As a former british colony, Singapore has an age-old heritage as a western outpost in Asia. With a dependency on tourism and a reputation as a haven of luxury, Singapore has a dynamic C&T market to match. But in such a tiny nation, how much further can growth be pushed? Sinéad Galvin reports
The tiny island nation of Singapore has a long and chequered history of servitude and when it finally achieved independence in 1965, the country was socio-politically volatile and economically underdeveloped. Over the last 42 years this has translated into a country rated by the Economist Intelligence Unit as having the highest standard of living in Asia and ranked 11th in the world.
The Singaporean cosmetics and toiletries market in 2005 had an overall value of US$500.7m, marking a 6.1% rise on 2004. The past five years have seen impressive, sustained growth rising 30.7% from 2000 figures, according to Euromonitor. Overall, this percentage growth represents a compound annual growth rate (CAGR) of 5.5% in the period 2000-05, a value of $117.6m.
Singaporeans prioritise skin care over smelling good and skin care and fragrance are the two biggest subsectors in the Singaporean C&T market. Skin care is the largest subsector, worth $149.9m in 2005, up 9.3% on the previous year. This marks a 35.1% rise between 2000-05 worth $39m accumulatively. SK-II (P&G) usurped Shiseido as the most popular skin care brand in 2001, gaining an impressive 132.7% between 2001-05 to dominate the market with an 11.4% share. Shiseido trails behind with a 6.6% share, although the brand has also seen sustained growth since 2001. Between 2004-05 the brand’s share rose 4.8%. Estée Lauder follows closely behind with a 6.3% share of the market.
As a nation internationally renowned for its wealth and dynamic economy, it comes as no surprise that there is a burgeoning luxury market in Singapore, especially in the facial skin care arena. The Australian skin care brand Aesop chose to offer its signature facial treatments in only two countries outside Australia, one of which is Singapore. It took almost a year for the company to recruit and train the sole therapist to practise the treatment in Singapore and the aim is to showcase Aesop’s philosophy and products, with therapist Victoria Grace recommending a list of products after each facial.
The fragrance subsector is worth $95.7m and rose 6.1% in 2005, with huge growth of 38.3% between 2000-05, a value increase of $26.5m. Interestingly, The Body Shop’s range of fragrances is the most popular in the Singaporean market, although after reaching a high of a 6% market share in 2002, the brand’s share has declined 6.1% year on year to reach a retail value of $4.6m in 2005. Calvin Klein’s Eternity (Coty) entered the Singaporean market for the first time in 2005, placing second at 2.5%. Ralph Lauren’s Romance (L’Oréal) followed closely behind with a 1.6% market share.
After taking care of their skin and pampering themselves with expensive perfume, Singaporeans next turn their attention to their appearance. Colour cosmetics represents the third largest subsector in the C&T market, albeit significantly smaller than skin care and fragrance. Sales rose steadily between 2000-05 with year on year sales rising 4.3% in 2004-05 to reach a value of $67.2m. Estée Lauder is the most successful cosmetics brand in Singapore, although its popularity declined slightly from a high of a 7.9% share in 2003, falling 2.5% to reach 7.7% in 2005. Shiseido has gained ground in recent years with a 7.6% share of the market, with Lancôme (L’Oréal) close behind with 7.2%.
Pantene Pro-V (P&G) leads the pack in the hair care sector with an 8.5% share of the $64.7m category. However, 2003 was a poor year for Pantene, whose 7.8% share dropped 8.9% to reach a four-year low of 7.1%. But the brand has steadily been making up ground to take an 8.5% share of the subsector in 2005. Dove (Unilever) made an impressive turnaround in the category to increase its share from 2% in 2001 to reach 5.9% the following year, a rise of 195%. Dove and Elsève (L’Oréal) compete closely in the category and 2004 was a good year for Elsève, who firmly batted Dove into third position after its rapid rise in the market, tallying a 6.3% share compared to Dove’s 5.6%. Still, 2005 saw Dove fighting back to reach a high of 6.7%, with Elsève in pursuit with 6.5%.
The category that has seen the biggest growth between 2000-05 is the deodorants subsector. Despite being one of the smallest categories in the Singaporean C&T market, the subsector registered 41.1% growth since 2000 to reach a total value of $10.5m in 2005 with a 6.1% rise on the previous year. Nivea (Beiersdorf) leads the pack with a 17.5% share of the burgeoning market, leaving Fa (Henkel) trailing behind with a 7.7% share and Impulse (Unilever) in third position with 6.1%.
