Minimarts make the digital march towards survival
As provision shops dwindle, minimarts are fighting back
With its electric blue zinc roof and rusty metal gates, Tee Seng Store's old-world charm stands out from the bungalows in the residential sprawl off Yio Chu Kang Road.
It is packed to the brim with a bit of everything - shampoo and soap, crackers, loose bags of dried foods and even make-up.
The shop, which is also the home of Mr Ang Lu Heng and his wife, has a cash register that replaced the abacus 10 years ago. The 78-year-old is not worried about being behind the times.
Speaking over the chatter of a TV, he said in Mandarin: "Don't need to invest in technology, lah. It is just me and my wife here looking after the shop until we are no longer able to. Nobody is going to take over."
Today, provision shops like his are rare, thanks to the proliferation of supermarkets and online grocers.
The Singapore Provision Shop Friendly Association has not many more than 100 members today, down from the 1,262 members it had in the 70s.
Even minimarts, which some provision shops converted into in the 80s to compete with supermarkets, are not spared.
Figures from the Department of Statistics show falling sales every month from January to July, compared with the same seven-month period last year.
There is no official tally on the number of minimarts here, but the dwindling numbers of the iEcon minimart franchise outlets may be an indicator.
From more than 100 outlets in 2010, the number of iEcon minimarts has fallen to just 29 as of May last year.
This gloomy backdrop has prompted minimart owners like Mr Kelvin Tan to develop a plan to rejuvenate the industry.
Banding together 13 other operators looking for "digital transformation", the 32-year-old formed New Econ Holdings a few months ago.
The idea is to get trained together to "go digital in a big way", using the right solutions to automate manual processes so time can be devoted to analysing sales data or look at how to take the business further, said Mr Tan, the second-generation owner of New Econ - Kim Eng Mini Supermarket.
Together, the minimart operators have upgraded their point-of-sale systems, but more can be done, he said.
[We will just keep manning the shop since we live here. We will do it until we can't do it any more.Mr Ang Lu Heng of Tee Seng Store
"We are trying to work with the Singapore Institute of Retail Studies (SIRS) and various government agencies to ensure that practical and sustainable solutions rolled out are implemented with effective and practical on-the-job training for total adoption," Mr Tan said.
"Even for my store, the degree of data analytics adoption is at a very premature level. There's a lot more depth to it."
What he is trying to achieve by banding together is reminiscent of what some 30 provision shop owners did in the 1980s, when they set up the Provisions Suppliers Corporation (PSC).
Back then, the big competitors were supermarkets, business was no longer brisk at provision shops, and bankruptcy loomed in the sector.
The PSC allowed provision shops to procure stocks in bulk and lower the cost of doing business. In 1982, the PSC, now Hanwell Holdings, took things a step further with the iEcon minimart franchise.
Provision shops were given a facelift - think identical brands stocked, consistent pricing and standardised displays you now see in minimart franchises.
Owners were taught basic entrepreneurial skills such as inventory control and profit management.
With competitive prices, a wider variety of goods and more organised displays, these former provision shops turned things around.
Their sales had a three-fold increase from 1983 to 1987.
Today, just as minimarts replaced mom-and-pop provision shops, online grocers are beginning to threaten the survival of minimarts.
Associate Professor Ang Swee Hoon from the National University of Singapore Business School attributed it to a growing group of consumers who place less importance on freshness or quality.
"The younger generation of consumers may not have the time to shop personally. Hence, they may be willing to forego quality for convenience," she said.
"Or such consumers may not know how to assess product quality, like how to judge whether an orange is juicy or not by the feel of the fruit. In which case, buying the orange personally at minimarts adds little value to them."
Embracing technology is the only way for these minimart operators to survive in this "brutal scene", said Mr Tan.
"It is not an option. Those who are stuck in their old ways will be eradicated. Minimarts will become endangered."
The Government has been taking small steps to help small businesses remain competitive in the current climate. For instance, they can tap into grants, such as the Capability Development Grant, to fund business development solutions like self-checkouts.
The costs of training and educating staff to adopt new solutions are covered by the grants.
SIRS offers a professional conversion programme for digital professionals, in which training covers topics like setting up stores on e-marketplaces and cost-effective social media marketing.
But recently introduced regulations are adding to headwinds in the sector, said Mr Tan, who is also an adjunct lecturer at SIRS.
Even for my store, the degree of data analytics adoption is at a very premature level. There's a lot more depth to it.Mr Kelvin Tan of NewEcon — Kim Eng Mini Supermarket
"Part of it also has to do with the regulations we are heavily hit by: no sale of alcohol after 10.30pm, the tobacco display ban, and now, a higher minimum age to buy cigarettes."
