1. SINGAPORE Country Profile MATTHEW STYCH
October 2013
MATTHEW STYCH
Research Director - Asia-Pacific

2. Contents Key Findings Macro Perspective Channel Development
Competitive Environment
Key Trends

3. 1. Key Findings

4. Government growth plans should lead to new retail opportunities.
1. Key Findings
Government growth plans should lead to new retail opportunities.
Increasing population and government-led development projects are expected to underpin GDP and consumer spending growth over the forecast period. As a regional hub, Singapore is also likely to benefit from the relaxation of trade regulation with the ASEAN integration project.
Recognising the threat of an ageing population, the Government of Singapore is expected to pursue immigration and family planning policies designed to boost the population of this already densely populated country from around 5.3 million in 2012 to 5.9 million in and 6.7 million in The authorities will relax regulation in order to encourage the influx of more young migrants.
Immigration is expected to lead to further ethnic diversity in the already strong multicultural environment in Singapore. The number of non-resident migrant workers from less wealthy Asian nations is likely to drive demand for local services catering to their needs, particularly those of non-domestic workers many of whom arrive from the Indian subcontinent.
Rapid development of luxury shopping facilities, the city’s major casinos and the Sentosa resort will continue to attract tourists to the country, with strong growth of Chinese mainland tourists.

5. 1. Key Findings
Retailers will look to drive growth and build value by focusing on premium and taking share from independents and traditional retailers.
Supermarkets will remain the dominant channel in Singapore, but with limited space and high rentals, retailers will rely on premium formats to drive growth and margins. The convenience channel is also set for dynamic growth as the main players seek to wrest the proximity shopping trade away from the independent sector.
Wet markets and street market stalls continue to play a significant role in food retailing. The major grocers will look to strengthen their fresh offerings to take share from the traditional sector.
NTUC FairPrice is set to maintain its leading position through expansion of its Finest supermarkets, the franchising of the Cheers banner, raising instore service levels and boosting online shopping. Although expected to gain some ground, Dairy Farm needs to address declining operating margins. The retailer could look to streamline banners and private labels to achieve this.
Grocery shopping online remains relatively small scale, but its popularity is gathering momentum. The expected entry of Sheng Siong could have an impact.
Private label sophistication levels remain low with price segmentation and niche interest ranges crying out for exploration.

6. 2. Macro Perspective

7. GDP and consumer spending are set for further rapid growth.
2. Macro Perspective: Economy
GDP and consumer spending are set for further rapid growth.
Closer ASEAN market integration scheduled for should increase intra-regional trade and Singapore, already a global shipping hub, should benefit.
© channelnewsasia
Finance and transportation accounted for nearly 20% of GDP in Transportation was among the fastest growing sectors.
© blog.kinternational.com
We expect the effects of GDP growth to continue to trickle down to improvements in household income and fuel consumer spending as a result. Increased spending should underpin retail sales growth.

8. 2. Macro Perspective: Population and demography
Fearing the threat of an ageing citizen population, Singapore will pursue initiatives to boost the younger population through immigration.
Relaxation of certain immigration criteria will increase the diversity of the overall population, with communities from South Asia expected to grow strongly.
New arrivals will be expected to integrate into Singaporean society, but they will be allowed to keep their ethnic traditions. Retailers have the opportunity to benefit by catering to the basic needs of new migrant workers from around Asia.
© Government of Singapore

9. 2. Macro Perspective: Infrastructure
Although Singapore is the world’s third most densely populated country, the Government plans for further development.
Residential development will focus on new suburbs on the outskirts of the territory, while reclaimed land will provide opportunity for downtown commercial development such as at Marina Bay.
Existing and Upcoming Rail Developments by 2021
New towns are being developed in Punggol, Bidadari, Tampines North and Tengah.
Additional housing is being considered in Bukit Batok, Bukit Merah, Choa Chu Kang, Clementi, Hougang, Queenstown, Sembawang, Tampines, Woodlands and Yishun.
By 2030 land reclamation projects will have increased the area of Singapore from 700 square metres to 800 square metres.
© Government of Singapore
Transport and lifestyle infrastructure is planned to support the new communities, which will increase the leasable area available for retail.

