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Take a look

Singapore’s economy is expected to grow by around 3.5% in 2014 aided by healthy domestic demand and a strong service sector. Economic growth is expected to gain momentum from 2015 to 2018 as external demand strengthens.

Glance Franchise

Singapore is a friendly and open economy. For the ninth year in a row, the World Bank ranked Singapore # 1 for ease of doing business. It is an advanced country with strong supply chains and a developed infrastructure. The franchise industry is very well controlled and transparent, so there are few regulatory hurdles compared to its Asian neighbors. Due to the trust system, there is a certain peace of mind when dealing with potential Singaporean partners.

According to McKinsey, Singapore is ranked as the fourth most connected country in the world, thus offering a good hub for its regional headquarters and a springboard for expanding across Asia. There are around 7,000 multinational companies and more than half of them use Singapore as their regional headquarters.

Of the 20 private economists surveyed by the Monetary Authority of Singapore (MAS), the expected GDP growth for 2014 is 3.8% and is projected to grow more and more over the next 5 years.

Despite comparatively slower Asian growth, retail sales increased by 5.5% in July 2014 (Singapore Department of Statistics) and are projected to increase by almost 20% between 2014 and 2016 (PwC).

The food and beverage industry contributed approximately 3.2% of GDP in 2013, with Singapore having the highest per capita food consumption in Southeast Asia (Research and Markets). The retail and wholesale trade sector accounted for 16% of GDP, 5% more than the previous year; the financial services sector grew 10.6% and business services grew 5.1% (HKTDC). The service sector is by far the largest employer, adding about 60% to GDP.

The government has a very global attitude and is connecting with global business and imported goods. There are a series of global and regional free trade agreements with hardly any tariffs on most agri-food products. Franchise information (including financial incentives) can be found through the following government-supported organizations:

Spring Standards, Productivity and Innovation Board.

International Enterprise (IE) Singapore.

Singapore has a very multicultural and world-conscious population and is therefore a great place to test marketing before committing to a regional launch. The population is small and predominantly urban, but it has an enviable low unemployment rate. As a result, it is one of the richest countries in Asia in terms of consumers, the level of wealth per capita is one of the highest in the region and has increased steadily over the past years.

The average monthly household income of Singaporeans increased from $ 8,110 in 2007/08 to $ 10,500 in 2012/13 and households spent an average of $ 4,720 a month on goods and services. Total consumer spending is forecast to grow at a CAGR of 5% between 2011 and 2016, and 36% of Singaporeans believe that the next 12 months would be a good time to buy the things they need or want (Nielsen 2014).

Food is the second largest expense behind housing and, interestingly, private education accounts for a high percentage of spending equivalent to spending on university education (Singapore Department of Statistics).

Given the higher incomes, the average consumer travels a lot and is very brand-savvy. They have a good level of sophistication and are very receptive to foreign products and services. The generally higher influx means there is a less price-resistant market, a useful point for premium brand companies to keep in mind.

The franchise business in Singapore is healthy; there are more than 600 concepts with more than 35,000 franchisees. Franchises and licenses represent 18% of the total national retail sales volume and generate a turnover of approximately $ 6 billion. Franchisors from a variety of countries are present, in a variety of sectors. Most of the brands are from the United States, although Singapore remains the most popular Asian destination for Australian franchisors.

Singaporeans are eager to find new franchise opportunities and are experts in dealing with foreign franchisors. They not only have a good knowledge of their domestic market, but also of the regional market. This, combined with the strategic location, creates opportunities for foreign brands to partner with knowledgeable Singaporean companies to spread their brand across the region.

A successful foreign concept proven in the Singapore market has the potential to be adopted by the domestic partner and developed throughout the region, thus significantly mitigating the risk and cost to the foreign company.

Snapshots of useful information:

  • Consumers will be very aware of the safety and health of food.

  • Singapore’s consumer foodservice industry recorded $ 7.5 billion in total retail sales in 2011, a growth of 3.3% over the previous year.

  • Singaporeans spend around $ 5 billion a year eating out. Restaurants as a group account for 37%, while fast food establishments account for 13% of total revenue in the food and beverage service industry.

  • Almost two-thirds of Singaporeans (61%) surveyed ate out more frequently in the past year than in the previous two years (Weber Shandwick 2014).

  • Singapore’s confectionery market is promising and has shown a steady growth of 20% over the past 5 years. The US $ 210 million market is mainly led by sugar and chocolate products (Canadian Government).

  • The overall food and beverage service industry profitability ratio was 7.3% in 2012. All food and beverage services reported increases in operating income in 2012 (Singapore Department of Statistics).

  • Private tuition and education is a healthy sector and represents a growing expense for Singaporeans. However, they have a greater respect for reputable and proven brands.

  • Two large supermarket chains dominate Singapore’s retail industry: Cold Storage (Dairy Farm) and NTUC Fairprice. In addition to this, Singapore has another 1,300 specialty food and beverage outlets, and these companies are trending.

  • Singapore is considered one of the most aggressive discount companies (Reed).

  • About $ 3.5 billion is expected to be spent online in 2015 (asianewsnet.com). The 2014 Weber Shandwick survey reported that more than half of respondents (53%) bought food online at least once and 15% bought between one and three times a month.

Industry trends:

  • Specialized products will rise, such as artisan bakeries, organic groceries and natural cosmetics.

  • Personalized beauty products and services are a growing sector.

  • Unprocessed and functional foods will increase in popularity as consumers become more health conscious.

  • Guess what, cupcakes are the new big trend in Singapore.

  • Fresh and healthy juices will be an emerging sector.

  • Restaurants that have a different atmosphere and offer a unique dining experience are a present and future trend.

Singapore Consumer

Sinagpore consumers are very open to buying foreign products and services. They are generally loyal to a brand so it is essential to offer some type of retention scheme. However, Singaporeans like to experiment and will try new products, especially if they have seen the concept while traveling or have heard of the quality or customer service.

Although they have a high standard of living, they are innately price conscious. Pricing needs to be attractive and match the market, so thorough research is recommended – pricing outside of this market could be a catastrophic mistake.

Analyzing the behavior of Singaporean consumers does not seem that difficult as there seems to be a general consensus on why they buy. It is suggested to boost your brand through initial price promotions, thus generating initial consumers and retaining them (while creating a great word of mouth campaign) with your level of quality and service.

As in the rest of Asia, comfort is becoming the main motivator for buying. Modern business formats, lack of time and overwork are factors that support this change in behavior. Brands that facilitate the buying process and / or offer a variety of delivery channels will have a higher chance of success.

Lastly, Singaporeans like to have an emotional connection to a brand, so a story behind the brand can be a key marketing point. Emphasize your heritage or the quality of your product / service. Make a lot of your clients, endorsements and your domestic image.

The bottom line

A safe market that does not leave much to the imagination, do not read it as negative. Clear regulations and trustworthy partners make the process simpler and more professional than in other Asian countries, and there is a lot to be said about it.

In conclusion: A mature, solid market and a well-regulated, but small, industry.

Rating: 6/10.

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