BDO Retail CFO Outlook: Key Financial Trends for 2025

Singapore’s retail sector enters 2025 amid a mixed economic landscape and a need for financial agility. BDO Consultants examines the key financial trends shaping the outlook for retail CFOs in Singapore and Southeast Asia, through a VUCA lens – a world of volatility, uncertainty, complexity, and ambiguity. This article analyses the macroeconomic conditions, evolving CFO priorities, and retail sentiment in the region, providing an analytical yet accessible view for industry stakeholders.

Economic Landscape 2025: Stability with Underlying Volatility

After a turbulent post-pandemic recovery, macroeconomic indicators point to a moderating but stable outlook. In Singapore, GDP is forecast to grow around 2.6% in 2025, near the midpoint of the official 1–3% range. Inflation is expected to ease considerably – headline inflation is projected at roughly 1.7%, down from recent highs. This cooling inflation, alongside a slight loosening of monetary policy, suggests that interest rates may stabilise or even fall modestly going into 2025. Indeed, the Monetary Authority of Singapore eased policy in January on the back of slower inflation and growth expectations, providing some relief in financing costs for businesses and consumers (Reuters, 2025).

Regionally, Southeast Asia’s economies remain on a growth trajectory, though external headwinds persist. The Asian Development Bank expects Southeast Asian GDP growth to hold around 4.7% in 2025, supported by resilient domestic demand and lower inflation (VietnamPlus, 2025). Major ASEAN markets like Malaysia, Thailand, Vietnam, and Indonesia are driving this expansion, benefiting from recovering consumption and sustained public investments. For example, Vietnam’s retail sector is booming – retail sales rose 9.3% year-on-year in December 2024 (TradingView, 2025). Such momentum in emerging markets bodes well for regional retailers, although it comes with complexity: diverse markets face challenges from geopolitical tensions (e.g. trade policy shifts) and domestic issues (like high household debt in some countries).

Retail sales in Singapore have also started 2025 on a stronger note, indicating cautious optimism among consumers. January 2025 saw retail sales jump 4.5% year-on-year (or +4.8% excluding motor vehicles), reversing a 2.9% decline in December 2024. This surge – partly due to the timing of the Lunar New Year – underscores how volatile monthly consumer spending can be. On a seasonally adjusted basis, January sales were 2.4% higher than the previous month, suggesting an uptick in consumer confidence. However, challenges remain. Certain segments (e.g. petrol stations, some electronics) saw declines (Singstat, 2025), and overall consumer sentiment, while improved, is still fragile. Across the region, weak external demand and cautious consumers mean retailers cannot be complacent despite the headline growth in sales (RetailAsia, 2024).

In summary, the economic backdrop for 2025 is less inflationary and more growth-supportive than the previous year, but it is by no means free of risk. Volatility persists in the form of possible interest rate changes and currency fluctuations; uncertainty lingers around global trade (with potential new tariffs or supply chain snags); complexity arises from differing recovery speeds across markets; and ambiguity clouds forecasts as consumer behaviours continue to evolve post-pandemic. This context is pushing retail CFOs to stay vigilant and adaptable (VietnamPlus, 2025).

Shifting CFO Priorities: Growth vs. Margin Protection

Facing this nuanced environment, CFOs in the retail sector are recalibrating their priorities for 2025. After a year where many retailers enjoyed strong revenue growth but shrinking profit margins, CFOs are keenly focused on closing the gap between the top line and bottom line (BDO, 2025). According to BDO’s 2025 Retail CFO Outlook Survey, margin erosion is top-of-mind: retail CFOs cite shrinking profit margins as a primary concern for 2025, prompting them to seek both revenue-driving and cost-optimising measures. In essence, CFOs recognise that pursuing growth must be balanced with protecting profit margins – a delicate dual mandate in a VUCA world.

Technology adoption has moved to the forefront as a means to achieve this balance. To fuel long-term growth while safeguarding margins, retail CFOs are harnessing advanced technologies like artificial intelligence (AI) and analytics. In fact, 60% of CFOs globally plan to increase investment in AI in the year ahead, seeing it as a lever to boost efficiency and unlock new revenue streams. For retailers, this often means deploying AI in areas such as demand forecasting, dynamic pricing, and supply chain optimisation. Over a third of retail CFOs (36%) are targeting AI-driven supply chain improvements, while 34% are reassessing their store footprints (e.g. optimising number and location of stores) to future-proof their business models. These moves illustrate a strategy to leverage innovation for both offense and defense – using AI to enhance customer-centric growth (better product availability, personalisation) and to drive cost efficiencies (reducing stockouts, labour savings).

