Sheng Siong



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 his family’s pig farm, Cheng Siong Pig Farm.1 The farm, which reared 3,000 pigs at its peak, had to close when the government started phasing out Singapore’s pig-farming sector in the early 1980s.2 In 1984, when the farm was stuck with an excess of unsold meat, Lim saw an opportunity when he visited a provision store in Ang Mo Kio that did not sell pork. He set up a pork counter at the Savewell Supermarket and paid the store’s owner 20 percent of sales revenue as rental.3

The Savewell chain of stores ran into financial trouble the following year, and its outlets were put up for sale.4 Despite having no experience in running a provision store, Lim borrowed S$30,000 from his father and bought the 1,650-square foot Savewell outlet in Ang Mo Kio for S$20,000 from its owner, Aw Chwee Seng.5 Assisted by Savewell employee Lim Gek Heng, Lim ran the first Sheng Siong store with his two brothers, six sisters and four workers.6 Sheng Siong faced stiff competition as there were five other provision stores within walking distance of it, 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.7

Expansion
Takings at its first store amounted to about S$3,000 daily when Sheng Siong started in 1985.8 Two years later in 1987, Aw offered them a space for a second outlet in Bedok, which Lim opened under the name Shing Siong.9 It was almost a decade later in 1995 that a third store named Shng Siong opened in Woodlands.10 The Woodlands store was the first to feature a section for fresh produce – similar to the traditional “wet market” but within a provision store setting. This combination proved to be very popular and eventually became the chain’s business model.11 In 1999, the company’s net profit was S$1.56 million on a turnover of S$26.4 million.12

Sheng Siong expanded quickly, with 14 outlets opening between 1999 and 2006. Its largest outlet, at 59,000 square feet, opened in 2003 at Tekka Mall in Little India, and was Sheng Siong’s first store in the city.13 It also featured the chain’s first food court called Food More.14

Sheng Siong was able to offer low prices on a wide range of products as it made bulk purchases and yielded a high turnover, as well as reduced costs such as excess signage in its stores. A 2003 news report stated that Sheng Siong’s prices for household items were around 5 percent lower than those of its competitors.15 This cost-effective strategy helped the chain to gain market share and grow its revenue, which rose from S$45.76 million in 2000 to S$381.4 million in 2005.16

A 2005 Euromonitor study measuring the sales return by retail space utilised placed Sheng Siong in the top position in the supermarket category. The chain had a return of US$11,700 annually per sq m, reflecting an efficiency that was above 63 other supermarkets in Asia.17 Another Euromonitor survey in 2008 revealed that Sheng Siong was the third-largest retailer by sales volume in Singapore, jumping from eighth spot the year before.18

Sheng Siong acquired five wet markets from Heeton Holdings in 2009, with the intention of converting them into air-conditioned markets.19 However, this plan was met with negative public feedback, and the Housing Development Board (HDB) ruled that the sites had to continue functioning as wet markets.20

In 2011, after obtaining permission from HDB, Sheng Siong reopened the Elias Mall wet market at Pasir Ris as Elias 1 Station Market, an air-conditioned market.21 The same year also saw Sheng Siong’s debut on the Singapore Exchange, with an initial public offering (IPO) of 351.5 million shares at 33 cents each, despite volatile stock market conditions.22 Proceeds from the IPO went towards the repayment of loans taken to open a centralised warehouse and distribution centre at Mandai Link, rewarding staff and future expansion.23

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. He developed a manifesto that identified employees as a key component of company culture. Employees are trained to work quickly, offer competent, polite service, execute stock-taking proficiently with Sheng Siong’s suppliers, and manage supplier invoices promptly.24 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 percent of its profits towards bonuses, and employees can be rewarded with bonuses of up to 10 months’ pay.25

In 2006, the chain underwent a branding exercise in which its logo was revamped and the slogan “Sheng Siong…all for you!” was introduced.26 The Sheng Siong Show, a Chinese-language games-and-variety television show broadcast on Channel 8 since 2007, has been used for publicity and sales promotion.27 Tan Ling San, who became Sheng Siong’s executive director in 2011, was credited with launching the show.28



