Grocery retailers find growth in Punggol and younger estates

RHB Research believes 3.6% of the industry growth came from the newer estates.

Most of the new store openings by NTUC Fairprice and Sheng Siong were in the new residential estates such as Punggol, which saw the formation of new, smaller, and younger household units, RHB Research analyst Juliana Cai revealed. “We believe the bulk of the industry’s 3.6% growth came from the new residential estates rather than the mature estates,” she added.

“Moreover, our recent checks further reveal that the range of products offered by its peer, Sheng Siong, is much more curated to cater to these new households,” Cai said. The analyst observed that Sheng Siong supermarkets in new residential estates curate its product range to cater to the needs of new homeowners through offerings like utensils and tools.

“Sheng Siong supermarkets used to have a poorer brand image of being dirty and messy like wet markets but the new stores are now nicely arranged and clean,” Cai said.

She noted that the lack of Dairy Farm’s new store openings meant it lost out in terms of growth. However, analysts suggested that competition from smaller players and Amazon Prime may be easing and struggling retailers, especially Dairy Farm, are set to recover their lost market share.

Cai also commented that even if Dairy Farm’s distribution centre has been up and running in Singapore, “the change in the group’s leadership has led to the slower implementation of new strategies. As such, new initiatives such as direct sourcing and bulk handling that could have led to higher gross margins did not come through as fast as we had thought,” she added.