Are supermarkets kicking convenience stores out of Singapore?

Small stores cannot keep up with the market giants’ product variety and prices.

Convenience stores have been losing out as supermarkets keep expanding their variety of goods at lower prices, Maybank Kim Eng revealed. Reflective of supermarkets’ growing dominance, more of them have started to operate 24 hours, especially in heavily-populated estates.

According to a report, supermarkets in Singapore will continue to eat up the market shares of convenience stores such as 7-11; minimarts and traditional grocers found in wet markets; food, drink, or tobacco specialists; and other retailers.

Citing Euromonitor data, Maybank KE revealed that supermarkets have been gaining market share since 2016, at the expense of other grocery retailers.

Supermarkets took up only 50.4% of the market in 2012 then 51.9% 2016. This rose to 52.7% (+0.8ppt) in 2017. Hypermarkets are also slowly growing. They only ate up 9.4% of the market in 2012. In 2016 they comprised 11.5% whilst in 2017 they comprised 11.6% of the market (+0.1ppt)

Meanwhile, traditional grocery retailers and convenience stores are coming out as losers. In 2012, traditional grocery retailers still held 31.4% of the market. Their share progressively declined from 29% in 2016 to 28.4% in 2017 (-0.6ppt).

The market share of convenience stores has always been the smallest amongst the four. It has declined from 7.4% in 2012 to 6.4% in 2016, and then to 6% in 2017 (-0.4ppt).

Maybank KE analyst John Cheong commented, “Traditional grocers have been downsizing or exiting due to rising rentals, a lack of successors, and price competition from the big boys. The chaotic setting of wet markets also contrasts unfavourably with supermarkets’ airconditioned comfort and wide selection of products.”

Aside from market share, the sales of convenience stores and traditional grocers have also declined. In the modern grocery retailer category, the sales of supermarkets jumped from $5.9b in 2016 to $6.03b in 2017 (-2.2%), whilst those of convenience stores dipped from $532m to $508m (-4.5%).

Meanwhile, those in the traditional segment are suffering large blows. In the same time period, sales of food, drink, or tobacco specialists fell 1.9% from $901m to $884m. Those of independent small grocers dropped 2% from $441m to $432m. Meanwhile, the sales of other grocery retailers rose 1.8% from $1.06b to $1.08b.

Amongst the supermarkets, SSG and FairPrice, a cooperative run by the National Trades Union Congress (NTUC), the apex of trade unions in Singapore, have been gaining market share from Dairy Farm International and the smaller supermarket players.

Dairy Farm’s sales have been declining for two of its four supermarket formats: Cold Storage and Giant Super. “We attribute Cold Storage’s poor performance to increasing price consciousness among Singapore consumers on one hand and more premium food options being rolled out by online retailers on the other. Giant Super huge supermarket outlets could also be facing more disruptions from online retailers, as non-fresh and non-FMCG products such as apparel and electrical appliances tend to be more convenient and cheaper to buy online, with more choices to boot,” Cheong added.

Dairy Farm attributed its 2017 results weakness to fierce price competition and the growth of discount retailers & e-commerce.