Minimarts have been a tough business for decades, facing threats from supermarkets, then hypermarkets, and now online marts. Last year's retail sales index showed the minimart and convenience store business decline by 3.1 per cent from the year before. Given the ongoing economic slowdown, this year will be another challenging one.
But, neighbourhood minimarts can still do well, given the right conditions and support. A key factor in their favour is Singapore's geography, with densely populated housing estates around the island where it is not uncommon for 1,000 households to be contained in 10 blocks of Housing Board flats. For these households, the minimarts at their doorstep offer convenience and proximity, which translate into savings of time, resources and transport costs. Such advantages are recognised by the big players too, with FairPrice launching its own minimarts last year. There are at least 1,000 provision and minimart outlets here, of which about 45 per cent are provision shops and 55 per cent minimarts.
Minimarts tend to know their customers' needs better since most of them live within walking distance and are repeat customers. Shops which build good personal relationships with customers are also more likely to upsell and cross-sell their products. While customers may start with only a tray of eggs, the purchases could slowly be built up to a sack of rice or a bottle of detergent and so on.
It may be a slow and incremental approach, but it builds a sustainable business.
It helps too if minimarts band together to form chains, obtaining economies of scale and a stronger bargaining power over distributors and suppliers. A chain can also have common promotional drives, or even take the business online. This is where minimarts can do with more government support. A key recommendation of the Committee on the Future Economy is to encourage local entrepreneurship, and the minimart retail industry is a good entry point for many into the world of business.
It starts small, offering newbies precious lessons in entrepreneurship, such as inventory, display, supply chain and customer outreach. Government grants for skills upgrading in computerisation, display improvements and stock taking can help not only existing shopkeepers improve their businesses, but also ease young entrepreneurs into the trade.
It would also help if the authorities are more sympathetic to minimarts when it comes to new regulations. When retail shops were banned from selling takeaway alcohol from 10.30pm to 7am two years ago, many shopkeepers were fearful of accidentally breaking the law. Now, it is common for most marts to have a nightly countdown to 10.30pm, with the shopkeeper shouting aloud "two minutes" to make sure no sales are made unknowingly.
It is similar with the upcoming ban on point-of-sale displays of tobacco products from Aug 1. Minimarts are preparing to cover their cigarette dispensers with curtains or sliding doors. But, there are concerns over how the ban will be enforced. If, for instance, the doors are faulty or the curtains fall off, would that constitute a flouting of the ban?
Regulatory change and the need to deal with multiple government and municipal agencies make it more difficult for minimarts to operate and also deter new entrants. Efforts to proactively consult the Singapore Mini Mart Association prior to any major policy change and a lighter touch in the enforcement of new rules would go a long way towards enhancing small retail businesses like ours.
Minimarts are plugged into their communities and act as connectors in our heartland so that a semblance of the old kampung spirit lives on. With a little more support, they can remain integral to Singapore's heartland, building ties from the ground up.
- The writer is chairman of the Singapore Mini Mart Association.