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FairPrice will hold prices of 100 private label products stable until June 2020 to reduce the burden of essential groceries on shoppers.

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Lazada, the leading ecommerce platform in Southeast Asia, owned by Alibaba Group, plans to expand its cross-border trade for international brands.

Global Collection 2.0

One of the key initiatives announced was a revamped “Global Collection”, which is a dedicated channel to showcase  Lazada’s cross-border merchants from around the world. The platform aims to help the brands grow their businesses and achieve higher visibility among the Southeast Asian shoppers.

Global Collection 2.0 uses an algorithm-based search function to filter the product offerings and highlight the vendors for shoppers to find them easily. Shoppers would also receive their deliveries much faster and within seven working days from the time their placed their order if they choosese the standard shipping option.

From April, cross-border sellers interested in joining Lazada can submit applications in the self-service system, instead of getting an invitation from Lazada. Once the review is completed, they will become Lazada merchants.

Lazada's cross-border ecommerce business

First launched in 2013, Lazada’s cross-border business has grown to become one of the most diverse marketplaces. The sales have quadrupled over the past three years and, with the aim of boosting sales further in 2019, the company plans to identify and nurture the top 300 brands in each of the six countries that it operates in – Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. 

The top five markets which cross-border sellers come from are Mainland China, Hong Kong, Korea, the US and Europe, with women’s fashion, home and living and kids’ fashion ranking among the most popular cross-border items.

 

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HAO Mart opened its first supermarket on 1st January 2016. With 47 stores opened to date, it is one of the fastest growing grocery chains in Singapore.

Neighbourhood stores

The retailer has focused its growth in residential areas in the last four years. The stores range from 1,500 sq ft to 7,000 sq ft and many of these are open for 24 hours. The store formats are flexed according to the location and size. Fresh produce, meat, frozen food, convenience food, personal care products and household items are found in most of the stores.

Second banner launched in September 2018

The retailer launched a new banner under HAO Halal Hub to cater to the Muslim community, providing a unique alternative in a highly competitive scene. There are 17 stores dedicated to halal products, with plans for further expansion. We visited one of the Halal Hub stores at 537 Bedok North and were impressed with the halal range available.

Hao Mart Singapore
Source: IGD Research

Halal versions of Asian food products

Many Korean, Japanese and Chinese products are usually not halal due to the ingredients and process of manufacturing the food. For example, many Japanese food contains mirin, a sweet rice wine that is key to making Teriyaki sauce. HAO Halal Hub carries a version made in Singapore, which is halal-certified and does not contain alcohol. Muslim shoppers will also find halal versions of kimchee (fermented cabbage), bean paste and dim sum in the store.

Hao Mart halal mirin alternative
Source: IGD Research


Source: IGD Research


Source: IGD Research

Expansion outside of residential areas

There will be new HAO Halal Hub stores opening in malls later this year. These stores will carry more premium products to meet shoppers’ demands. The retailer is preparing for the next stage of growth with a new 150,000 sq ft warehouse in Changi. This will allow suppliers to send products to a central location and reduce procurement cost. The retailer expects to increase the range of products in the stores, including products from local distributors. HAO Mart aims to increase its network to 200 stores over the next few years. Plans are also under way for an ecommerce platform.

Soo Eng is a senior research manager in our Singapore office. She has a strong consumer research background, having worked for Unilever, Millward Brown and Suntory in roles across Asia. She focuses on Vietnam, Thailand, Singapore, Myanmar and Cambodia, as well as the role of hypermarkets and supermarkets in the Asian grocery market.

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Dairy Farm has reported its 2018 annual results. Performance of its Health and Beauty segment was strong, but its Food business saw further decline.

Annual sales up 4.1%

Dairy Farm posted sales growth of 4.1% to US$11.7bn for the fiscal ending. Consolidated sales including joint ventures and associates increased 0.6% to US$21.9bn. During 2018, the retailer sold its Giant hypermarket store in Vietnam to Auchan. It also acquired the remaining 51% share in Rose Pharmacy and sold Rustan's in exchange for a 18.25% stake in Robinsons in the Philippines.

