SG’s modern grocery sales inches up amidst travel outflow

DBS believes the sector could reach $6.8b by the end of the year.

Singapore’s modern grocery sector saw a modest year-to-date (YTD) sales volume increase of 0.4% ending on 24 July amidst headwinds from travel outflow, according to a DBS report.

On a nominal basis, the industry grew 1.4% with a 1% pricing effect. By the end of the year, the sector is projected to deliver a 1.5% growth to reach $6.8b.

With the closing of nine giant stores, DFI Retail Group likely ceded market share to its top competitors. For 2024, NTUC FairPrice and Sheng Siong could see market share gains of 0.3% and 0.8% to command 49.3% and 20.4% market share, respectively, DBS said.

In 2025, the sector is expected to grow by 3% with an overall sector sales of $7.1b to be driven by the easing outbound travel and opening of new stores. Additionally, the pricing effect will be minimal at 1% due to easing inflation.

In terms of profitability, easing soft commodity and oil prices should support a low increase or even reduction in costs, according to DBS. Wage increases are also expected to remain subdued.

Meanwhile, other costs like carbon tax offset the benefits of lower oil prices. Overall, there is a positive outlook for the sector given the return to volume growth.