Yahoo Finance 5 Things You Should Know About Sheng Siong
The story of supermarket chain Sheng Siong Holdings Ltd (SGX: OV8) is one with true Singaporean roots.
Sheng Siong CEO, Lim Hock Chee, grew up in the 1970s with his siblings in Punggol on his family’s sprawling 90,000 sq. ft. pig farm.
However, in 1985, their successful Cheng Siong Pig Farm (which reared 3,000 pigs at its peak) like many others suffered when the government closed down the pig-farming sector.
But a visit to a Savewell provision store in Ang Mo Kio changed Mr Lim (and his new wife’s) fortunes.
Noticing it didn’t sell pork, he proposed setting up their own counter in the store from which they could sell off the farm’s excess stock of the chilled meat.
The owner agreed, accepting 20% of Mr Lim’s takings as rental.
1. Savewell collapse
However, the Savewell chain of stores was experiencing difficulties of its own.
The chain was soon forced to put its stores up for sale by offering them to its existing tenants.
Lim Hock Chee and his brothers, borrowing capital from their father, bought their outlet for S$30,000, and the first Sheng Siong store was opened.
2. The birth of Sheng Siong
With only a skeleton crew to run the store made up of the three Lim brothers, their six sisters and a Savewell employee Lim Gek Heng, life was tough.
This was made worse by the fact that there were five other provision stores within walking distance of theirs.
To worsen the problem, the store was located at the foot of a slope and was not visible from the main road.
3. No-frills, lower profit margins
However, the Lim family focused on offering no-frills products at rock bottom prices.
The siblings also offered to carry heavy items for customers up the stairs – believing in the importance of offering “excellent customer service”.
Their hard work paid off.
Takings rose from S$2,000 per day in 1985, to over S$19,000 per day in 1988.
By 2004, only one of their local competitors remained.
4. Expansion
Sheng Siong soon opened a second store in Bedok, followed by another in Woodlands, which featured the novel (and popular) concept of a wet-market style fresh produce section.
The company continued its no-frills strategy, buying in bulk and keeping prices low.
At the same time, it opened stores in areas with little competition that offered lower rents.
5. Thriving in times of trouble
If shrewdly managed, supermarkets possess the unique ability to be able to thrive under tough economic conditions.
Even events such as financial crises, the pandemic and the aftermath of 9/11 terrorist attacks do not dent their allure.
After all, we still need to eat.
As retail space rentals plummeted during the 1997 Asian financial crisis, Sheng Siong seized the opportunity to open more stores.
When diners couldn’t eat at restaurants during 2020’s circuit breaker, they bought more food from supermarkets to cook at home.
But did you know these other interesting facts:-
The names “Sheng” and “Siong” mean “rising” and “vegetable” in Chinese.
Sheng Siong offers its full-time workers one free meal per workday, with all food prepared in the company’s central kitchen.
Upon leaving school, Mr Lim undertook a two-year car mechanic course, with the aim of being able to fix cars. It stood him in good stead as until recently, he was known as “Mr Fix It’ at Sheng Siong, regularly welding trolleys and fixing power outages.
Sheng Siong believes in profit sharing with its employees to promote loyalty among its staff. In 2020, the group distributed up to 16 months’ bonus to employees due to its stellar performance.
Mr Lim was known as the “towkay” (meaning ‘boss’ in Chinese) who drove a lorry” due to this being his only mode of transport for many years. What’s more, to this day he spurns owning a smartphone, jotting down appointments and meetings in a trusty notebook instead.
Today, Sheng Siong is Singapore’s third-largest supermarket chain after NTUC Fairprice and Cold Storage, which is owned by Dairy Farm International Holdings Ltd (SGX: D01), with 63 outlets around the island.
The group sells everything from groceries and seafood to essential household items.
It strongly believes in offering customers a quick and efficient service, and reckons it has the fastest cashiers and shortest queues.
Get Smart: Continued growth expected
Sheng Siong’s growth story is far from over.
The chain started out humbly but has established itself as one of the largest supermarket chains today in Singapore.
Its savvy business acumen and focus on delivering excellent service have allowed it to grow and expand successfully.
The group has opened two profitable outlets in Kunming, China as part of its regional expansion strategy.
By the end of last year, it had planned to open two more, making it four in total outside of Singapore.
As the pandemic eases and HDB units are open for bidding once again, Sheng Siong plans to continue with its strategy of bidding for HDB spaces to open new outlets.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.
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