Singapore’s retail sales index has been showing positive signs, particularly robust growth in consumer durables. According to RHB, higher expenditures in consumer durables suggest consumers are more confident in their outlook and are becoming more willing to spend.
Retailers Refreshing Store Image To Attract Millennial Consumers
Over the past three years, the intensifying competition from e-commerce and muted consumer spending have compelled retailers to revamp its physical brand image and embrace digital platforms.
For example, the traditional brick-and-mortar grocer Sheng Siong Group (Sheng Siong) has been revamping its outlets to make them look “cooler” to attract the younger crowd. Meanwhile, Asia’s largest healthcare and beauty care chain store Watsons has also been incorporating interactive digital screens to attract the digital-savvy millennials to try on its make-up products virtually.
Retailers Using Flagship Stores To Enhance Overall Shopping Experience
Major retailers like Uniqlo, Victoria Secret and Apple have been investing in physical stores to improve overall brand experience. More companies are opening flagship stores to enhance the overall shopping experience to integrate with their digital channels.
The idea of mixed retail concepts in Singapore has been increasingly popular amongst retailers. Mixed retail concepts involve amalgamating food, play and shopping into one. For example, bars like Hopheads and Level Up, for instance, combine a “playing element” into the food and beverage (F&B) bar concept. They have arcade machines, card games, foosball tables, and beer pong tables for patrons to enjoy, on top of the food element.
World Cup, GSS Driving Demand For Consumption
We are now nearing the FIFA World Cup finals and RHB expects the quadrennial event to boost sales of snacks, takeaway foods, as well as alcoholic and non-alcoholic beverages. This will give supermarket and convenience store operators like Sheng Siong and Dairy Farm International a slight sales kick. Restaurants and fast food outlets that air football matches at their premises are also likely to see a one-off surge in volumes. Takeaway foods and food delivery services could also benefit from increased demand in takeaway food and beverages.
Notwithstanding that, the improved consumer confidence could spill into the Great Singapore Sale (GSS) season. RHB expects retail sales to pick up for apparel, footwear as well as department stores. Coupled with higher tourist arrivals and pent-up local demand, sales at both specialty stores and department stores should continue to do well for at least another month.
Investors Takeaway: 2 Top SG Consumer Stocks To Own In This GSS, World Cup Season
- Sheng Siong
Sheng Siong is viewed as a pure Singapore play by RHB. RHB expects Sheng Siong to benefit from the uplift in domestic spending, new store openings and potential margin expansion. RHB believes that the refreshed image at its outlets in new housing estates would also help attract new target consumers, i.e. the millennials. It would also enjoy margin expansion once consumers purchase higher quality and higher value products such as fresh produce.
BUY, TP $1.18
- Food Empire Holdings
Food Empire Holdings (Food Empire) is an instant coffee mix player that has been identified as one of the consumer top picks by RHB. RHB views Food Empire’s efforts in diversifying outside of core Commonwealth of Independent States’ (CIS) markets blossoming over the years.
With approximately 50 percent market share in Russia’s instant coffee mix industry, RHB foresees Food Empire to remain resilient in spite of the depreciating Russian Ruble. RHB also notes that declining income of local Russians could induce a pick up in demand for mass-market products.
Moreover, Food Empire has restructured its distribution in Ukraine and has ramped up utilisation at the second snack line which should drive organic growth for its food ingredients business.
BUY, TP $1.07