Noughties trends, such as the rise of the metrosexual male and increased awareness of sun care, have had a noticeable impact on the Singaporean C&T market. The tiny men’s grooming subsector has demonstrated growth of 36.3% between 2000-05 to reach $27.4m in 2005, up 7.03% on the previous year. Sun care has seen a similarly dramatic rise in growth, with the $7.6m subsector putting on a healthy $2.1m between 2000-05, a CAGR of 6.5%.
In order to encourage men to take care of their appearance, companies have been drawing parallels between masculine heroes like James Bond to up the macho factor. Nivea (Beiersdorf) chose the tagline Mission Impossible when it launched its nine-sku Nivea For Men skin care line in Singapore. The Male Advanced Face Care range was reintroduced earlier this year with an enhanced formula. Whether this marketing strategy will work is yet to be proved, as Nivea does not fall into the top three men’s grooming brands, which is dominated by Gillette in first and third place.
Shopping spree
The Singaporean retail market was worth $13.38bn in 2006, a rise of 5.2% year on year. Store based retailing accounts for 93.7% of the market at a value of $12.54bn, with non store retailing making up the remainder at $836.5m. Direct selling accounts for the majority of non store retail sales with a value of $412.9m, rising 13.8% in 2005 representing steady growth between 1999 and 2006. Internet retailing follows closely behind, accounting for $342m of the category. This area has also seen steady growth, increasing 28% between 2005 and 2006.
NTUC FairPrice Co-operative dominates the store-based retail market with a 7.4% share of the market. But its competitors have been gaining ground in recent years and the retailer has seen no growth between 2004-06.
FairPrice was founded in the early 1970s in a climate of a rising oil crisis and vastly increased prices caused by inflation. The government supported the co-operative’s mission to stabilise the prices of essential consumer products and FairPrice is now the leading supermarket in Singapore with 180 stores island-wide.
In 2007, FairPrice opened its first hypermarket store and announced that a quarter of a million customers visited the FairPrice Xtra branded store within a week of the doors opening. On the back of this success, the company’s ceo announced plans to open at least two more hypermarkets before the end of 2009. According to BMI, the hypermarket sector is forecast impressive growth with hypermarket sales set to rise 140% to $840m in 2011.
Carrefour currently has two stores in Singapore and is rapidly expanding into Asia. As an indicator of things to come, the company has opened 46 stores in Taiwan and will be keen to compete in the hypermarket sector currently being opened up by FairPrice. But it should also be noted that Singapore represents a geographically limited market and prime retail estate is already fought over at premium rates. The supermarkets and convenience segments have slowed dramatically recently as the number of consumers remaining to convert to modern retail has flagged.
Another major player is 7&I Holdings and the company currently places ninth in the top ten retailers. The company only entered the top ten in 2005 and growth has been steady, rising 15.4% in 2005 to reach a market share of 1.5%. Seibu department stores are a major subsidiary of 7&I Holdings.
Nuance-Watson, who operates all the mainline and standalone beauty stores and perfumeries at Singapore’s Changi Airport, has experimented with store concepts to target Singapore’s major tourism economy. The Nuance Group opened a new beauty store concept at Terminal One in 2005 in a joint venture with Hong Kong based AS Watson, targeting a younger urban audience. Glam Up carries affordably priced products, including the Paris Hilton (Parlux) and Britney Spears (Elizabeth Arden) fragrance lines, and has a DIY nail bar. The retail space is designed with a 70s retro feel and make-up promotions and in-store events drive sales. “Besides lower prices at Changi, we want to add a new dimension to beauty shopping through this chic and groovy collection and thereby reach out to a niche segment of the market,” says Nuance-Watson (Singapore) executive general manager Ken Tse. In 2004 Nuance-Watson increased its Terminal Two mainline perfumery floor area by 77%, revamping the stores in the process.
Giving something back
In a small island nation news spreads fast and brands have started to tap into other ways of raising their profile in Singapore. As a way of encouraging brand growth, L’Oréal has started to give something back to the tiny community, part of a long history of community-driven consumerism in the country. The Singapore L’Oréal Brandstorm competition picks finalists from the country’s leading universities to play brand manager to an existing L’Oréal brand. “L’Oréal Brandstorm was conceived as a global initiative developed for undergraduate students. In addition to attractive prizes, L’Oréal Brandstorm serves to identify and spot talent among the next generation of marketers,” says Kwan Lai Heng, human resources, L’Oréal Singapore.
Asia is a burgeoning market area and western companies are already competing heavily in the eastern arena. But the million dollar question is whether this will impact on Singapore, a geographically tiny and therefore limited market.
Singapore: Key facts
Area 692.7 sq km
Population 4,492,150
Capital Singapore