Online and social shopping, plus health and freshness, are amongst the top five trends set to influence Singapore’s grocery retail market over the next five years.
The Singapore grocery market is forecast to see steady growth over the next five years when compared globally. However, compared to other markets in Asia, growth will be relatively subdued. By 2022, Singapore’s grocery market will be worth S$9.6b, remaining the 18th largest grocery market in Asia, with a strong economy supporting high spend per capita. Although it 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.
Traditional trade still makes up about a fifth of grocery sales in Singapore, with this value likely to reduce over the next five years as the grocery market continues to modernise. All channels are forecast to boost the value of modern trade. Growth will be driven primarily by the expansion of online, as retailers invest and shoppers shift their consumption pattern towards this channel.
Looking to next year and beyond, the team has identified five key trends predicted to shape Singapore’s grocery market and influence retailer strategy, revealing what this means for suppliers in the region.
1. Ultimate convenience
Changing lifestyles mean shoppers in Singapore are becoming increasingly demanding. Shopping little and often is a growing trend and consumers expect to be able to source products anywhere, anytime and anyhow they like. Retailers are adapting their operations to respond to this – convenience store chains continue to rapidly expand their networks, stores are using space in new ways, retailers are developing smaller and more unique stores, and online delivery times are being cut.
Convenience is not purely about speed. Retailers that are able to meet different shopper demands through their stores, ranges, services and the experience they offer will win. These experiences will need to be fast, relevant and seamless, so suppliers will need to ensure they also have the necessary flexibility in their businesses.
7-Eleven, for example, has added pick-up lockers for online shopping from Lazada in their stores. 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, whilst home deliveries cost S$1.49 for normal and S$2.99 for express service.
2. Partnerships shaping the future of online
Over the past few years, major partnerships have helped share expertise and accelerate online growth in Singapore. These partnerships come in many forms, with retailers, suppliers and technology businesses increasingly looking to blur the boundary between the offline and online worlds. In 2019, we expect to see more partnerships emerge and existing ones develop further.
Collaboration between partners will help online expand both within individual markets and across borders, faster than previously thought. Suppliers should ensure they stay on top of the latest online partnerships.
In Singapore, ride-hailing firm Grab has partnered with retailer FairPrice to introduce an exclusive rewards program. It has also launched GrabFresh, a partnership with HappyFresh, to introduce grocery delivery services in Indonesia, Thailand and Malaysia.
Meanwhile RedMart, an online grocery platform, was acquired by Lazada in 2016, but kept it as a separate business until now. It will be integrated into Lazada’s platform in March, allowing shoppers in Singapore to buy both groceries and other products on Lazada in the same location
3. Health and freshness at the heart
Increasing levels of affluence, improved education, targeted government campaigns and historical food safety scares mean that Asian shoppers are increasingly aware of the importance of healthy living, fresh food, nutrition and product sourcing. Retailers are responding by highlighting healthy ranges and freshness using innovative concepts, layouts and technologies.
Fresh food, foodservice options and health and wellness ranges will feature more prominently in-store in the future as retailers respond to changing shopping habits – so suppliers should be aware that competition for space in-store will intensify.
The refreshed FairPrice Xtra at Ang Mo Kio Hub showcases different aspects of health, wellness and beauty under one roof. Besides a wider range of products, the integrated Unity pharmacy in-store provides pharmacist counselling services on medication and healthcare concerns.
4. Online and social shopping
Online and social commerce is rapidly growing in importance in Singapore. Brand communication via social media platforms is commonplace, influencing shopper behaviour and providing smartphone users with easy ways to shop online. New innovations will continue to emerge in 2019, as retailers and suppliers deliver targeted marketing and new ways to make online shopping more social.
Shopping via social media platforms is starting to pick up in Singapore. Retailers and suppliers must therefore truly understand the landscape and have a clear social media strategy to engage shoppers and stay relevant.
In Singapore, Facebook has launched its Marketplace, where individuals can buy and sell items. C2C (consumer to consumer) commerce is a key component in the social shopping mix in many Asian countries.
5. Technology transformation
Consumers across Asia, but especially in Singapore, are exceptionally open to new technology. In 2019, we will be keeping a close eye on digital and technological innovations in Asia, particularly those helping retailers to differentiate their offer, raise service levels, develop stores that are set up for an online future, and deliver more efficient operations in the face of rising costs.
Technology is revolutionising the food and grocery industry in Singapore and across Asia, which could have big implications for how shoppers interact with brands in store in the future. However, it is not only about a focus on customers – it’s also about reducing costs and improving efficiency. Suppliers need to understand which technologies are set to have the biggest impact on their category.
Cold Storage in Singapore has installed a digital weighing scale in its latest store that identifies the fruit type automatically, without shoppers having to scroll through a product list. Meanwhile honestbee, an online grocery and food delivery service in eight Asian countries, recently opened its first physical retail store in Singapore. habitat by honestbee uses advanced technologies to enhance the in-store experience for shoppers. The store is a blend of supermarket, specialty grocer, in-store entertainment and dining concepts. It is a destination where shoppers are encouraged to linger and enjoy the experience.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.
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Shirley Zhu leads IGD Asia’s research team in Singapore. She has extensive research experience in the FMCG industry and has helped many multinational and local clients achieve their strategic objectives. Her role with IGD involves strategic planning, expanding research coverage in Asia and supporting our members in the region.