The online sales of groceries in Singapore clock in at approximately 15% of the total sales of the country. Where do the remaining 85% of sales achieved? The brick and mortar shops and supermarkets that have been around since forever. But, does this mean that Singaporeans do not like to live as digitally as the country’s government projects?
It is not entirely false to say that many people in Singapore still prefer going to the supermarket rather than ordering groceries online. However, this should not form the basis of the argument that online grocery sales are not a trend in Singapore. Let’s put the numbers in perspective.
Growth of Online Sales in Singapore
While it is true that Super Markets still dominate a large part of the country’s sales, the growth of e-commerce cannot get neglected. Several major segments registered a decent increase in Singapore in the last few years, and it is a good sign for the government that has been pushing the smart nation idea.
The fashion and beauty section grew by 30%, while that of electronics saw an increase of 31%. The grocery niches combined saw an increase of 47%, which also happens to be the highest among all the sectors.
The table above shows the trend in e-commerce expenditure in different sectors during the last few years in Singapore. The table also shows the projected spending in 2020 for the various sectors. Singaporeans have started shifting to spending online. The highest growth registered in the fashion sector, where the projections have almost reached USD 1500 million. The electronics and media sectors are closely following up, which reflects the love for technology among the people of Singapore.
In terms of percentage, the revenue expected to grow at 14.9% (CAGR 2019 – 2023), resulting in an eventual market volume of USD 8,549 million by 2023. The user penetration in 2019 was 69.3%, and experts believe that the figures will hit a little above 72% in the next three years.
Are Supermarkets Alive?
The growth in the Singaporean e-commerce scene has made the life of the brick and mortar stores a little harder at the least. However, there are several reasons why Supermarkets are still highly popular among the people of Singapore. The primary reason being, the lack of an organized structure of online stores in Singapore. Although there are several major players like Amazon and RedMart that have been putting in much money to make their presence felt, they are still somewhat ‘away’ from being a mainstream source of grocery shopping in Singapore.
Supermarkets have been revamping themselves, introducing fresher concepts to keep themselves practical, thereby adding misery to online stores. For example, apart from grocery shopping, Habitat by Honest Bee is known for its freshly cooked meals, which a shopper can pick while in the store.
Similarly, several other supermarkets and marts have added a particular offering to attract buyers and provide a lively experience that online stores struggle to deliver. Also, physical stores have pro-actively remodelled themselves to become an all-round outlet that caters to the multiple needs of the users. Many a store is now operational 24 hours, sell a wide range of products, deal in exotic varieties, and have reduced prices to sound more attractive to the buyers. This re-organization has further improved the foothold of the brick stores in the Singaporean market.
The Movement from Online to Offline
While a lot of organizations have been preparing for the future and re-organizing their business model to suit the e-commerce needs, there has been an unusual movement of online-first stores towards the physical shops. For example, Taobao, an online retail store, had set up its first brick and mortar store in Singapore last year. Interestingly, the store is one-tenth of the size of the football field and displays 300 different items.
As per Taobao’s business development lead in Singapore, home and living category is the fastest growing niche in Singapore, and this is why 80% of the items in Taobao’s first-ever retail store is in this niche. The company decided to open a store after it received a positive response from two temporary pop-ups in Singapore.
However, this approach can only be adopted by brands that have successfully build an online audience for themselves. Taobao benefited from the reputation of Alibaba, and therefore, when it opened its store, it was able to attract the audience from day one. For a new brand without a reputation and audience, movement from online to offline can be exhausting.
O2O (online to offline) strategy going forward is being considered by several major companies to extend their presence on a more local level, discover consumer insights in a better way and build a stamped image among the competitors.
Answering the Question – Are Supermarkets a Thing of The Past?
The popularity of e-commerce in Singapore is on the rise. Experts believe that by 2022, the market share of online sales in Singapore will be approximately 48% (or S$ 9.98 billion). Most of this success in e-commerce will get triggered by the adoption of high-level mobiles in the country.
However, this is a mere projection. The reality right now speaks in favor of supermarkets. The supermarkets provide an experience that online stores lack. The stores fulfil the last-minute needs of the people, help in quick refilling of the groceries, and let the users touch and feel the products before they are billed and delivered. Of course, online stores provide the convenience of shopping from the comforts of home, but some people love to hang out at the stores and explore new products on the shelves. Then comes the online to offline movement, which is tricky. While it may be true that brick and mortar is the future of e-commerce in Singapore, but unless the brands have time to be creative and generate consumer awareness, opening a store, in this case, is only going to add to the investment cost.