Friday, April 2, 2010

The eventual demise of wet markets in Singapore

The recent news of Sheng Shiong raising the rentals of the wet market stalls is of no surprise. The evidence is everywhere that these kind of small market stalls will soon be a thing of the past.

The reason is very simple. Property prices in Singapore are going sky high with no signs of abating. For all properties in Singapore, we have to pay a property tax that is a certain percentage of the property value (more if it's commercial in nature). Therefore, for anyone that owns the property, they'll need to raise the rental to cover this increase in cost. Furthermore, electricity rates are going up.

The writing is on the wall that wet markets will soon be a thing of the past because it becomes extremely difficult for them to maintain that competitive edge against the big supermarkets. Previously, the newspapers have also did a survey and found that most of the wet market products are more expensive than our big supermarkets. The reason is also very simple. Big supermarkets have economies of scale and are able to get lower prices mainly due to their size of purchases and flexibility in arranging their products.

You will find this phenomena not only in Singapore but elsewhere all over the world. Small shops are increasingly driven out by big stores due to this fundamental reason. You can delay the inevitable by retaining the wet market but sooner or later, the stall holders will find themselves price out of the market. They are unable to match the pricing by big supermarkets.

That's sadly the fact of life.

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