Sheng Siong Supermarket is one of the largest grocery store chains in Singapore. Founded in 1985, they currently have 33 store chains offering a wide variety of products including wet and dry shopping assortment. Customers are delighted for their wide range of popularly known brands and highly affordable price (see appendices). Currently they are selling more than 400 products. Because of their popularity, they have been constant recipients of the Superbrands in Singapore since 1998. Sheng Siong Supermarket is a highly technologically advanced store with superb customer service support, promotion and advertising scheme that makes them even more popular. Currently, they are planning for continuous expansion of their stores to reach more areas of Singapore in the future.
Sheng Siong Supermarket Macro Environment
Political Factor - Sheng Siong Supermarket is a proud member of the Singapore National Employers Federation (SNEF) while their managers are highly trained and recognized by the Workforce Skills Qualification Scheme recognized by the Singapore Workforce Development Agency. This ensures that their employees are highly trained and consistent in their services (Benson, Gospel & Zu, 2013). They consistently follow the political and government system of Singapore that makes their contribution to the country more appreciated by their people. Currently they are also affected by the government restriction of foreign labor but they still remain focus in the industry.
Economic Factor – According to the latest Annual Report of Sheng Siong Group Ltd. Their net profit grows up to 18.6% equivalent of at least S$38.9 million Singaporean dollars within the fiscal year of 2013. This means that as of 2013 they contributed S$1.6 million in tax from the sale of their old warehouse plus S$3.1 million in tax operation and other government taxes that reaches up to S$9 million dollars during 2013. They are contributing a high percentage of their taxes to the economic gains of their country because of their market strength Sheng Siong (2014). It is expected that the increase of food inflation will also affect their current prices as they continuously pursue supply chain arrangement coming from various suppliers to prepare for such inflation.
Social Factor – As of 2014 they have more than 3,000 employees within their 33 stores contributing to the very high employment rate to the society. Sheng Siong Supermarket is a socially responsible group they provide contributions to the Red Cross projects while they also encourages customers to buy their Happy Family Jasmine Rice for donations. Collected rice are given to less fortunate beneficiaries Sheng Siong Annual Report (2013).
Technological Factor – using e-commerce technology, customers can shop and pay online, with a minimum purchase they are given free delivery services Lee & Ang (2013). Inventory is easy using computerized inventory and integrated system information. They are also the recipient of EBD Solar Pioneer Award producing at least 1,200 kilowatts of pure energy coming from the sun which also protect the environment to reduce energy cost and carbon emission. They can also boost their Hazard Analysis and Critical Control Point (HACAP) Certification that guarantees technologically advance safety in handling and food production and storage control are guaranteed safe and fresh upon delivery and consumption.
Sheng Siong Micro Environment
Threats of New Entrants – New entrants always want to penetrate the prices of consumer goods to carry a good first impression and usually they may increase their prices as they move along the markets. Sheng Siong’s expansion and construction of a new warehouse distribution in Mandai Link aims to establish centralized distribution to widen their scope and sustainability during expansion. They can also provide e-commerce to provide stronger technology standing from present competitors and new entrants.
Threats of Substitute – Due to the growth of this country, people have become busier. Many of them live fast-paced lifestyles. They may seek convenience and instant services. This is where convenience stores like Seven Eleven comes into the picture. They provide an immediate substitute for supermarkets like Tesco, NTUC Fair Price and others. They are also located in highly traffic foot areas allowing them to capture their audience with immediate needs. Busy people especially those who work at night will usually pick up items, pay without thinking about its price. In response, Sheng Shiong is now offering 24 hours store services staying late for busy customers (Lin, M.& Xuan, J., 2014).
Threats of Competition – Sheng Siong Supermarket is still behind the popularity of NTUC Fair Price Cooperative and Dairy Farm (see appendices). They are also targeting middle income to low income markets in residential areas although they are still ahead among smaller store chains like Cheers and Seven Eleven that are usually targeting premium consumers. Sheng Siong still focuses on cheaper product lines and other popular brands of consumer goods coming from China and other countries in the Asian region (KPMG, 2006).
Bargaining Power of Consumers – The retail industry also suffers from inflation, as well as consumers, during the recession, especially during the late 1990’s to early 2000. Currently, the retail industry is recovering and people are showing their willingness to spend.Sheng Shiong products are relatively cheaper compared to Carrefour and Cold Storage. That is to entice consumers but some may also argue that their products have lower quality (GuideGecko, n.d.). They are still able to manage during the recession period because of this strategy which is also appreciated by the consumers.
Bargaining Power of Suppliers – Sheng Shiong can get supplies within Singapore butas compared to other retail stores Sheng Shiong supplies usually focuses from direct suppliers in China and other neighboring countries in the Asian region. Through this, they are able to eliminate middlemen to take care of their supply chains and control their prices avoiding their suppliers from controlling their high price and delays of deliveries.
Intense competition is a major threat in the retail industry while competitors can also provide lower priced products. New entrants like mom and pop stores including petrol retail stores may also come in to place. Furthermore, deliveries and supplies from other countries may soon be uncertain. Inflation and the presence of other threats may be present but opportunities still abound in Sheng Siong Supermarket. In Singapore, there is still room for growth and expansion because of the present economic condition. The company can still maximize their positioning to construct more outlets. Several strategic areas within the island are still available with less retail store competition. If they can maintain their price then can even tap a wider market shares (see appendices), more so they have established a strong reputable brand that serves as their strength.
Benson, J., Gospel, H. & Zu, Y. (2013) Workforce Development and Skills Formation in Asia, UK: Routledge, p 109
GuideGecko (n.d.) Singapore in 1-2 days, Singapore: Xentral Methods
KPMG (2006) Strategic and Commercial Intelligence Grocery Retailing in Asia Pacific, UK & Asia Pacific: KPMG Intl. p 28-31
Lee, E. & Ang, S. (2013) Sheng Siong – More Than a Modern Homemaker’s Friend [Online] Available from http://www.sharesinv.com/articles/2013/12/11/sheng-siong-modern-homemaker/ [16 June 2014]
Lin, M. & Xuan, J.(2014) Streetview: Staying Open for Late Shoppers [Online]
Available from http://www.straitstimes.com/the-big-story/case-you-missed-it/story/streetview-staying-open-late-shoppers-20140402 [Accessed: 16 June 2014]
Sheng Siong Annual Report (2013) Sheng Siong Your Home Essentials Provide Annual Report 2013, Singapore: Sheng Siong Group Ltd p 2
Sheng Siong (2014) Sheng Siong Group’s core net profit grew 18.6% YOY to S$38.9 million for FY2013 [Online] Available from Sheng Siong Group’s core net profit grew 18.6% yoy to S$38.9 million for FY2013 [Accessed: 16 June 2013]