Minimarts 2.0: Updating a traditional business

Manual processes can be automated to gain business intelligence.

I WAS stuck on an hour-long bus ride in Shanghai two years ago during a tour with retailers from Singapore and decided to make better use of time. I logged on remotely into my store's inventory system to check on stock, realised it was low on Yeo's packet drinks and sent a purchase order to the supplier via WhatsApp.

My fellow minimart operators were surprised. They had done stock taking only one way for decades: counting with their fingers, in person. To find out how many more cans of Coca-Cola to order, for instance. It would mean moving boxes around in tight spaces, before repeating it for all the variants of the popular drink: Diet Coke, Coke Zero, in cans or bottles of different sizes. Very often, there were errors.

It could not go on. This has been an especially tough year for retailers in Singapore, buffeted by the weak Malaysian ringgit, the gloomy economy and disruptive technologies.

To survive in this increasingly brutal scene in Singapore with the double threats of supermarkets and e-grocers, minimarts must embrace disruption. Otherwise, it would not only be disrupted, but could also face extinction.

To stay relevant, minimarts have to reboot by going digital in a big way. With the right solutions, manual processes in the shops can be automated to boost efficiency and gain business intelligence, allowing more time for business development.

A system as simple as barcode scanning and automated inventory management can save many man hours. Instead of deploying scarce manpower to do manual stock taking, it would allow remote access and free up labour which could be devoted to analyse sales data.

For instance, in a recent study of my store's scanned sales data, I noticed a sharp spike in the sales of paper towels. The data gleaned was able to pinpoint the specific transactions that contributed to the increased sales.

After some checks, most of the purchases were traced to a business owner of a nearby eatery. This bit of simple business intelligence allowed us to speak to the owner to learn more about his business needs and also to reassure him that we would cater to his needs.

Such business development is important to minimarts. After all, a key differentiating factor of minimarts, as compared to the big brands, is the emphasis on human relationships and familiarity with customers in the neighbourhoods. The personal touch was made possible only through simple data analysis.

The transition to the digital sphere may also make this line of work more appealing to youngsters. Succession planning is a common worry of minimart operators, most of whom are in their silver years.

This old-world business steeped in equally old-world practices often appears unattractive to the younger generation. But the younger folk could be more drawn to enter this industry if they feel they can make an impact by working with digital solutions and data, moving away from the murky practices of gut feel and habits.

That said, minimarts face several challenges embracing this disruption. Most operators are unfamiliar with online processes. And if years of using old-world methods to run the minimarts have served them well, they are even less likely to change.

Even for those who want to make the digital leap, they face other practical concerns, such as training staff to adopt the new systems. For older employees in the trade, making the switch to any devices is usually a stressful struggle.

Yet, it does not make business sense to hire another employee to see to its digital aspect. Margins are small in the minimart business and manpower is kept lean - a store typically has just one or two hired staff.

Support from the authorities is thus useful and even critical. The government is taking steps to help small businesses remain competitive in the current climate.

One example is the Professional Conversion Programme for Digital Professionals initiative by the Singapore Institute of Retail Studies (SIRS). It helps mid-career PMETs re-skill so as to start a career in retail, with training courses funded up to 90 per cent and also salary support for companies to tap on this source of manpower.

The training includes tips on how to go digital, including simple and cost effective social media marketing through Facebook and setting up stores on e-marketplaces. Fees are payable by SkillsFuture Credit, which means it is essentially free.

Spring Singapore has also been encouraging micro-retailers to be more productive by adopting self-checkout and cash management solutions through its five appointed vendors.

Businesses can tap grants, such as the Capability Development Grant, to fund these business development solutions. The cost of training and educating staff to adopt new solutions are covered by the grants.

But amid such support, the minimart sector also has to deal with an ever-changing and dynamic environment which includes challenging new laws. For instance, the government's proposal to raise the minimum legal age of smokers from 18 to 21 in a phased manner over three years has given micro-retailers pause for concern.

While some studies have shown the effectiveness of raising the minimum legal age to discourage smoking, such a change would hurt minimarts in its manpower needs.

It would lengthen checkout time to check the ages of a larger pool of potential illegal cigarette buyers. Furthermore, minimarts rely on part-timers, aged 18-21, during their vacations, but would face problems hiring them after the revision.

More dialogue with the relevant authorities on such kinks would be reassuring that such policy changes have taken into consideration the existing challenges of minimarts in the face of massive disruption.

Given the right attitude from operators and support from the government, minimarts can embrace change and overcome disruption in the evolving micro-retailers' landscape in Singapore.

  • The writer is a trainer at the Singapore Institute of Retail Studies. He is also a second-generation minimart operator.