Shifting consumer purchase channels for FMCG
While Singaporean consumers were no strangers to e-commerce, the pandemic accelerated the adoption of online shopping in the grocery and FMCG sectors. FMCG, previously purchased through traditional retailers such as supermarkets, hypermarkets, or convenience stores, is now increasingly being purchased online. This resulted in key segments of FMCG, such as food and personal hygiene products, being among the most purchased items online by Singaporean consumers.The convenience of online shopping for their daily needs seemed to have convinced most Singaporean consumers to continue purchasing FMCG items online even after lockdowns and social distancing measures were lifted. Traditional FMCG retailers have thus entered the e-commerce space. Customers can now order their groceries online from the websites of the major supermarket chains in Singapore, such as NTUC Fairprice and Sheng Siong, alongside established e-commerce marketplaces such as RedMart, Shopee, and other specialty online shops. However, the shift to e-commerce might not be enough to stop the decline in consumer spending in FMCG retailers from 2021, as Singapore started to ease pandemic-related restrictions.
Inflation and the rising cost of living curb FMCG spending
Apart from decreasing sales brought about by the end of pandemic restrictions, the FMCG sector in Singapore faces another challenge from inflation and rising living costs. Private consumption expenditure on food and non-alcoholic beverages in Singapore, a key segment in FMCG, increased significantly between 2019 and 2020 and has remained constantly high since then. The personal care segment also saw price increases in 2022, when inflation rose. Prices of FMCG goods in Singapore are greatly affected by the global supply chain and the global economy, as Singapore imports a significant amount of its consumer goods, especially foodstuffs.However, the change in real income has not kept up with the increase in prices, and many Singaporean households are now feeling the pinch. 77 percent of Singaporeans surveyed in November 2022 were expecting food prices to increase in the coming months. Singaporean consumers are now more price-conscious and adopting penny-pinching behaviors such as switching from a brand name product to one from a private label.
