UTM Comments is a partnership between Macau News Agency and Macao University of Tourism
By Kitty Fong and Loretta Tou
In Macau, small and medium-sized enterprises (SMEs) can be determined by having no more than 100 staff members and being registered with the Macau Financial Services Bureau for tax purposes. In the recent decades, it is unquestionable that gaming is the most critical industry in Macau. However, due to the serious slump in the hospitality industry caused by the crisis of COVID-19 in the past three years, Macau government has been making its utmost efforts to promote economic diversification like never before. Some policies have been set to create more opportunities and assist the non-hospitality industries in an effort to balance the whole business environment. Subsidies from the government has encouraged a lot of entrepreneurs to start their businesses and fashion retail industry is among the thriving start-ups.
Kitty, Fong Kit Sam, Lecturer at UTM 
Loretta, Tou Un Ieng, Lecturer at UTM
In the entire retail industry, there were 1,636 shops registered in 2021 and 909 shops were fashion retail industry. During COVID-19, closing of the Macau borders greatly changed the purchasing pattern for most of the people in Macau. People could not shop around as much as they liked and a number of online platforms such as Facebook, Instagram and WeChat served a very important role in the fashion retail industry. As a growing number of customers now prefer to shop online, it has affected the operation of the small fashion retail shops in Macau immensely. In the past, most of the retail shops built their customer relationship through face-to-face sales. However, in order to cope with the rapid changes of the industry, the owners might have to invest more money and time on the different online platforms, which also became their challenges in continuing the business. Therefore, it is not only the keen competition in the fashion retail market that they have to struggle with; they also need to deal with the lack of financial resources, human resources and low bargaining power in the choices of inventory.
The inventory system in the fashion retail industry is always the main issue of the retail owners. Overestimation or underestimation in the inventory management would have great impact on the business performance. Retail shop owners have to be very sensitive to the market trend and their own market segmentation in ordering the goods. If they make wrong decisions or forecast on the stock, they have to bear the consequences of tight cashflow and lack of storage space. When the stock cannot be sold out, the ultimate result would be a lost in the bottom line. The retail shop owners had a usual practice in the past of starting to place orders before the start of the season. Typically, the minimum order quantity (MOQ) required for the orders would be larger. Some of the traditional shops are still applying this method but the MOQ required nowadays has become less. Moreover, some young retail shop owners who are more familiar with technology has changed the way they place orders with the suppliers. They would create some posts about the upcoming fashion on the online platforms and collect the order from their customers. In this way, they can guarantee their sales revenue. Some others may even fly to the destination such as Korea or Japan and make a live video for the customers to place instant orders. With the change of sales strategies, the traditional inventory system would be replaced sooner or later in the fashion retail industry.
