FAIR price with quality service – that’s the business philosophy driving the Sheng Siong supermarket chain. ‘We differentiate ourselves from our competitors not only by offering fairly priced goods but also excellent service. This way, we offer true value for money,’ managing director Lim Hock Chee said in a recent interview. Such a strategy has helped the company grow into a supermarket chain with 17 stores islandwide and headcount of over 2,000. Sales at the Ang Mo Kio outlet average $60,000 daily – a far cry from the $3,000 daily takings when Sheng Siong opened its first provision shop there some 21 years ago.
Previously, the family owned a farm in Punggol that supplied fresh pork to a neighbourhood market, which later closed down due to financial problems. ‘That’s when we decided to open the Sheng Siong provision shop,’ Mr Lim told BT. Back then, as Mr Lim and his brothers – Hock Eng and Hock Leng – had no experience in running a provision shop, the family hired an experienced staff to oversee the purchasing of non-poultry products, while the brothers focused on the purchase and sales of fresh poultry. “Sheng Siong pays out 60 per cent of the chain’s profits as staff bonuses. ” In the early days, business cost was a major consideration, and so we hired only about four workers, with the other staff largely made up of family members. ‘ Today, it is paying about $30,000 in monthly rental for its 14,000 sq ft supermarket in Ang Mo Kio. Then in 1988, the brothers opened a second provision shop in Bedok, spread over 14,000 sq feet, followed by a third in Marsiling Road some nine years later. Sales at both outlets eventually grew to over $50,000 daily. Spurred by its success, Sheng Siong then went on a rapid expansion trail, opening some 14 new outlets between 1999 and 2006, the biggest being the one at
Tekka Mall with a floor space of 60,000 sq feet. According to Mr Lim, staff welfare is important as the business is very much service-driven. As such, the company provides meals, either a lunch or dinner, for all its staff every day. In addition, Sheng Siong pays out 60 per cent of the chain’s profits as staff bonuses. Explained Mr Lim: ‘I tell my workers, it is the customer who is paying your salary, not me. That will drive home the importance of serving the customers well. ‘The bonus scheme gives each of them a stake in keeping our customers satisfied and wanting to come back. The gross margin for the business ranges from 10 to 15 per cent, while net profit margin is about 5 per cent. ‘While margins may not be high, we have a stable pool of loyal customers to sustain the business,’ he explained. Some 80 per cent of the shoppers at Sheng Siong are repeat customers. Between 2000 and 2005, revenues jumped from $45. 76 million to $381. 4 million, and for the first half of this year, the company chalked up sales of $212. 86 million. The supermarket chain is currently trying to raise its profile through advertising and renovations at the supermarkets.
It will renovate the Katong outlet after Hari Raya. Sheng Siong says it is on the lookout for suitable locations to set up more outlets, and aims to open at least 10 supermarkets over the next five years. There are also plans to expand its operations into Johor Baru. Already, part of the sales at its Woodlands outlet comes from Malaysian tourists, and there are hopes that a new supermarket in Johor will help Sheng Siong service its Malaysian customers better. The company is looking for a new location for its warehouse – ‘ideally, one that can accommodate up to 10 times our current storage capacity,’ Mr Lim added.
Its 100,000 sq ft warehouse is located in Marsiling. Earlier, the company had also spent more than $1. 5 million on a cutting-edge computer system that revolutionises stock management by creating a direct computer-based link to the company’s various product suppliers. This ensures that the supplier of a particular product gets constant computer-generated updates on the sales volume, and cuts the additional storage cost for excess stocks. Mr Lim said the new technology will save both time and money in terms of paper work, warehousing and manpower. It can also be more nimble by keeping less stock in the warehouse.