Su­per­mar­kets lock horns for cov­eted HDB es­tate spa­ces

Singapore Business Review - - ANALYSIS: RETAIL -

Smaller su­per­mar­ket play­ers such as Hao Mart are fac­ing off against gi­ants like Sheng Siong in a race to set up shop in new Hous­ing and Devel­op­ment Board (HDB) su­per­mar­ket spa­ces. Hao Mart, which has opened more than 35 small out­lets in Sin­ga­pore, said it is look­ing at more HDB open­ings.

Ac­cord­ing to Hao Halal Hub’s vice pres­i­dent Ron­nie Faizal Tan, smaller play­ers are look­ing to HDB ar­eas in an at­tempt to avoid the hefty rental prices in shop­ping malls, which come at­tached to set­ting up shops and com­pli­ance rules like monthly ad­ver­tis­ing and dis­counts. Hao Halal Hub is a new ban­ner un­der Hao Mart, set up in 2018 to cap­ture the mar­ket share of the Mus­lim com­mu­nity. “Shops other than F&B restau­rants are clos­ing down or mov­ing away from shop­ping malls mainly be­cause of the growth of the e-com­merce,” Tan told Sin­ga­pore Busi­ness Re­view. “Mov­ing to the HDB is a bet­ter choice to be closer and bring­ing con­ve­nience to the cus­tomers.”

DBS an­a­lyst Al­fie Yeo notes that the near-term out­look for new su­per­mar­ket sup­ply in HDB es­tates looks good, with five out­lets up for ten­der in the next six months. Mean­while, CGS-CIMB an­a­lyst Cez­zane

See said in a re­search note that for 2019-2022, they are pro­ject­ing at least an­other 15 ten­ders for HDB re­tail spa­ces. “An­other fac­tor is the size of the sites be­ing re­leased by the govern­ment. In many in­stances, the sites re­leased are too small to sup­port a su­per­mar­ket. As such, min­i­mar­kets fill the gap un­til the es­tate is ma­ture enough,” Johann Hall, IGD Asia’s se­nior re­tail an­a­lyst said.

This sen­ti­ment was echoed by Deepika Chan­drasekar, re­search as­so­ciate at Euromon­i­tor In­ter­na­tional, who added that with the re­cent re­lease of HDB shops for re­tender­ing, the su­per­mar­ket bat­tle can pos­si­bly in­ten­sify be­tween ma­jor play­ers like Fair­price, Sheng Siong, and Prime.

Typ­i­cally, as a new hous­ing area is be­ing rolled out the cus­tomer de­mand is low and smaller mini marts tak­ing top space serve the lim­ited num­ber of res­i­dents. How­ever, cur­rently, the ma­jor su­per­mar­ket chains are not as will­ing to wait un­til an es­tate ma­tures to en­ter and are pre­fer­ring to lease space even when de­mand is low.

“Typ­i­cally, it takes about two to three years be­fore enough res­i­dents move into these es­tates and it be­comes a bustling com­mu­nity. In the in­terim pe­riod, it is com­mon for min­i­mar­kets to open stores. Big­ger chains set up only after there are suf­fi­cient shop­pers to sup­port a su­per­mar­ket,” he said.

Fol­low­ing HDB’S im­ple­men­ta­tion of a new ten­der method for su­per­mar­ket own­ers to bid, Tan added that it would be no sur­prise if su­per­mar­ket own­ers will be com­pet­ing in the bid­ding process aggressive­ly to com­mand and pro­tect their turf.

In its fi­nan­cial state­ment, Sheng Siong said that it would con­tinue to look for re­tail space in new and ex­ist­ing HDB hous­ing es­tates. Ac­cord­ing to May­bank Kim Eng, three of these six HDB shops were re­cently awarded to an­other su­per­mar­ket operator, and Sheng Siong is still look­ing at bid­ding for the other three.

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