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Cold Storage Strategies



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    Beginnings In its early years, Cold Storage was an independent small retail depot selling mainly frozen meat from Australia, and its target customers were mostly Europeans. From 1965, to achieve economies of scale, Cold storage adopted the concept of multiple retailing, where bulk buying activities and distribution of food products to a network of stores throughout Singapore and Malay Peninsula was carried out (Goh 2003). Cold Storage also pioneered the manufacturing of condensed milk and other milk products such as UHT milk, Magnolia soft drinks and soya bean milk to serve the ever changing consumer taste buds (Goh 2003).

    In 1993, Cold Storage, with 11 stores at that time, was acquired by Dairy Farm International Holdings who had plans on expanding its operations in Singapore. Even after being acquired, Cold Storage’s primary vision (strategy) remains unchanged; always to cater to customers’ unique needs. This case study highlights the background and how Cold Storage attained its current success to-date. It also emphasizes the present environmental factors which led to their strategic decision to sustain its competitiveness. Competitions [pic] Source: EuroMonitor International 2009

    Like all other companies, Cold Storage faces intensive competitions. Till date their major competitor in the supermarkets industry is NTUC FairPrice, with a total of 81 outlets islandwide. The co-operative makes much of its efforts to keep prices low on basic products for the benefit of the less well-off. Initially, Cold Storage targeted middle to upper income segments of the consumer market, emphasizing on freshness and quality (Goh, 2003). In contrast NTUC FairPrice focuses on patriotism and low prices to promote sales (Euromonitor, 2004).

    Recently, NTUC FairPrice Co-operative Pte Ltd launched new concept stores; FairPrice Finest in 2008, to compete with Cold Storage in the upper income segment of the supermarket industry. Coming a distant third in the supermarket segment, domestic player Sheng Siong specifically targets lower income groups. It operates 15 no-frills concept supermarkets in secondary retail locations in the heartlands (MediaCorp Today “Neighbourhood shops still feel gloom”, 10 January 2005). Sheng Siong focuses on cheaper products from China and the Asean region.

    Reference [pic] Acquisition In order to maintain its competitive position in the supermarkets industry, Cold Storage was involved in a strategic acquisition of Shop N Save Supermarket in Singapore during November 2003 for a total consideration of US $52 million (EuroMonitor International, 2004). Shop N Save was previously jointly owned by Singapore’s QAF Limited and Delhaize Group and it had a total of 35 stores in Singapore. A leading discount supermarket chain in Singapore, Shop N Save exemplifies simplicity and efficiencies.

    It is committed to provide convenience and competitive pricing to customers of the lower income segment, without compromising the quality and freshness of the products sold (Cold Storage, 2008). Simon Keswick, Chairman of Dairy Farm International commented that the acquisition of the 35-store Shop N Save chain in Singapore complemented Cold Storage’s operations. This acquisition represents the successful implementation of their strategy to build on leading positions in existing markets (Dairy Farm International, 2003).

    For the past 3 years since 2006, the market shares of NTUC FairPrice have decreased steadily from 47. 0% to 46. 3%. Inversely, the market share of Dairy Farm International Holdings increased slightly from 21. 7% to 22. 0% (Euromonitor, 2009). Financials [pic] Source: EMIS, 2009 Cold Storage contributed a significant amount of earnings to the East Asia of Dairy Farm’s business. Net profit increased 29. 3% to SGD 61,367,000 between 2005 and 2007. Return on equity shot up by 10. 35% in 2007 as compared to 2005. Activities

    Cold Storage recognises the need to increase its flexibility to consistently develop competitive advantages. In conjunction with the Singapore F1 race in September 2008, Cold storage strategised to work with Shell, organising a Supermarket Night Race where the racing shopping carts are being ‘driven’ down the aisles in one of the Cold Storage stores. The event gave consumers a chance to win Cold storage and Shell fuel vouchers. Consumers who were not able to participate in the event were given shell vouchers for spending a minimum amount in Cold Storage (Marketing-Interactive. om, 2009). Cold Storage was the first supermarket to organise a kid-run activity islandwide which targeted kids from ages of 3 to 12 years old. This was organised with the intention to integrate family-bond activity with wholesome and healthy awareness (Cold Storage 2008). Technology Cold Storage was the first supermarket to set up an online groceries website for its customers. This is initiated to create convenience for its customers; including information on products’ specifications (e. g. weight, amount, pieces per packing) offered, promotional details and availability of products.

    This was so successful that NTUC FairPice subsequently mimic. Cold Storage entered into a partnership with Media Cart Asia to pioneer the implementation of RFID technology- enabled shopping carts, the MediaCarts. This collaboration is made possible with the help of SPRING Singapore, which encourages organisations to innovate and exploit technologies available. The MediaCart is an effective shopping tool linking the retailers, marketers and shoppers as well as providing customers with an entirely different and value- oriented shopping experience.

