Singapore's grocery market to be worth $9.9b by 2023

Singapore is expected to rank as the 23rd largest grocery market in Asia.

Singapore’s grocery market is expected to grow 14.5% annually from 2018 to $9.9b in 2023, led by FairPrice and Dairy Farm, according to the latest forecasts from international food and consumer goods researcher IGD Asia.

The city is expected to rank as the 23rd largest grocery market in Asia, with a strong economy supporting high spend per capita. By 2023, China is tipped to be the largest grocery market in the region followed by India, Japan, Indonesia, and South Korea.

Although Singapore is a small market in value terms, it remains strategically important for many businesses and is often seen as a benchmark for the evolution of cities in Asia, according to Nick Miles, head of Asia-Pacific at IGD.

IGD’s research revealed that the top retailers in 2018 will continue to drive steady growth to 2023, with FairPrice and Dairy Farm retaining the top two market positions.

According to Miles, FairPrice’s supermarkets are the most important channel, with ongoing store expansion into newer residential areas of Singapore. Likewise, the convenience channel will also see strong growth by 2023 for FairPrice.

Meanwhile, Dairy Farm is reportedly working on a transformation plan to turn around its business. 7-Eleven, which is managed by Dairy Farm, is expected to see growth ahead of the market, as it rolls out store refreshes and improved product ranges, Miles noted. Its hypermarket banner Giant will also remain a significant part of the business, but Dairy Farm’s fastest growth will mostly come from the online channel.

“Sheng Siong continues to outperform the market with its strategy of new store openings as a revenue driver. Growing at more than double the market rate, this retailer should be a key focus for suppliers as it expands its store network over the next few years,” Miles said.

Also read: Sheng Siong's new-store strategy may fall flat as consumer sentiment sours: analyst

Whilst traditional trade still makes up about a fifth of grocery sales in Singapore, this is likely to fall over the next five years as the market continues to modernise.

“All channels are forecasted to boost the value of modern trade, but growth will come mainly from the expansion of online, as retailers invest to meet growing shopper demand. Indeed, online will be the fastest-growing grocery channel in Singapore over the next five years, primarily driven by Alibaba Group through its RedMart store, as well as FairPrice investing more in the channel,” Miles explained, adding that on current projections, RedMart will establish itself as the clear online market leader by 2023.

He further noted that supermarkets and convenience channels are set to grow in line with Singapore’s overall market, between 2.5% and 3.5% per year, whilst hypermarkets will have a compound annual growth rate (CAGR) of just 1.1%, as retailers focus on expanding their smaller stores and online operations.

Supermarkets are estimated to remain the main grocery format in Singapore, with a value of $5.7b, and accounting for 57.4% of sales by 2023. “At more than half the total market value, protecting and growing sales in this channel should be a top priority for retailers and suppliers,” Miles highlighted.

Although growth will be challenging, brands can still capitalise on opportunities in traditional trade in value terms, and this area should remain a focus, Miles noted. “Online will also grow in importance, so suppliers should actively engage with retailers in this channel with suitable plans and products to target shoppers.”