The story of supermarket chain Sheng Siong (SGX: OV8) is one with true Singaporean roots.
Sheng Siong CEO, Lim Hock Chee, grew up in the 1970s with his siblings in Punggol on his family’s sprawling 90,000 sq. ft. pig farm. However, in 1985, their successful Cheng Siong Pig Farm (which reared 3,000 pigs at its peak) like many others suffered when the government closed down the pig-farming sector.
But a visit to a Savewell provision store in Ang Mo Kio changed Mr Lim (and his new wife’s) fortunes. Noticing it didn’t sell pork, he proposed setting up their own counter in the store from which they could sell off the farm’s excess stock of the chilled meat. The owner agreed, accepting 20% of Mr Lim’s takings as rental.
However, the Savewell chain of stores was experiencing difficulties of its own, and was soon forced to put its stores up for sale and offered them to its existing tenants. Lim Hock Chee and his brothers, borrowing capital from their father bought their outlet for S$30,000, and the first Sheng Siong store was opened.
With only a skeleton crew to run the store made up of the three Lim brothers, their six sisters and a Savewell employee Lim Gek Heng, life was tough – compounded by the fact there were five other provision stores within walking distance of theirs. The store’s location at the foot of a slope not visible from the main road made things even worse.
No-frills, lower profit margins
However, the Lim family focused on offering no-frills products at rock bottom prices. The siblings also offered to carry heavy items for customers up the stairs – believing in the importance of offering “excellent customer service”.
Their hard work paid off. Takings rose from S$2,000 per day in 1985, to over S$19,000 per day in 1988. By 2004, only one of their local competitors remained.
Sheng Siong soon opened a second store in Bedok, followed by another in Woodlands, which featured the novel (and popular) concept of a wet-market style fresh produce section. The company continued its no-frills strategy, buying in bulk and keeping prices low, whilst opening stores in areas with little competition that offered lower rents.
Thriving in times of trouble…
If shrewdly managed, supermarkets posses the unique ability to be able to thrive under all economic conditions – even following events such as financial crises and the aftermath of 9/11 terrorist attacks. After all, we still need to eat.
As retail space rentals plummeted during the 1997 Asian financial crisis, Sheng Siong seized the opportunity to open more stores. When diners avoided eating at restaurants due to the SARS outbreak, they bought more food from supermarkets to cook at home.
But did you know…
- The names “Sheng” and “Siong” mean “rising” and “vegetable” in Chinese.
- Sheng Siong offers its full-time workers one free meal per workday, with all food prepared in the company’s central kitchen.
- Upon leaving school, Mr Lim undertook a two-year car mechanic course, with the aim of being able to fix cars. It stood him in good stead as until recently he was known as “Mr Fix It’ at Sheng Siong, regularly welding trolleys and fixing power outages.
- Sheng Siong believes in profit sharing with its employees to promote brand ownership amongst its staff – in the past two years 20% of the Group’s profit before tax was distributed as a variable bonus to its employees.
- Mr Lim was known as the “towkay” (meaning ‘boss’ in Chinese) who drives a lorry” due to this being his only mode of transport for many years. What’s more, to this day he spurns owning an electronic device such as a Blackberry, jotting down appointments and meetings in a trusty notebook instead.
Today, Sheng Siong is Singapore’s third-largest supermarket chain after NTUC Fairprice and Cold Storage, which is owned by Dairy Farm Holdings (SGX: D01), with 33 outlets and selling everything from groceries and seafood to stationery and electronics. It strongly believes in offering customers a quick and efficient service, and reckons it has the fastest cashiers and shortest queues.
What’s more, the supermarket chain even has its own, live, Mandarin variety television game show on a Saturday night known as “The Sheng Siong Show”.
The towkay who drives a lorry…
But in spite of all of this (and featuring at position 35 in Forbes’ Singapore’s 50 Richest list) Lim Hock Chee remains a humble man, who still steadfastly refuses to waste money and who lives in a modest five-room HDB flat in Hougang.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Alison Hunt doesn’t own shares in any companies mentioned.