With experiential retailing becoming more sought after in Singapore, hypermarkets need to adapt to changing consumer demands by revamping their store layouts and introducing more exciting ways to shop in order to go beyond transactional functions. Singapore’s largest supermarket chain, NTUC FairPrice, delivers just that through its recently revamped hypermarket FairPrice Xtra.
Starting from 2018, hypermarkets in Singapore are expected to see declining value growth, although the rate will remain positive. With the high penetration of supermarkets in Singapore and their one-stop nature, this not only eliminates the need for consumers to go to convenience stores and pay high premiums for a limited range of products, but also dilutes the necessity of going to hypermarkets as supermarkets now provide everything.
Moreover, the only situations where hypermarket sales would see increasing growth is if there is either additional consumption by the same consumers in Singapore, or a massive influx of residents, neither of which is likely to due to weak consumer sentiment arising from the recent soft economy and low birth rate in Singapore respectively. In order to prevent declining growth, retailers in Singapore would need to amplify in-store experience to keep consumers coming back.
After having struggled for a while now, consumer electronics retailer TT International announced the closure of its subsidiary Big Box in Singapore in 2018. Although this may have made a very slight contribution to the overall decline in the growth rate of hypermarket sales in Singapore, the impact is expected to be limited since Big Box has struggled to attract consumers.
Although Dairy Farm International remains a leading hypermarket player in Singapore, both in terms of value sales and number of outlets, 2018 was a difficult year. The company saw a drop in sales share due to the spill over effect continuing from 2017 related to weak same-store sales arising from stiffer competition from online retailers, as well as other offline rivals like hypermarket FairPrice Xtra.
Some initiatives in the pipeline that could boost Dairy Farm’s Giant hypermarket sales include an improvement in product range, revision of pricing strategy, addressing of operational efficiencies and better store rationalisation. The launch of more private label products and opening of new distribution centres will also aid Giant’s good sales performance.
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This industry report originates from Passport, our Retailing market research database.