SINGAPORE (Jan 22): A new 11,800 sq ft, 24-hour store opened by Sheng Siong Group in Woodlands last month could begin drawing away some of the more price-sensitive customers of two NTUC FairPrice stores, each located about a seven-minute walk away. Five China Fuji apples, for instance, cost $3.45 at FairPrice and $3.29 at Sheng Siong on Dec 17.

With a total of 43 stores across Singapore as at Sept 30, Sheng Siong is actually a relatively small player in the grocery business. Its arch rival NTUC FairPrice has more than 140 supermarket outlets and 160 convenience stores. Meanwhile, Dairy Farm International Holdings has more than 50 Cold Storage supermarkets and more than 60 Giant supermarkets in Singapore. Yet, Sheng Siong has steadily opened new stores over the years, winning over customers with very competitive prices. At the same time, it has managed to generate relatively high rates of profitability with a focus on efficient sourcing and logistics and an emphasis on fresh produce, which generate higher margins.

Now, as the supermarket business in Singapore gets more saturated, the company could be reaching a tipping point of sorts. “Given the economic growth rate and the population growth, the market can only grow so much. At some point, the more mature housing areas that have three to five stores serving them, may only need two — we may see consolidation of brick-and-mortar stores,” says Ali Potia, partner at McKinsey Singapore, who heads the Asia Consumer Insights Centre.

To continue reading,

Sign in to access this Premium article.

Subscription entitlements:

Less than $9 per month
3 Simultaneous logins across all devices
Unlimited access to latest and premium articles
Bonus unlimited access to online articles and virtual newspaper on The Edge Malaysia (single login)
Related Stories

Stay updated with Singapore corporate news stories for FREE

Follow our Telegram | Facebook