At a Glance

Singapore’s economy is expected to grow by around 3.5% in 2014 aided by healthy domestic

demand and a strong services sector. Economic growth is expected to gather momentum from

2015 to 2018 as external demand strengthens.

Franchise Glance

Singapore is an open friendly economy. For the 9th continuous year the World Bank ranked

Singapore #1 for ease of doing business. It is a forward country with solid 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 neighbours. Due to the trusted system there is

a certain peace of mind when dealing with potential Singapore partners.

According to McKinsey, Singapore is ranked as the 4th most connected country in the world so

offers a good hub for your regional headquarters and a springboard to expand across Asia. There

are around 7,000 multinational corporations with more than half of them using Singapore as

their regional headquarters.

Of 20 private economists surveyed by the Monetary Authority of Singapore (MAS) expected GDP

growth for 2014 is 3.8% and this is forecast to increasingly grow over the next 5 years.

Despite comparatively slower Asian growth, retail sales were up 5.5% in July 2014 (Singapore

Department of Statistics) and are forecast to increase by nearly 20% from 2014-2016 (PwC).

The food and beverage industry contributed approximately 3.2% to 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, up 5% from the previous year; the

financial services sector grew 10.6% and business services rose 5.1% (HKTDC). The service

sector is by far the biggest employer and adds around 60% to GDP.

The government has a very global attitude and is reliant on global business and imported goods.

There are a raft 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 backed organisations:

SPRING-Standards, Productivity and Innovation Board.

International Enterprise (IE) Singapore.

 |   FRANCHISE Key Point   |  Singapore has a very multi-cultural, globally aware population and is

therefore a great test marketing location before committing to a regional launch. The population

is small and predominately urban but has an enviably low unemployment rate. As a result, it is

one of Asia’s richest countries in terms of consumers, the level of per capita wealth is one of the

highest in the region and has risen consistently over previous years.

The average monthly household income of Singaporeans rose from $8,110 in 2007/08 to

$10,500 in 2012/13 with households spending an average of $4,720 a month on goods and

services. Total consumer expenditure is forecast to grow by CAGR 5% from 2011-2016 and 36%

of Singaporeans feel the next 12 months would be a good time to buy the things they need or

want (Nielsen 2014).

Food is the 2nd biggest expenditure behind housing and, interestingly, private education

accounts for a high percentage of spend-equivalent to university education expenditure

(Singapore Department of Statistics).

Given the higher income, the average consumer is well traveled and is very brand savvy. They

have a good level of sophistication and are very receptive to foreign products and services.

|   FRANCHISE Key Point   |  The generally higher affluence means there is a less price resistant

market-a useful point for premium brand companies to bear in mind.

The franchise business in Singapore is healthy; there are over 600 concepts with more than

35,000 franchisees. Franchising and licensing accounts for 18% of total domestic retail sales

volume and generates a turnover of about $6 billion. Franchisors from a range of countries are

present, across a range of sectors. The majority of brands are from America though Singapore

remains the most popular Asia destination for Australian franchisors.

Singaporeans are keen to find new franchise opportunities and are adept in dealing with foreign

franchisors. They not only have a good understanding of their domestic market but also the

regional market. This, combined with the strategic location creates openings for foreign brands

to partner with knowledgeable Singapore companies in order to extend their brand across the

region.

A successful foreign concept proven in the Singapore market has the possibility to be taken on

by the domestic partner and developed across the region, therefore significantly mitigating the

risk and cost to the foreign company.

Useful information snapshots

Consumers will be very conscious of food safety and health.

Singapore’s consumer foodservice industry reported US$7.5 billion in total retail sales in

2011, a 3.3% growth from the previous year.

Singaporeans spend about US$5 billion annually eating out. Restaurants as a group

account for 37% while fast food outlets account for 13% of the total revenue in the food

and beverage services industry.

Nearly two thirds of Singaporeans (61%) surveyed ate out more frequently in the past

year than they did in the two years prior.(Weber Shandwick 2014)

The Singapore confectionery market is promising having showed steady growth of 20%

over the last 5 years. The US$210 million market is primarily led by sugar and chocolate

products (Canadian Government).

Profitability ratio of the overall food and beverage services industry was 7.3% in 2012. All

food and beverage services reported increases in operating receipts in 2012 (Singapore

Department of Statistics).

Tuition and private education is a healthy sector and represents a growing expenditure for

Singaporeans. They do however have greater respect for reputable, proven brands.

Two major supermarket chains dominate the Singapore retail industry: Cold Storage

(Dairy Farm) and NTUC Fairprice. In addition to this Singapore has another 1,300 specialty

food and drinks outlets- and these enterprises are trending.

Singapore is considered to be one of the most aggressive discounting societies (Reed).

An estimated US$3.5 billion is predicted to be spent online in 2015. (asianewsnet.com).

Weber Shandwick’s 2014 survey reported over half of respondents (53%) purchased food

online at least once and 15% buy between one and three times per month.

Sector trends

Specialist products will rise, such as artisan bakeries, organic grocers and natural

cosmetics.

Bespoke beauty products and services are a growing sector.

Unprocessed and functional foods will increase in popularity as consumers become more

health aware.

Guess what-cupcakes are the new big trend in Singapore.

Healthy, fresh juice drinks will be an emerging sector.

Restaurants that have a distinct environment and offer a unique eating experience are a

present and future trend.

Singapore consumer

Consumers in Sinagpore are very open to purchasing foreign products and services. They are

generally loyal to a brand so it is essential to offer some kind of retention scheme. However

Singaporeans do like to experiment and will try new products-especially if they have seen the

concept while traveling or heard about the quality or customer service.

Although they have a high standard of living they are innately very price conscious. The price

point has to be appealing and match the market so it is recommended thorough research is

carried out: pricing yourself out of this market could prove a catastrophic mistake.

Analysing Singaporean consumer behavior does not seem so difficult as there appears to be a

general consensus about why they purchase. Franchise Meets suggests pushing your brand

through initial price promotions, thereby generating initial consumers, and retaining them (while

simultaneously creating a great word of mouth campaign) with your level of quality and service.

As with the rest of Asia, convenience is becoming a main purchase motivator. Modern retail

formats, lack of time and over work are factors supporting this change in behavior. Brands that

ease the process of purchase and/or offer a variety of delivery channels will have a higher

chance of success.

Lastly, Singaporeans like to have an emotional connection with a brand so a story behind the

brand can be a key marketing point. Emphasis your heritage or the quality of your

produce/service. Make much of your clients, endorsements and your domestic image.

The bottom line

A safe market that doesn’t leave much to the imagination-don’t read this as a negative. The

clear regulations and trustworthiness of partners make for a simpler, more professional process

than in some other Asian countries, and there is a lot to be said for that.

To conclude: A mature, solid market and well regulated industry, but small.

Franchise Meets reckons: 6/10.