New Cold Storage, Giant owners say $125m price tag fully reflects value of the business

SINGAPORE - Although DFI Retail Group has decided to offload its Singapore supermarket business to focus on other more lucrative businesses, the new owners of Cold Storage and Giant see new opportunities to expand their supermarket empire.

In fact, Datuk Andrew Lim and Datuk Gary Yap, co-founders of privately owned Macrovalue, which

acquired the two supermarket brands from DFI for $125 million

on March 24, told The Straits Times that the price tag for the two brands in Singapore is reasonable and rational, as it fully reflects the value of the business. They added that no debt was taken to fund the acquisition.

The pair will have high customer expectations to meet, though.

Speaking to ST at the Cold Storage in Novena Square, where she was out shopping for granola, peanut butter and other organic products, Ms Rani, a 48-year-old secretary, said she is hoping that prices for these products, which are unavailable at her regular FairPrice and Giant outlets, will moderate under the new ownership.

“I don’t often come to Cold Storage as the products are pricey, so I hope prices will drop with the acquisition,” she said.

Ms Sivagami, who is 40 and works in administration, told ST at the same outlet that she is concerned about the continued availability of certain products “that can only be found here”.

“I’m concerned about whether the brands I like will still be available, and am wondering if the new owners will bring in more Malaysian brands. The quality of the products is also something I think people might be concerned about,” she said.

Mr Lim, who is a veteran in the Malaysian supermarket industry, said there will be no disruptions at the 48 Cold Storage and 41 Giant outlets his firm now owns in Singapore. “It will be business as usual,” he said.

He added that what consumers can expect at Cold Storage and Giant from now on is a greater assortment of merchandise, more value for money and fresher products from Malaysia.

Cost savings can be achieved for the Singapore business by leveraging Macrovalue’s logistics and supply chain arrangements in Malaysia.

For example, products that are now flown in to Singapore due to insufficient volume can be shipped in bulk from Malaysia at a lower cost. This will also enable a greater variety of products to be available at the Singapore stores.

Consumers can also expect to see Cold Storage outlets opening in emerging districts such as those near Lentor Modern.

Mr Lim said several banks in Singapore and Malaysia are already in touch with Macrovalue for potential funding arrangements on this front, and that the company is prepared to invest “as much as needed” to carry out its expansion plans.

This could benefit consumers like Mr Leong, a 68-year-old accountant, who does not shop at Cold Storage or Giant “because none of the outlets is within walking distance of my neighbourhood in Upper Thomson”.

Mr Leong said he does most of his shopping at FairPrice. “It is convenient to reach. The prices of goods are also reasonable and there’s a variety available. The supermarkets are also bright and tidy, and the staff are friendly.”

Clearly, Macrovalue will face stiff competition from FairPrice and Sheng Siong in districts where it does not yet have a presence.

Still, Mr Lim noted that there is a growing number of consumers who want to “trade up” and are willing to spend on a greater assortment of higher-quality merchandise, such as cheese, wines and dairy products.

“They will be able to find all these and enjoy better customer service as we open more Cold Storage stores,” he said, adding that Cold Storage has had a long history in Singapore and consumers here view the brand positively.

Take Ms Ong, a 29-year-old executive in the education sector.

“I enjoy shopping at Cold Storage because they have products that are harder to find in other supermarkets, like rigatoni pasta and olive bread,” she said, adding that she is expecting good prices, better deals and a wider variety of products, moving forward.

At the heart of the acquisition is the ability to combine Cold Storage and Giant in Singapore and Malaysia for better scale and assortment, so that customers can enjoy better value, Mr Lim said.

Macrovalue owns two Cold Storage and 38 Giant outlets in Malaysia, as well as 11 upscale Mercato supermarket outlets.

On top of expanding the number of outlets and range of products in Singapore, Macrovalue will focus on training its supermarket staff for higher productivity and better customer service.

“Besides price and range, Singapore customers wish for better service, like staff who can recognise them by name,” Mr Lim said.

He added that there will be no retrenchments, and human resources policies will be refreshed to allow staff more flexibility and work-life balance.