    The MediaCart has brought about several advantages to the customers; view their shopping lists and locate inventories through a LCD screen. It also informs shoppers about the latest promotions in Cold Storage by constantly updating any advertisements or promotional messages. Other than providing information, the MediaCart also captures customers’ profiles and buying behaviours which are valuable to Cold Storage. This strong analytical tool helped Cold Storage in better understanding of consumers (A* Star 2008). Another technological leverage that Cold Storage employs is the alliance formed with SAP, a world’s leading software provider.

    The SAP technology is applied to its retail outlets. This technological platform is able to provide consumers with an enhanced shopping experience by increasing the efficiency and in- stock performance of Cold Storage (SAP 2008). SAP provides real-time data on Cold Storage’s inventories, minimizing out-of-stock and excess stocking situations. Achievements As an old brand name with over 100 years of experience in Singapore, it is constantly seeking to introduce new store concepts and has been the trend-setter for the industry.

    Its launch of slogans in “Triple Guarantee of Price Integrity, Quality and Freshness”, “Shop with Confidence” and “Scanning Integrity Guarantee”, assured customers improved services and higher quality products. It received a CASE TRUST mark by CASE which was to identify companies that have received a high degree of customer confidence. Its excellent service is further manifest as a retailer to go the extra mile to provide Halal purchases for the smaller cluster of ethic group- Malay.

    In recognising and fulfilling its Quality and Freshness concept, it started the Fresh Food Distribution Centre in 1999 to ensure a fully integrated system is organized; from the supply chain to store level to ensure safe handling of unpreserved items. This is an important aspect to provide for high quality products (Cold Storage 2008). Cold Storage’s customer- focus strategy has indeed won the consumers’ support where it has been voted Gold status in the Reader’s Digest Trusted Brand for a consecutive of three years since 2006 (Cold Storage 2008; Trusted Brands, 2008).

    The gold award represents that Cold Storage attained a score clearly above its competitors and this goes to show on the strong brand image that it has imprinted in consumers’ mind. What does the future holds for Cold Storage? Over the century, Cold Storage has gone through takeover, acquisition and several strategic implementations. The main issue facing management of Cold Storage is to maintain its current competitive advantages while providing the flexibility to enhance competitive advantages for future strategies. With fierce competitions arising as the world globalises, will Cold Storage be able to sustain for another century?

    References Books Goh, CB, 2003, ‘Serving Singapore, A Hundred Years of Cold Storage, 1903-2003’, Cold Storage Singapore, Singapore Websites Cold Storage 2008, Welcome to Cold Storage, viewed March 31 2009, Emerging Markets Information Service 2009, Company Profile, viewed March 31 2009, Dairy Farm Internation 2009, Dairy Farm Annual Report 2003, viewed March 31 2009, Trusted Brands 2008, Award Winners, viewed March 30 2009, Euromonitor International 2009, Dairy Farm International Holdings Ltd – Retailing – Singapore, Euromonitor International, Singapore, viewed 20th March 2009, < http://www. portal. uromonitor. com. libproxy. sim. edu. sg/passport/accessPDF. ashx? c=26PDF&f=F-113243-15216426. pdf&code=vSrCPTyGNKj0UxNkHrP%2fSrPopTc%3d > EuroMonitor International 2009, Supermarkets-Singapore, viewed March 14 2009, EuroMonitor International 2004, Retailing in Singapore, viewed March 16 2009, https://gpxsvr5. np. edu. sg/apps3/lib/reference/refenq. nsf/85d009b644b0defc48256f69001b402d/0fb533c6ed0c7c44482570a0001174d2/$FILE/SporeRetail_Sect8. pdf SAP 2008, Leading Pan- Asian Retailer of Well- known Brands Chooses SAP for Retail Solutions to Support Growth and Better Serve Customer Demands, viewed 14 March 2009,

    Marketing-Interactive. com, 2009, Marketing, Shell and Cold storage promote F1, SINGAPORE, Marketing, Campaigns, Sponsorship marketing, Sports Marketing, Competitions, Alliances, | Market-interactive. com, viewed March 15 2009, < http://marketing-interactive. com/news/8202> Retail Asia 2007, NTUC FairPrice Launches Its Finest Retail Concept Yet, Retail Asia, Singapore, viewed 20th March 2009 Delhaize Group 2003, Delhaize Group Sells Interest in Singapore Retailer Shop N Save, Delhaize Group, Belgium, viewed 20th March 2009 < http://www. elhaizegroup. com/divclassdg_MenuText_YellowMEDIAdiv/PressReleases/2003/tabid/72/ctl/ViewPressRelease/mid/738/PressReleaseID/547/language/en-US/Default. aspx> Dairy Farm South Asia 2004, Dairy Farm South Asia Posts Strong Growth in 2004 First Half Sales increased 33%, viewed 20th March 2009 < http://www. dairyfarmgroup. com/shareholder/press/p040803. pdf> A* Star 2008, Press Release: Singapore’s first intelligent innovative shopping carts – Mediacarts – to make its debut at a Cold Storage supermarket outlet in Singapore, viewed 14 March 2009,

    Cold Storage Strategies. (2018, Feb 27). Retrieved from

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