Author
Alvin Chua



References
1. Chan, F. (2009, June 10). From pig farmer to supermarket chain owner. The Straits Times, p. 37. Retrieved from NewspaperSG.
2. Chan, F. (2009, June 10). From pig farmer to supermarket chain owner. The Straits Times, p. 37; If it’s only a matter of cost. (1984, March 14). The Business Times, p. 8. Retrieved from NewspaperSG.
3. Mak, M. S. (2008, February 11). Mind your p’s and queues. The Straits Times, p. 4. Retrieved from NewspaperSG.
4. Ng, L. (1986, January 1). Retailers in the doldrums. The Business Times, p. 2. Retrieved from NewspaperSG.
5. Mulchand, A., & Fong, T. (2004, June 13). Mr no frills. The Straits Times, p. 8; Mulchand, A., & Fong, T. (2004, June 13). His children will just have to fend for themselves. The Straits Times, p. 8. Retrieved from NewspaperSG.
6. Mulchand, A., & Fong, T. (2004, June 13). Mr no frills. The Straits Times, p. 8; Sheng Siong’s recipe for business growth. (2006, October 24). The Business Times, p. 11. Retrieved from NewspaperSG.
7. Mulchand, A., & Fong, T. (2004, June 13). Mr no frills. The Straits Times, p. 8. Retrieved from NewspaperSG.
8. Sheng Siong’s recipe for business growth. (2006, October 24). The Business Times, p. 11. Retrieved from NewspaperSG.
9. Mulchand, A., & Fong, T. (2004, June 13). Mr no frills. The Straits Times, p. 8; Mulchand, A., & Fong, T. (2004, June 13). His children will just have to fend for themselves. The Sunday Times, p. 8. Retrieved from NewspaperSG.
10. Mulchand, A., & Fong, T. (2004, June 13). His children will just have to fend for themselves. The Sunday Times, p. 8. Retrieved from NewspaperSG.
11. Chan, F. (2009, June 10). From pig farmer to supermarket chain owner. The Straits Times, p. 37. Retrieved from NewspaperSG.
12. Rashiwala, K. (2003, January 16). Sheng Siong supermarket goes to town. The Business Times, p. 12. Retrieved from NewspaperSG.
13. Sheng Siong’s recipe for business growth. (2006, October 24). The Business Times, p. 11. Retrieved from NewspaperSG.
14. Tor, C. L. (2003, June 16). The new Tekka-shimaya. Today, p. 4. Retrieved from NewspaperSG.
15. Teo, G. (2003, August 17). Now showing: Supermarket sweep. The Straits Times, p. 5. Retrieved from NewspaperSG.
16. Sheng Siong’s recipe for business growth. (2006, October 24). The Business Times, p. 11. Retrieved from NewspaperSG.
17. Boo, K. (2005, August 2). Cortina a savvy user of floor space. The Straits Times, p. 3. Retrieved from NewspaperSG.
18. Tay, M. (2008, August 1). Sheng Siong chain climbs to third in S’pore for turnover. The Straits Times, p. H33. Retrieved from NewspaperSG.
19. Heeton sells wet markets to Sheng Siong. (2009, September 12). Today, p. 22; Lim, J. (2009, September 30). Wet markets’ buyout causes upset. The Straits Times, p. B1. Retrieved from NewspaperSG.
20. Wong, T. (2009, December 18). Sheng Siong gets nod to buy markets. The Straits Times, p. 33. Retrieved from NewspaperSG.
21. Lim, J., & Neo, W. T. (2011, March 3). New-look wet market opens at Elias Mall. The Straits Times, p. 8. Retrieved from NewspaperSG.
22. Ho, D. (2011, August 6). Sheng Siong to grow business. The Straits Times, p. 24. Retrieved from NewspaperSG.
23. Ng, J. (2011, August 15). New warehouse to help improve margins of grocery chain. The Edge Singapore. Singapore: The Edge Publishing Pte Ltd, p. 22. (Call no.: RSING 338.7095957 ES)
24. Mulchand, A., & Fong, T. (2004, June 13). His children will just have to fend for themselves. The Sunday Times, p. 8. Retrieved from NewspaperSG.
25. Sheng Siong’s recipe for business growth. (2006, October 24). The Business Times, p. 11. Retrieved from NewspaperSG.
26. Tan, J. (Ed.). (2009). Superbrands. Vol IV: An insight into many of Singapore’s strongest brands. Singapore: Superbrands, pp. 82–83. (Call no.: RSING 658.827095957 SUP)
27. Mak, M. S. (2008, February 11). Mind your p’s and queues. The Straits Times, p. 4. Retrieved from NewspaperSG.
28. Tan, A. (2012, May 5). $14m shareholder gift for Sheng Siong exec director. The Straits Times, p. 22. Retrieved from NewspaperSG.



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.

 

Subject
Organisations>>Companies
Supermarkets--Singapore
Trade and industry
Business, finance and industry>>Industry>>Services>>Retail and wholesale
Commerce and Industry>>Trade
Business enterprises