IN A supermarket business estimated to be worth $4 billion a year, players shop constantly for prime space in a fierce bid to go one-up on rivals.

Take nex, the newly opened mall in Serangoon Central where chains had ea- gerly coveted space as far back as 2008.

They were so keen to do business in the largest mall in the north-east that some submitted*mukiple proposals - unu- sual in the industry.

Eventually, NTUC FairPrice and Cold Storage got the nod to open a FairPrice Xtra hypermarket and a Cold Storage su- permarket.

Expect competition among supermar- ket and hypermarket players such as Fair - Price, Sheng Siong, the Dairy Farm group, Prime and Carrefour to intensify.

In an industry that thrives on selling basic necessities at a slim 5 to 10 per cent profit margin, sales volume is key and the more stores a retailer owns, the better the bottom-line prospects.

It is also what shoppers want - the convenience of having a supermarket near their homes,

Cold Storage under the Dairy Farm group aims to open 11 stores next year, bringing the total number to 50.

Sheng Siong, which has 22 branches, plans to open three to five more next year.

The 103-outlet FairPrice declined to re- veal specific expansion plans but at least two new stores are on the cards: FairPrice Finest outlets in Clementi Mall and myVil- lage shopping centre in Serangoon Gar- dens.

. However, with an almost 40 per cent jump in the number of supermarket out- lets from 186 in 2005 to 255 this year, re- tail analysts and grocers said the industry is fast becoming saturated.

For example, Bedok, with the largest number of Singapore residents - 294,500 - has 17 supermarket outlets run by five major retailers. Some, such as the Sheng

Publication: The Straits Times, p B8 Date: 16 December 201 0 Headline: Supermarket face-off

Supermarlcet face-off

Competition between major players here set to intensifjr over prime retail space and consumer dollar

Siong and FairPrice branches near Bedok MRT station, are just a short trolley-push- ing distance from each other.

Industry observers said that with most suitable space - between 10,000 and 20,000 sq ft and in residential neighbour- hoods - snapped up, expansion will be a challenge.

"There is fierce competition for sites," said Sheng Siong's managing director Lim Hock Chee, 49. "Right now, we are looking for appropriate locations in the heartland but there are very few left."

It took over six wet markets last year with the aim of tuning them into super- markets. But the land owner, the Housing Board, disallowed that.

Earlier this year, FairPrice and the Dairy Farm group's Shop N Save vied to buy MCP Supermarket, a heartland chain with eight outlets. In ~ugus t , it was sold to Shop N Save, which already mns 51 out- lets, for a seven-figure sum.

Dairy Farm and FairPrice were said to be rivals again when Carrefow put its two stores up for auction in September, though the sale was eventually called off.

The latest figures. from market re- search firm Euromonitor International show FairPrice as the industry leader with a 47.8 per cent market share based on retail value, followed by Cold Storage (21.3 per cent) with 39 outlets, and Shag Siong (18.2 per cent). Retail analysts said though profit margins are between 5 and 10 per cent annually, these can translate into big bucks.

Profit for the FairPrice group, which in- cludes its FairPrice Xpress outlets in pet- rol st at ions and Cheers convenience stores, was $98.5 million for its last finan- cial year that ended in March.

But in: land-scarce Singapore, the oper- ators also face rental pressure. The hike is said to be over 20 per cent in recent years, from about $4 to $5 per sq ft (psf)

to between $6 and $7 psf, and at times, as much as $10 psf for a popular location.

But it is unlikely any rent increase will be passed on to consumers, said Dr Srini- vas Reddy, 56, associate dean of the Lee Kong Chian School of Business at the Sin- gapore Management University.

"Even a small price difference will pro- hibit shoppers from returning because these are standard products and they will go comparison shopping."

Mr Danny Yeo, 57, group managing di- rector for property consultancy Knight Frank, said some chains are taking a stake in' property developments to secure space.

Kang Kar Mall in Hougang, which opened late last year, is the first mall to be built and managed by Fairprice. It houses a two-storey FairPrice supermar- ket and leases space to other businesses such as a foodcourt.

FairPrice is also a shareholder, along with Singapore Press Holdings, of Clem-

enti Mall in Clementi Avenue 3. It will open early next year with a FairPrice Fin- est.

Location, though critical, is just part of the baffle for the consumer dollar. Ana- lysts said customers are also wooed by what the store offers m terms of prod- ucts, ambience and service.

Cold Storage has introduced more than 500 goods from international brands such as Waitrose from Britain in the last year,

Supermarkets also have their own house brands which are, on average, 15 per cent cheaper than famous brands.

Customers can also shop online for items from FairPrice and Cold Storage and have groceries delivered to their door.- steps. , The Shop N Save chain is undergoing a makeover to achieve a "clean-cut look with a cosy ambience", said its spokes- man.

Others like hypermarkets Giant and Carrefour let customers physically handle the fresh produce and pick the amount they need.

The biggest winner in this shop- ping-cart war is clearly the shopper. Tour guide Fern Wong, 43, said she favours Cold Storage for its helpful service and wide range of premium products includ- ing deli meats, which her children like.

Giving the thumbs up to competition, property executive Jefferey Teo, 31, said: "Of all the supermarkets, FairPrice is gen- erally cheaper. They also have a wide range of products plus rebates for Fair- Price card members."

For housewife Monica Low, 44, her wish list is to have more supermarkets in Sengkang, where she lives,

She said: "1 hope more supermarkets open here because when there is competi- tion, the chains might lower their prices. Also, it becomes more convenient for me to shop."

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