Despite sluggish performance in 2018 due to weak consumer sentiment and the initial hype around online grocery retailing, supermarkets are poised to be the fastest growing format in the years to come as they maintain a strong foothold in grocery retailing, in spite of threats from multiple sources. Having increasingly become a multi-purpose, “one-stop shop” in Singapore, supermarkets have scored with local consumers by operating 24 hours, expanding their product ranges, offering cheaper prices, and embracing omnichannel retailing, without cannibalising physical store sales.
The growth of supermarket outlets and their value sales need not necessarily mean a decline in convenience store figures, although this is currently the case in Singapore. A recent trend seen in Singapore, in addition to the regular expansion of supermarkets, is the opening of smaller supermarkets in residential areas.
Although there is much hype around omnichannel retailing, some omnichannel concepts failed to take-off in 2018. For example, while the concept of showrooming, where physical stores are used to display product ranges for consumers who later purchase the items online, may be a success for bulk purchases, in the bigger scheme of retailing it is not expected to be a hit in supermarkets because of the huge range of grocery items they carry.
NTUC FairPrice remains the leading supermarket chain in Singapore due to the remarkable performance of its FairPrice and FairPrice Finest brands. The increase in value sales for FairPrice is not surprising given recent pro-activeness in expanding the offering of Tesco products, with more of a focus on fresh produce, and efforts to win over price-conscious consumers from shopping in other supermarkets.
Only two of four Dairy Farm International supermarkets (Giant supermarket and Cold Storage) saw a major drop in value sales in 2018, continuing the trend of recent years. Online competition has impacted both supermarkets, with Cold Storage not being able to cope with the premium options offered by other online retailers and Giant supermarkets seeing a lack of sales due to the growing popularity of buying non-grocery and bulky items online.
On an individual basis, Cold Storage is bearing the brunt of not only consumers’ increasing price consciousness, but also a lack of awareness of the premium quality of Cold Storage products. Dairy Farm believes that this lack of awareness can be attributed to the company’s inadequate communication and marketing of product quality.
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This industry report originates from Passport, our Retailing market research database.