Food: large formats struggling, convenience remains robust

Sales from supermarkets and hypermarkets (excluding Yonghui) declined -2.1% to US$5.9bn from previous year in constant currency. Performance of its large formats remain a concern, especially in Southeast Asia. Sales and profits from Giant supermarkets and hypermarkets in Singapore, Malaysia and Indonesia declined. While supermarket sales in Hong Kong increased, rising rental and labour costs impacted profitability. Sales and profit were also lower in Taiwan. 

Its 7-Eleven convenience business (Hong Kong, Macau, Singapore and operations in southern China) reported sales of US$2.1bn, up 4% from previous year in constant currency terms. Operating profit increased by 8% to US$92m. Ready-to-eat continued to drive sales in Hong Kong and Macau, while in mainland China, it surpassed 1,000 stores. 7-Eleven Singapore posted a slight fall in total sales after closing a few stores.

In China, the retailer's key associate business, Yonghui, maintained strong sales momentum and continues be one of the fastest growing retailers in the market. For 2018, it posted sales growth of 23% to US$7.4bn, mainly driven by new store openings.

Health and beauty: sales and profit up

Like the last few years, the Health and Beauty (effectively led by Guardian and Mannings) division performed strongly, with sales increasing 16.9% to US$3bn and operating profit rising 59% to US$334m. It continued to perform strongly in Hong Kong, recorded significant sales increase in Southeast Asia and increased penetration of Beauty and Own Brand.

Home furnishing and restaurants: solid sales growth

Home Furnishings (Ikea in Hong Kong, Taiwan and Indonesia) continued to achieve solid sales growth, posting 10.4% growth to US$721m. This was supported by strong ecommerce growth and the opening of a new store in Hong Kong. Further expansion has been outlined, with new stores expected in Indonesia and Taiwan.

Dairy Farm's restaurants business and key associate, Maxim's reported a 15.5% sales increase to US$2.5bn. This was supported by new franchises and mooncake sales surpassing last year's record.

Growing store network

Dairy Farm (including associates and joint ventures) added 2,567 stores to its network, ending 2018 with 9,747 stores. The key growth channels (in store numbers) were convenience (+673), supermarket (+593) and health and beauty (+578).

Future outlook

Looking ahead, the retailer’s multi-year transformation plan is in progress under new leadership. It hopes to see the benefits of restructuring its food business following completion of the strategic review.

Chairman of Dairy Farm, Ben Keswick, said, "With a more customer-focused and market-driven strategy we will stay competitive, improve performance, and achieve long-term sustainable growth. While the group faces significant challenges in the short-term as we reset and reshape the food business as part of the multi-year transformation plan, the group’s other businesses and key associates are performing well and have strong market positions.”

Want to know more?

Asia subscribers can read more on Dairy Farm's Strategic Outlook here.

 

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Revenue for the supermarket chain increased by 7.4% versus last year.

Store openings boosts growth

Singapore supermarket operator Sheng Siong Group reported positive growth for 2018, with revenues of SGD890.9m, an improvement of SGD61m versus last year. Out of the 7.4% increase in revenues, 10.1% was contributed by new store openings. In total, the retailer added 10 new stores to its network. Net profit grew by 1.4% and closed at SGD70.5m.

The main source of revenue growth was attributed to Sheng Siong’s new stores. Comparable same store sales actually decreased by 0.4% for the retailer.

Expansion in spite of a challenging retail environment

The Group will continue to look for opportunities to expand its store network. It is already targeting six sites that have recently been released for tender by the Singapore government. High competition for retail space in new residential areas, the rise of ecommerce players and slowdown of the country’s economy are expected to provide a challenging environment.

Chief executive officer Lim Hock Chee said, “Besides nurturing the growth of our new stores in Singapore and China, we will continue with our efforts in enhancing the gross margin via more efficiency gains in the supply chain and higher sales mix of fresh produce. We will remain vigilant on costs.

More information about the Sheng Siong Group can be found here.

 

 

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This in-depth guide to Singapore explores the key trends in grocery retail and the growth strategies of the leading retailers in the country.

Five year growth forecasts for the grocery market, the leading retailers and modern trade grocery channels in Singapore.

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