SINGAPORE: MARKET SNAPSHOT
Throughout the first half of 2019 Singapore’s economy has caught the brunt of the challenging global economic climate, which saw its annual GDP growth slow from 4.2% in Q2 2018 to 0.1% in Q2 2019—the lowest level since the financial crisis lows recorded in 2009.
Earlier this month the Singapore Ministry of Trade and Industry downgraded its GDP forecast for the second consecutive quarter this year, from 1.5%-2.5% to 0%-1%, as the island nation faces a slowdown across a number of key sectors including manufacturing, electronics and services, creating pressure on the otherwise stable economy.
In the face of the economic slowdown consumer confidence is waning, with the latest Global Consumer Confidence Survey revealing nearly 30% of consumers view job security and the economy as two of their biggest concerns in the next six months. Overall consumer optimism levels are also subdued, with the country posting a Consumer Confidence Index of 92 in Q2 2019, down from 94 in Q2 2018 and significantly trailing the global average which currently stands at 107.
FMCG sector performance reflects the broader economic climate, with little to no growth year-to-date. The Nielsen Total Retail Index recorded growth in the sector of 0.1% annually as at June 2019. Convenience stores and petrol marts are somewhat bucking the trend, however, recording 3% annual growth in FMCG value sales. The top three fastest-growing FMCG categories are novelty ice creams (up 14.7%), hand sanitizers (up 12.2%) and diabetic supplements (up 10.6%).
In contrast to the broader market trends, growth in FMCG ecommerce sales is surging, up 39.1% annually as at June 2019. The top three categories with the highest share of online sales include infant milk (7.2%), followed by diapers (6.6%) and beer and lager (5.0%). While ecommerce is advancing at a fast pace, experiential shopping, which focuses on well-organised storefronts, good customer service and a pleasant ambiance, remains a shopper magnet and a driver of sales — 68% of Singaporeans claim to have purchased more than they had initially planned to when shopping in-store.
A closer look at Singaporeans’ shopping behaviour reveals that more than a quarter (28%) love trying new brands and products, while around three in five consumers (61%) prefer to stick to their favourite brands. While established brands may take comfort in Singaporeans’ brand loyalty, and up-and-coming brands may consider Singapore a tough market to crack, there are certain triggers that can entice consumers to try new brands and products.
More than three quarters of Singaporeans (78%) say they would switch brands for better value for money and a further 73% of consumers would switch to a different brand to take advantage of price reductions or promotions. Meanwhile, two thirds of consumers (66%) would be encouraged to try a new brand or product if they perceived it would provide some form of convenience. Brand switching is most prevalent in the chocolates and biscuits category (52% of consumers report brand switching). Half of consumers (50%) report regularly switching brands in the dairy category, which includes milk, cheese, yoghurt and butter. Following close behind are shampoo and conditioner, with 49% of consumers switching brands, coffee and tea (48%) and skincare (47%).
Amidst the changing behaviours and attitudes of Singaporean consumers, established brands are facing hyper-competition across offline and online marketplaces. However, opportunity still exists for manufacturers and retailers that are able to tap into local consumer needs and tastes to guide their innovation efforts, and think ahead to identify new and emerging trends.