10. 2. Macro Perspective: Tourism
The opening of casinos in 2010 as well as the development of Sentosa resort have drawn increasing numbers of Asian visitors.
Shopping is a perennially popular pastime among Asian families on holiday, which is expected to fuel further development of retail, although the biggest impact will be felt in sectors such as luxury and fashion.
Mainland Chinese are among the fastest growing visitor groups, which should provide opportunities to boost seasonal and higher-end non-food sales, as prices for these goods are often cheaper than at home, and consumers also have a higher level of confidence that they are purchasing authentic merchandise.
© The Straits Times

11. 3. Channel Development

12. 3. Channel Development
Supermarkets will remain the dominant channel but continued mall development will also create new opportunities for the larger store channel.
The convenience channel is also set for dynamic growth as the main players seek to wrest the proximity shopping trade away from the independent sector.
4.6%
CAGR
3.0%
4.3%
Singapore lacks discounter and cash & carry sectors of note, which may be an opportunity (albeit a niche one) for potential new entrants or existing players. Both of the leading players, however, have tried and failed to establish discount operations in the early to mid-2000s.

13. 3. Channel Development
Competition in the convenience arena is set to heat up with Cheers entering a new phase of expansion.
7-Eleven will remain market leader with superior numbers, prime locations and its greater focus on c-store specific merchandising.
© NTUC FairPrice
NTUC FairPrice has embarked on a new franchise programme to ‘accelerate the growth of the Cheers brand’. NTUC has set a target of 60-70% of all Cheers stores to be franchised over the next three years. The scheme is open to Singapore citizens and permanent residents.
©NTUC Fairprice

14. 3. Channel Development
Despite the rise of modern retailing, wet markets and street market stalls continue to play a significant role in food retailing in Singapore.
With only three major grocers, taking share from the traditional sector is one of the few opportunities to grow.
© The 3211 Times
Supermarket operator Sheng Siong has taken an innovative approach to competition from street markets (left) by operating its own pitches at a wet market centre (right).
Street market stalls in the Bugis district.
© The 3211 Times

15. 4. Competitive Environment

16. 4. Competitive Environment
NTUC FairPrice is set to maintain its leading position through expansion of its Finest supermarkets and the franchising of the Cheers banner.
Dairy Farm is expected to gain some ground, although it will also need to focus on addressing the slide of its operating margins over the last few years, which could necessitate store rationalisation.
Sheng Siong has ambitious growth plans but lacks the resources of its much larger rivals.
Grocery Retailer Rankings: Banner Sales, f (USD mn)
Retailer
2013
2018
CAGR %
NTUC FairPrice
2,569
2,944
2.7
Dairy Farm
1,912
2,617
6.5
Sheng Siong
575
672
3.1
F – forecast Source: Planet Retail
Grocery Retailer Rankings: Number of Outlets, f
NTUC FairPrice
Retailer
2013
2018
CAGR %
Dairy Farm
708
787
2.1
NTUC FairPrice
310
479
9.1
Sheng Siong 34 37
1.7
Sheng Siong
Dairy Farm South Asia
F – forecast Source: Planet Retail

17. 4. Competitive Environment
NTUC FairPrice
NTUC FairPrice is the leading retailer in Singapore and will look to defend its position by expanding its network of stores, raising instore service levels and boosting online shopping.
Store expansion is likely to focus on the roll-out of the FairPrice Finest premium supermarket format.
FairPrice is also rolling out self-checkout counters and deploying contactless Visa payWave terminals to shorten waiting times.
Although not directly related to Singapore, the retailer is to expand in Vietnam through its joint venture with Saigon Union of Trade Co-operative. Buying power will increase in areas such as GNFR and regionally sourced products as a result.
NTUC FairPrice is working to consolidate its position as Singapore market leader with initiatives in multiple areas, such as format development, technology and online shopping. The retailer needs to take care to ensure that its Vietnam venture does not become a distraction from this purpose.