Regional Sentiment and Benchmarks: Cautious Optimism

Despite the challenges, business sentiment in Singapore’s retail sector has improved modestly heading into 2025. A national business survey late last year showed that 40% of businesses were satisfied with the current climate, a notable increase of 10 percentage points from mid-2024. More companies expected the economy to improve than to worsen in the next 12 months. This cautious optimism extends to retail, but with a clear eye on the risks that remain (SBF, 2025).

One major concern is consumer demand uncertainty. Retailers have encountered rapidly shifting customer behaviours – from the e-commerce boom to fluctuating tourist flows – making demand hard to predict. In Singapore, uncertainty in customer demand was reported by 75% of retail businesses in 2024, a sharp rise from the prior year. This was identified as one of the top challenges, second only to manpower costs for many firms. Such uncertainty necessitates the earlier mentioned scenario planning and also impacts how CFOs manage inventory and working capital (too much stock risks markdowns, too little risks lost sales). It also affects sentiment around investment – retailers are willing to invest in growth, but they favour areas that offer flexibility and quick payback given the ambiguity around consumer trends (SBF, 2025).

Financially, many retailers in Singapore managed to stay resilient through 2024’s headwinds of rising costs. About 57% of businesses managed to maintain or increase profitability in the past year, despite higher operating costs. This resilience came from measures like cost-saving initiatives (undertaken by 51% of firms), price adjustments (41%), and better inventory management (30%). These benchmarks indicate that while profits were squeezed, a majority have adapted through internal efficiencies and passing some costs to consumers. However, the remaining 43% of firms saw profitability decline significantly (average decline of 27.5%), underscoring that not all have thrived. The retail sector’s sentiment thus mixes hope with pragmatism – optimism that growth will continue, tempered by an understanding that cost pressures and demand variability will require careful navigation (SBF, 2025).

Across Southeast Asia, retail sector sentiment varies by market but is generally buoyed by the region’s economic growth. Countries like Vietnam and the Philippines enter 2025 with strong consumer demand, as evidenced by their retail expansion plans and sales figures (Vietnam’s ~9% retail growth in 2024, as noted). In contrast, more mature markets like Thailand or Malaysia are focused on sustaining momentum after a rebound year and are watchful of external risks like export slowdowns (VietnamPlus, 2025). 

Retail CFOs region-wide are sharing similar priorities – they are bullish on revenue opportunities but mindful of cost control. Many are also benchmarking against regional peers: for example, monitoring gross margin levels, expense ratios, and inventory turnover across markets to gauge competitiveness. There is an increased interest in regional financial benchmarks such as profit margins in the retail sector or the retail productivity (sales per square foot, sales per employee) in neighbouring countries. These benchmarks help CFOs identify gaps – e.g., a Singapore retailer might compare its operating margin to the Southeast Asia average and find room to trim overhead, or a regional chain might emulate the inventory turns achieved by leaders in the market.

Outlook: Steering Through VUCA with Agility

In the face of volatility and ambiguity, the retail CFO’s outlook for 2025 can be summarised as “cautiously optimistic, yet vigilant.” The macro environment provides reasons for optimism: steadier costs (thanks to lower inflation) and steady consumer spending. However, uncertainties from geopolitics to public health remain in the background. CFOs are therefore blending offensive and defensive strategies – pushing for growth through innovation and expansion, while instituting strong financial controls and agile plans to protect profitability.

Crucially, the VUCA lens is guiding leadership discussions. “Volatility” is being met with flexibility in budgeting and forecasting; “uncertainty” with robust scenario planning and data analytics for real-time insights; “complexity” with technology investments that simplify operations (like integrated omni-channel systems); and “ambiguity” with frequent strategy reviews and open communication across the C-suite. CFOs, as financial stewards and strategists, play a central role in this process, translating economic signals and data into actionable plans.

As we progress through 2025, key indicators to watch will include quarterly retail sales growth, consumer confidence indices, and margin trends in financial reporting. An uptick in retail sales or consumer sentiment could encourage bolder expansion moves, whereas any sign of margin erosion might spur a renewed cost crackdown. Additionally, CFOs will keep an eye on policy changes – for instance, any significant shifts in interest rates, tax policy (e.g., VAT/GST changes affecting retail pricing), or labour regulations that impact manpower costs.

In conclusion, 2025 for retail CFOs in Singapore and Southeast Asia is about striking the right balance. With economic tailwinds providing opportunities for revenue growth, and receding headwinds easing some pressures, the stage is set for retailers to thrive. Yet, the playbook is one of disciplined growth: pursue new opportunities but fortify the core business. By embracing technology, honing cost structures, and staying prepared for multiple scenarios, retail CFOs can guide their organisations through the volatility and uncertainty – turning financial insights into effective strategies for success in the year ahead.


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