Cold Storage Strategy

Topics: Brand, Hypermarket, NTUC FairPrice Pages: 7 (1186 words) Published: April 9, 2011

SUPERMARKET: a large self-service shop selling foods and household goods Provision stores and grocers Supermarkets These two categories will be considered Hypermarkets

Examples of local supermarkets
NTUC FairPrice Cold Storage Shop n Save Giant Sheng Siong

Oligopolies have:
A few dominant firms High barriers to entry Homogeneous/Differentiated products Mutual interdependence

analysis and evaluation

analysis and evaluation
Is the supermarket industry really an oligopoly?
NUMBER and SIZE of firms: big or small? BARRIERS to entry: high, low, or none? NATURE of products: unique, differentiated, or homogenous? Mutual INTERDEPENDENCE: are their actions influenced by others? COMPETITION: pricing, product development, or marketing?

NUMBER and SIZE of firms
NTUC: over 225 outlets island wide
NTUC Fairprice, Xpress, Xtra, Finest

Dairy Farm International Holdings: over 87 outlets island wide Cold Storage (Shop N Save, Jason’s Marketplace) Giant Hypermarket

Sheng Siong: 21 outlets Carrefour*: 2 outlets island wide

NUMBER and SIZE of firms
These firms are classified according to their presence in Singapore (i.e. their local market share). Some examples of firms, like Carrefour, have only a few outlets in Singapore though they belong to a large international chain. Carrefour has more than 12,200 stores in 29 worldwide

BARRIERS to entry
HIGH barriers:
High start up costs
Floor space Suppliers Storage and transportation

Strong brand names such as NTUC and Cold Storage
Difficult to attract loyal customers

Firms already in industry will have cost advantages, able to offer low prices

NATURE of products

Homogenous Differentiated Products products

NATURE of products
HOMOGENOUS products:
Most products are homogenous; the same wholesalers usually supply more than one distributor Almost all supermarkets will carry national brand products Most brands for typical goods are found in all supermarkets E.g. imported rice and sugar

Singapore is a small market and most clients (rich and poor) will consume similar goods.

NATURE of products
The selection differs according to the clientele
Range of products may be differentiated by providing a wider range or for special needs E.g. Japanese soya sauce vs. conventional soya sauce

Only supermarkets with specific target groups will carry something more specific E.g. FairPrice caters to the general population, while FairPrice Finest targets to serve the higher income groups Prepared to pay for better quality

Some products are exclusive to FairPrice Finest
E.g. Raspberry salad dressing

Mutual interdependence:
High degree of rival consciousness
NTUC FairPrice: took full ownership of its central warehouse and distribution company in 1998 and renamed it Grocery Logistics of Singapore Pte Ltd. Cold Storage: started the Fresh Food Distribution Centre in Singapore in 1999, a composite multi-temperature warehousing for fresh and frozen food distribution.

Goods are priced similarly
NTUC FairPrice NTUC Xtra NTUC Finest Cold Storage
$2.55 First Choice $3.00 SIS

Sheng Siong
$1.90 Happy family sugar $2.00 Lin

Jason’s Marketplace
$2.55 First Choice $3.05 SIS

$2.50 Carrefour house brand

$2.55 FairPrice $2.35 FairPrice $2.55 $2.85 SIS $2.85 SIS FairPrice $2.85 SIS

Prices for sugar (1kg) in different supermarkets

Price competition

Non-price competition
Marketing Branding Innovation

Price competition: PRICING
Collusive competition: supermarkets setting similar prices Competition is mainly from the supplier side to compete for a stable pool of suppliers Other than occasional discounts, there is little price competition that can take place Singapore is a small country; it is difficult to set pricing regardless of what other retailers are...
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