of lease expiry, all shop owners will be provided with an interim tenancy term of at least one year and up to 3 years, within which there should be no change to the shop operator to minimise disruption to residents and shop tenants. Before the end of the interim tenancy period, HDB will tender out the shops via Price-Quality Method tenders to better curate the trade mix and rejuvenate the shop cluster. Former shop owners and existing shop tenants are also free to participate in the PQM tenders.

12 By taking this approach, HDB aims to facilitate a smooth transition for shop owners and tenants, while moving towards a better curation of trade mix to meet the needs of residents. HDB will be engaging stakeholders, especially shop owners and sub-tenants, throughout the transition process. We will share the rental options available to them at least one year ahead of the expiry of their 30-year shop leases, which means that owners and tenants will have at least two years to plan for their transition. HDB will be reaching out individually to shop owners starting from next week, and our officers will guide them through the transition.

c) Improving the Revitalisation of Shops (ROS) Scheme

13 To enliven our heartlands, HDB will continue to promote infrastructure upgrading by enhancing the Revitalisation of Shops (ROS) Scheme. The ROS is an upgrading programme for town centres and neighbourhood centres (TCs/NCs) where HDB provides co-funding to help retailers carry out improvement works for the common areas as well as shop fronts, so as to improve the shopping environment for residents. 25 town centres and neighbourhood centres have been upgraded under the scheme since it was introduced in 2007. HDB is currently reviewing how it can further improve this scheme, to make it more attractive and increase the take up rates from merchants. More details will be shared in due course.

d) Deepening Digitalisation Capabilities

14 Under the Our Heartlands 2025 programme launched by EnterpriseSG in February 2022, the Heartlands Go Digital initiative will continue to help heartland shops deepen digitalisation capabilities and increase e-payment adoption rates. HDB will also support digitalisation through the ShopperLink app. Launched in 2021, the ShopperLink app provides retailers with an online shopfront platform where shoppers can view products and services offered by the retailers.

e) Supporting Placemaking Initiatives

15 Beyond these, both agencies will also work closely with local merchants’ associations to upgrade their capabilities and support placemaking initiatives to enhance the vibrancy of the heartland shops. These can include festivities and events such as pasar malams and farmers’ markets. An example is the Heartlands Festival 2022, which returns after a successful inaugural run last year. This nation-wide celebration of the heartlands brought together over 40,000 merchants, hawkers and wet-market stall operators from November 2021 to February 2022. It drove a 20% increase in footfall to the heartlands during that period, demonstrating the draw of such activities.

16 Heartland shops are an integral part of the daily lives of many Singaporeans. As the needs of residents evolve, heartland shops will have to keep up with the changing landscape. The Government will continue to work with the stakeholders to ensure that heartland shops continue to be vibrant and meet the needs of residents while preserving their social value and local character.

Joint HDB-EnterpriseSG Press Release - Supporting Heartland Shops to Enhance Their Vibrancy and Competitiveness