MKTG1275: Sheng Siong offers operations in the grocery chains, through the provision of supermarket supplies and engagement: Strategic Marketing Assignment, RMIT, Singapore

Sheng Siong offers operations in the grocery chains, through the provision of supermarket supplies and engagement in the supermarket operations segment. As one of Singapore’s largest retailers, it reports over S$337.6m of revenues in the first quarter of 2021, providing over 1200 products and operating across 67 supermarkets and grocery stores.

With plans to open 25 more retail stores, the success of the company lies in its capacity in adapting to market condition changes. Such is seen through its cost-cutting initiatives like the “1% counter inflation discount” to keep prices low and in view of its competitors with similar rollouts due to the recent GST increase.

​Context Analysis 

The Singapore government’s necessary fiscal approach, i.e., the GST increase, was put in place to meet the country’s increasing needs such as to aid Singapore’s rising healthcare expenditure due to the rapidly aging population. The supermarket sector was less affected by this due to the relatively inelastic goods and services provided. However, the market performance is still forecasted to decelerate due to the decrease in consumer uncertainty attributed to the receding effects of Covid-19.

Despite this, retailers use Singapore’s globally high internet penetration rates to expand and with purchasing habits of consumers turned towards online shopping for grocery products, retailers have recently implemented new business models like the integration of digital platforms to stay competitive.

Initiatives to operate supermarkets sustainably faced difficulties in terms of risks in undergoing an unprofitable venture through eco-friendly concepts, or in the maintenance of the quality of products. A bill focusing on reducing packaging and food waste was proposed and compulsory measures include disposable carrier charges at supermarkets and a food waste reporting framework, ensuring businesses are more accountable.

​The threat of substitutes is high from major supermarket chains and online retailers as buyers shift between stores, hence, the moderate bargaining power of buyers is attributed to their freedom of preferred store choice. The low threat of new entrants due to a relatively high barrier to entry in the supermarket industry is ascribed to significant capital investment for setup.

Low bargaining power of suppliers as standardization of products in the industry allows supermarkets to have higher bargaining power over suppliers. Relatively high industry rivalry due to high-level customer loyalty and brand recognition from customers amongst the well-established players.