18. 4. Competitive Environment
Dairy Farm
Dairy Farm is focusing on integrating the newly rebranded Shop N Save stores to the Giant hypermarket banner.
Dairy Farm has rebranded all Shop N Save stores in Singapore to the Giant banner and the retailer reports encouraging early results.
Giant is focusing on strengthening its fresh produce offering and expanding its private label offering.
Dairy Farm has reported flagging sales at its 7-Eleven convenience operation in recent trading periods. The retailer has been rationalising its store base and now needs to find a solution to drive like for like sales growth.
Jasons The Gourmet Grocer store stocking premium private labels from Casino.
Giant display reinforcing the low price messaging.
Dairy Farm risks falling behind NTUC FairPrice in terms of investment in Singaporean operations, as the regional giant focuses on faster growth markets such as Vietnam.

19. 4. Competitive Environment
Sheng Siong
Sheng Siong has recently raised its growth targets and now plans to increase its store network from 33 to 50 stores.
Sheng Siong is also continuing to develop its private label range under a category specific single tier fantasy label strategy. The company boosted the number of SKUs by nearly a third to 400 last year.
Sheng Siong does not yet offer an e-commerce option, although the retailer says it is developing an in-house system for launch at some point in the future.
The retailer is also rolling out 24-hour opening to stores across the country.
Sheng Siong’s ‘no-frills’ store environments and merchandising underline to retailer’s low price proposition.
Sheng Siong has a strong reputation as a no-frills, low price supermarket chain, but its ability to deliver low prices may come under pressure from rising rents and as the company shifts towards 24 hour opening.

20. 5. Key Trends

21. Store development focus turns to premiumisation.
5. Key Trends
Store development focus turns to premiumisation.
Premium stores will play an increasing role in the strategy of the major grocers hoping to tap into the high income and expat households.
NTUC FairPrice looks set to edge out Dairy Farm in this segment with ambitious development.
Dairy Farm operates Jasons The Gourmet Grocer and Jasons Market Place.
©NTUC Fairprice
NTUC’s FairPrice Finest.
International ranges, organic, natural, Fairtrade products feature prominently in these stores, as do meat, wine, cheese, charcuterie at self service or counters. Typically, these stores carry selected private label ranges from European supermarket operators.

22. Grocery e-commerce gaining traction.
5. Key Trends
Grocery e-commerce gaining traction.
Online grocery shopping remains relatively small scale, but its popularity is gathering momentum.
Relative newcomer and pure play operator RedMart has tried to shake up the sector by offering promotional free delivery on orders over SGD49 (USD39) and a focus on customer service.
Sheng Siong will enter the fray at some point in the near future, although it has not yet specified a date.
RedMart reported monthly sales had risen 15-fold to SGD250,000 (USD198,413) in January 2013 year-on-year.
Dairy Farm’s Cold Storage Online may come under pressure from the rise of RedMart and the entry of Sheng Siong. The operation needs to expand its range of unique products, such as its own private labels and international supermarket brands to avoid losing out to lower priced rivals.
Dairy Farm operates two online supermarkets, with differing ranges and prices - above left Cold Storage Online, right Giant Online.

23. Private label in need of a boost.
5. Key Trends
Private label in need of a boost.
Private label penetration and sophistication levels remain low with price segmentation and niche interest ranges relatively unexplored.
NTUC FairPrice is backing its private labels with instore promotional material.
Sheng Siong operates several fantasy category-related brands in the standard price segment.
Dairy Farm operates a Singaporean banner branded private labelling approach, overlaid with group ranges such as First Choice. Some residual Shop N Save products were also stocked in Giant several months after the conversion.
Although NTUC FairPrice seems to be edging ahead in development of its private label offering, Dairy Farm has the opportunity to fight back with a potentially stronger regional buying should it choose to consolidate its banner strategies.

24. Author MATTHEW STYCH Research Director - Asia-Pacific
@matthew_stych
Matthew Stych is the Research Director for the Asia-Pacific region based in Hong Kong. Matthew is responsible for Planet Retail’s coverage of retailers in the region across all sectors. He has spoken at a number of supplier, retailer and trade events and features regularly in both print and broadcast media. Matthew has spent 11 years researching and analysing retail trends in both developed and emerging markets. Prior to joining Planet Retail, he worked at Euromonitor International for six years.
All images ©Planet Retail Ltd unless otherwise stated.

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