He added: "Does that mean we can no longer hire those who are below 21 to work as part-timers in the mart?"
All is not lost to the online retail market though, according to a July report on the Asean grocery retail scene by DBS.
While online grocery retail has the potential to be a popular channel in the future, it is still in its infancy, the report found.
It said: "This presents an opportunity for current brick-and-mortar grocers to jump on the bandwagon as they adapt to evolving consumer behaviour."
Prof Ang advised minimarts to target consumers who value freshness and quality of produce but do not have the time or ability to shop for them.
"They may engage personal shoppers to buy these products for them at minimarts or wet markets. In some households, they come in the form of domestic helpers.
"Minimarts should therefore stock themselves with more of such products that online groceries will find difficult to stock up to meet the expectations of freshness and quality.
"Minimarts may also stand by a guarantee of freshness and quality. They can offer a delivery service. If consumers are not pleased, there (can be a) full refund," she said.
Mr Tan hopes to take things further by working towards omnichannel retailing.
"For more channels of retailing, your point-of-sale system needs to be sitting on a cloud, and you need to start doing inventory management - something most minimarts don't do," he said.
With inventory management, minimarts can use data to enhance the customers' shopping experience, and leverage on the "personal touch" that gives them an edge.
"We did a Swot (strengths, weaknesses, opportunities and threats) analysis of the minimart, and found the sense of human touch remains the key differentiation asset for minimarts," said Mr Tan, who has an MBA in retail management.
"The minimart operators know our customers by face and on a personal level, including their shopping preferences."
It is this personal touch that Tee Seng's Mr Ang is banking on to keep the shop going.
Business has fallen over the years, but his attention to detail has kept him a regular stream of customers every day.
The shop gets crowded around 3pm as "it is tea time", Mr Ang said.
He remembers the favourite cigarette brand of workers from the nearby worksite, and banters with them in Hokkien.
While helping foreign domestic helpers top up their pre-paid cards, the sprightly man makes conversation in fluent Bahasa Indonesia.
"I don't make a lot of money, but it is enough for me and my wife to live on.
"We will just keep manning the shop since we live here. We will do it until we can't do it any more," he said.
Thors face tough fight in new arena
For the Thors, who run Kenny Grocery, not a day passes by without them toying with the idea of shuttering.
Their business has dipped some 30 per cent to 40 per cent in the past five years, after online grocers started sprouting.
Mr Leon Thor, 25, told The New Paper: "Even if we were to have a huge amount of capital, it would still not be enough. We are fighting against companies that are backed by Alibaba and Amazon, the two largest retailers in the world.
"It is a tough fight, even the local supermarkets get affected. Small players like us feel we always bear the brunt of large corporations coming in."
The grocer in Eng Kong Terrace used to have an edge by being the only player to take phone delivery orders.
But when e-grocers disrupted the market, customers started to "jump ship".
Mr Thor said: "Some remained with us because we provide the convenience of phone calls - something that the other grocers don't offer.
"But we got affected because the online grocers have an aggressive strategy.
"They went for the 'slash price, capture market share' strategy, and they had backers. That is the reality."
It is a tough fight, even the local supermarkets get affected. Small players like us feel we always bear the brunt of large corporations coming in. Kenny Grocery’s Leon Thor on the entry of online grocers
To keep up, the Thors blew $40,000 - quite a substantial sum for a small grocer - on an online store two years ago to capture a different slice of the market.
But the business' largely traditional environment poses a bigger barrier to modernising.
The part-time business management student once floated the idea of getting investors for the grocer, but the idea was met with resistance from his father.
"The thing about a family business is that at the end of the day, he is still your dad," he said.
Phone delivery orders taken are still scribbled, said Mr Thor, pointing to boxes of used receipt books sitting on the second storey of the grocery store.
The age of the 12 employees at Kenny Grocery is another obstacle. All, including his parents, are 40 and above and not very tech-savvy.
"Learning can be quite difficult for them at that age," said Mr Thor.
For now, the Thors' priority is to grow their online presence.
They have already tapped on online marketplace Qoo10 and are looking at how to work with platforms such as Lazada.
"We'll just target who we have already catered to, which is the expat crowd. We'll give them the best service we can. So far, we have managed to retain a good number of customers.
"Even though we do lose to RedMart because it has amazing prices, we will do our best to provide the best service," said Mr Thor.