VOLUNTARY CHAINS AND TRANSFORMATION OF LOCAL RETAILING IN SINGAPORE : A GEOGRAPHICAL CASE STUDY

Abstract

Over the last fifteen years, the identification and minimisation of distribution costs have become a priority for many retail establishments in the West and in Singapore. At the "top" end of the retail hierarchy, large establishments have established direct links with manufacturers to gain fuller control of the production chain. The strategy adopted by small and independent retailers has typically involved increased vertical integration with distribution. In Singapore, the replacement of the conventional marketing system by vertically integrated systems, has been experienced in the grocery retail sector. Instead of obtaining supplies from a myriad of distributors, efforts have been made by a proportion of provision shop owners, to integrate vertically with wholesalers or large organizations through contractual arrangements, such as voluntary chains and franchises. The motivations behind these arrangements have been problems of high selling costs, and inefficient scheduling and distribution of supplies, inherent in the conventional system of marketing. In most cases, the replacement is accompanied by changes in the trading format and physical appearances of the provision shops. These changes or retail innovations are well illustrated by their transformation to more modern forms or 'western type' retail outlets in the suburban neighbourhoods of Singapore. This exercise focuses on the case study of the Econ Minimart voluntary chain. The emergence of the voluntary chain is set within the context of innovation in the retail sector. The study examines the adoption and diffusion of an innovation of retail institution (Econ Minimarts) in Singapore. Since the adoption process links inextricably with the decisions of the retailers, it also investigates the motivations behind their membership in the voluntary chain, and the changing retail techniques and merchandising methods of the shops after conversion to the minimarts. Peripheral to the study, but nevertheless essential in putting the study into perspective, is a chapter devoted to outlining the retail trends in the West and in Singapore. Although Singapore has experienced trends such as decentralization, structural changes and ownership concentration like that of the West, there has been some adaptation to local circumstances in terms of the continued importance of the city as the retail centre, and the survival of small scale retailing. Small shops will continue to survive in Singapore due to the unique conditions present. These include factors such as population demographics, influences of certain government policies and legislation, and the nature of local entrepreneurship. Vertically integrated marketing systems such as the voluntary chain is a subset of these mechanisms enabling the survival of small shops in Singapore.