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We review Dairy Farm's current performance, its growth forecasts for the next five years, plus progress against key strategic objectives.

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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.

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Dairy Farm has reported mixed results for Q3, pulled down by challenges in the food division.

Strong growth in health and beauty

The retailer reported strong sales and profit gains in Hong Kong and Macau. The retailer also saw improvement in its Southeast Asian businesses, especially in Malaysia and Indonesia.

Food business profits decline

Both sales and profits were down in several markets including Singapore, Malaysia and Indonesia. In China, Yonghui reported strong sales growth but lowered profits due to higher investments in stores. 

Southeast Asian business being revitalised 

Dairy Farm has been closing loss making stores in Singapore, Malaysia and Indonesia. The retailer has just announced the closing of a Giant hypermarket store in VivoCity in Singapore next year. Three other Giant outlets are under review for lease renewals and store performance.

We understand that plans for product range, space management, pricing strategy and consolidated sourcing are being implemented in the region. This includes sharing suppliers and accessing Yonghui's suppliers for fresh food its stores in other markets. We believe that the focus on operations and its efforts in collaboration of suppliers across its banners will support its growth going forward.  

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Dairy Farm Singapore, which operates 7-Eleven, Cold Storage supermarket, Giant hypermarket and Guardian health and beauty stores, has announced a partnership with NETS and WeChat to enable shoppers to use a new digital wallet. WeChat Pay will be available at 600 Dairy Farm stores from November 1.

Pilot at key tourist destinations

WeChat Pay has been on trial since July at 7-Eleven and Guardian stores in Changi Airport, Chinatown and Orchard Road, a popular shopping area. It caters mainly to Chinese tourists, which has increased by 13% from 2016 to 2017 according to Singapore Tourism Board. Chinese nationals living in Singapore with WeChat will also be able to use the new payment method.

Cashless payment growing in Singapore

Tom van der Lee from Dairy Farm Singapore said that more shoppers are choosing cashless payment methods. At Cold Storage, cashless payments increased by 6 percent since installing new technology which unifies the different payment methods available. The new technology is provided by NETS, a leading payment services group in Singapore. It allows retailers to use one terminal for all types of credit cards, debit cards and digital payment systems. This reduces staff training time and errors resulting from swiping cards at the wrong terminals during checkout. It will also minimise the operating costs of consolidating statements from different devices.

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Lazada shoppers can now choose to collect their online purchases from 7-Eleven outlets in Singapore.

How does it work?

Convenience store chain 7-Eleven, online retailer Lazada and logistics provider Ninja Van announced a collaboration to allow shoppers on Lazada to choose a 7-Eleven store as a pick up point for their parcels. It is available at 159 7-Eleven stores from today (18 October), and will be rolled out to the rest of the 350 participating stores by the end of the year. 

Ray Chou, country head of Ninja Van Singapore, said, "we do encounter a substantial number of failed deliveries, which is disruptive not only for our customers, but sellers and delivery companies as well."

What does it mean for shoppers?

Shoppers are often not at home to receive their parcels, due to the rising number of single and dual residential households. Besides saving time, shoppers can also enjoy some savings if they choose to pick up their own parcels. The parcel pick up service is free for Lazada's shoppers, while home deliveries cost SGD1.49 (US$1.07) for normal and SGD2.99 (US$2.17) for express service.

The service provides an "added convenience to consumers' daily lives and online shopping habits", said 7-Eleven Singapore's head of marketing Crispian Leong.

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Business rationalisation process sees closure of several stores.

Giant hypermarket at VivoCity to close next year

As part of a review of its retail portfolio, grocery retailer Dairy Farm has revealed that Giant hypermarket in VivoCity shopping mall will cease operations early next year. It is targeting to vacate its premises after Chinese New Year 2019. Previously, the retailer had already shut two other supermarkets, located in Bukit Panjang and Whampoa.

The store in VivoCity is one of eight Giant hypermarkets currently in Singapore. It has been operating since the mall opened in 2006 and is one of the anchor tenants there. At present, Giant also operates 26 supermarkets and 28 Giant Express stores throughout Singapore.

It is a subsidiary of Dairy Farm International Holdings, who also operates Cold Storage, Market Place by Jasons and 7-Eleven in Singapore. The group will continue to review its store portfolio and may close more underperforming stores in future.

H1 2018 sales up by 6%

It was reported that Dairy Farm turned in a strong set of results for the first half of 2018, with consolidated sales up by 6%. We can expect Dairy Farm to continue taking steps to revitalise its Southeast Asian operations.

Find out more information about Dairy Farm here.

 

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