Sheng Siong is a Singapore supermarket chain that started out in 1985 as a family-owned provision store. In 2008, it achieved more than S$600 million in sales and was ranked the third-largest retailer in Singapore by sales volume in a survey.
Origins
The founder of the Sheng Siong chain, Lim Hock Chee, first worked on a pig farm owned by his family. The Cheng Siong Pig Farm, which reared 3,000 pigs at its peak, had to close when the government shut down the pig-farming sector in Singapore in 1985. Left with an excess of unsold meat, Lim spotted an opportunity when he visited a provision store in Ang Mo Kio that did not sell pork. Setting up a pork counter at the Savewell store, he paid the store’s owner 20% of sales as rental.
That same year, the Savewell chain of stores ran into financial trouble and its outlets were put up for sale. Despite not having experience in running a provision store, Lim borrowed S$30,000 from his father and bought the 1,650 square foot outlet in Ang Mo Kio for S$20,000 from owner Ang Chwee Seng. Helped by Savewell employee Lim Gek Heng, Lim ran the first Sheng Siong store with his two brothers, six sisters and a skeleton crew of staff. There was stiff competition with five other provision stores within walking distance of Sheng Siong, but the store focused on providing a wide range of no-frills products and increased sales volumes by accepting lower profit margins. By 2004, only one of the competing provision stores near its Ang Mo Kio outlet remained.
Expansion
Takings at its first store were about S$3,000 daily, and Sheng Siong opened a second outlet in Bedok in 1987. A third store in Woodlands followed in 1995, and sales at these two outlets grew to around S$50,000 daily. The Woodlands store was the first to feature a section for fresh produce in a model similar to the traditional “wet market” but within a supermarket setting, a combination that proved to be very popular.
At this stage of its expansion, Sheng Siong targeted sites that were not in demand by other provision stores and markets, and which had lower rents. The 1997 Asian financial crisis and the bursting of the dot-com in 2001 provided new opportunities for expansion as rents for retail space fell sharply. Sheng Siong expanded quickly, with 14 outlets opening between 1996 and 2006. The largest outlet, at 60,000 square feet, opened in 2003 at Tekka Mall, and was Sheng Siong’s first store in the city. It also featured the chain’s first Food More food court. In 1999, the company’s net profit was S$1.56 million on a turnover of S$26.4 million.
Sheng Siong was able to offer low prices on its wide range of products as it bought in bulk and had a high turnover, and had cut out extras like excess signage at its stores. A 2003 news report stated that Sheng Siong’s prices for household items were around 5% lower than those of its competitors. This cost-effective strategy helped the chain to gain market share and grow its revenues, which went from S$45.76 million in 2000 to S$381.4 million in 2005. It was estimated to hold 11% of market share in 2004. In 2005, a Euromonitor study measuring the sales return by retail space utilised placed Sheng Siong top in the supermarket category. The chain had a return of US$11,700 annually per square metre, which put it above 63 other supermarkets in Asia. By 2006, the chain had 17 stores and an employee headcount of over 2,000.
Despite an economic recession in 2008, Sheng Siong had sales of over S$600 million and continued to expand. A Euromonitor survey that year showed that Sheng Siong was the third-largest retailer by sales volume in Singapore, jumping from eighth spot the year before.
In 2009, Sheng Siong acquired five wet markets with the intention of converting them into air-conditioned markets. However, this plan met with negative public feedback and the government ruled that the sites had to continue functioning as wet markets. The chain currently acts as a landlord for the five markets. Future expansion plans include a listing on the Singapore Exchange and possible new stores in Malaysia.
Corporate philosophy and practices
Sheng Siong founder Lim Hock Chee has espoused a business model of low cost offerings and efficient customer service. Lim reviewed the company’s growth in 1998 after attending a management course and developed a manifesto on company culture, of which employees were identified as a key component. Employees are trained to provide efficient, polite service, to work quickly, execute stock-takes efficiently with Sheng Siong’s suppliers, and pay supplier invoices promptly. This provides for an efficient process, which together with bulk purchases allows Sheng Siong to offer lower retail prices. Sheng Siong channels up to 60% of profits towards bonuses, and employees are rewarded with bonuses of up to 10 months’ pay.
In 2006, the chain underwent a branding exercise in which its logo was revamped and the slogan “Sheng Siong…all for you!” was introduced. The Sheng Siong television programme, a live games and variety show on a Chinese-language television channel, is used for publicity and sales promotion. Sheng Siong also advertises in the print and broadcast media.
Author
Alvin Chua
References
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The information in this article is valid as at 2010 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.
