Dairy Farm overview

Dairy Farm is a pan-Asian retailer headquartered out of Hong Kong, with a strong history of acquiring businesses to drive expansion into new markets. As one of Asia’s leading retailers it has a network of over 10,000 stores (includes associates and joint ventures) across 12 markets. Stores cover grocery, health & beauty, home furnishings and restaurants and trade under multiple well-known banners.

Strategic Priorities

  1. Stronger capability – following a 80% change in the leadership team, Dairy Farm hopes to bring new value, experience and capability. The changes were not only to boost performance, but to also transform the business so that it is more relevant to customers.In addition to a strengthened leadership team, functional specialists are bringing expertise to drive change, developing enhanced in-store operating standards and building an integrated business culture.
  2. Grow in Mainland China – Dairy Farm is looking to develop a closer relationship with Yonghui. Performance in China continues to show promise, with improvements seen across all three formats (7-Eleven South China, Yonghui and Mannings) in some shape or form. New initiatives and network expansion will continue to help drive growth. 
  3. Maintain and use Hong Kong strength – of all the markets it has presence, Dairy Farm is strongest in HK. Wellcome, 7-Eleven, Mannings and Ikea are leading banners in their respective formats. All have a long-established history, with a large base of loyal customers, high brand presence and strong brand awareness. It is also exploring new ways to extend its leading position. The retailer has made supply chain changes to drive better fresh quality. While enhanced customer insight is also informing better decisions.
  4. Turnaround Southeast Asia operations – following a sustained period of subdued performance in the region, Dairy Farm is responding, investing more aggressively in format development. Dairy Farm continues to make strategic changes to its business in Southeast Asia. This involves multiple aspects, e.g. people, portfolio, product and price. The retailer has already been closing underperforming stores to improve profitability, but there will be further rationalisation of space and of its general merchandise offer. It has also launched new upscale concept stores: Penang Mercato Relaunch (Mercato Gurney Plaza, Malaysia) and CS Fresh (Singapore).
  5. Drive digital innovation – Dairy Farm recognises that it has underinvested in digital (people and technology) in response to rapid change in retail.  Upgrading the retailer’s legacy IT infrastructure remains a challenge, but it is committed to developing partnerships with key technology players. Dairy Farm is looking to bring stronger digital and technological innovations into its stores. In Mannings Hong Kong, for example, the retailer has introduced scan and go functionality to all stores.

Markets

  • Hong Kong (HQ) – Dairy Farm is one of the leading retailers in Hong Kong with operations across both mainstream and premium supermarkets (Wellcome, Jasons Marketplace, Jasons, Oliver’s, 3htreesixty), convenience stores (7-Eleven), health & beauty (Mannings, GNC), home furnishings (IKEA) and restaurant (Maxim’s).
  • Brunei – operations primarily focused on the health and beauty channel, with stores under the Guardian Banner, as of January 2018 it also operates one Giant hypermarket.
  • Cambodia – trades supermarkets under the Lucky Supermarket banner, as well as Guardian health & beauty stores and Maxim’s restaurants.
  • China – major strategic market for Dairy Farm with 7-Eleven stores operated across southern China, currently focused in Shenzhen and Guangzhou, the retailer also has a strong network of Mannings health & beauty stores, Maxim’s restaurants and has a strategic partnership (since 2015) with Yonghui Superstores, which it holds a 19.99% stake.
  • Indonesia – trades in Indonesia under PT Hero, operating premium supermarkets under the Hero banner, Giant Ekstra hypermarkets and Giant Ekspres supermarkets, Guardian health and beauty stores, plus IKEA.
  • Macau – acquired the San Mui supermarket chain in 2015, also trades 7-Eleven convenience stores, Mannings health & beauty outlets, plus Maxim’s restaurants, an IKEA store and an IKEA merchandise pick-up point.
  • Malaysia – operates hypermarkets under the Giant banner, plus mainstream and premium supermarkets under the Giant, Cold Storage, Mercato and Jasons formats, plus a strong chain of Guardian health & beauty stores are in operation.
  • Philippines – entered the Philippines in 2012 through acquiring an interest in Rustan’s Supercenters who operate Shopwise hypermarkets, supermarkets under the Wellcome and Shopwise Express banners, and premium supermarkets Marketplace by Rustan’s and Rustan’s. In 2018, Dairy Farm exchanged its ownership of Rustan Supercenters Inc. in return for 18.25% stake in Robinsons. In the same year, Dairy Farm acquired the remaining 51% stake in Rose Pharmacy, making it a wholly owned subsidiary. 
  • Singapore – the second largest grocery retailer in Singapore with hypermarkets trading under the Giant banner and supermarkets under Cold Storage, Jasons and Jasons Marketplace.
  • Taiwan – operates IKEA stores and small supermarkets under the Wellcome and Jasons Marketplace banners. In 2020, Carrefour acquired Dairy Farm's grocery operations in Taiwan.
  • Vietnam – operations are currently focused on Guardian health & beauty stores and Maxim’s restaurants. Supermarket and hypermarkets operations ceased in 2012 and 2018 respectively.

Trading & Marketing

  • Range – Dairy Farm operates its business within each market, so although there are similarities within the formats, ranges are decided locally. Hypermarkets typically stock a wide range (>50,000 SKU’s) of grocery and general merchandise, while supermarkets (>20,000 SKU’s) are more focused on grocery and health & beauty. In its more premium formats, stores offer a strong range of imported brands, with the retailer also having relationships with Waitrose and Sainsbury’s (UK) and Casino (France) to sell these retailer’s private label products as a point of difference.
  • Private label – Diary Farm has over 10,000 private label SKUs. Its strategy around private label is primarily focused on developing brands for each category, rather than a good, better, best approach, although some of these brands do still exist (e.g. Giant, No Frills, First Choice etc). It is focused on developing brands that differentiate its offer and help lead category development (to become number one or two brand in each category), examples include; Papa Alfredo (Italian), Sun Harvest (breakfast), Southdale Farm (dairy) Captain’s Catch (tuna), VitaPet (petcare), SnapMax (snacking), Veneto (water), French Cellars (wine). The Group is also beginning to adopt a more consistent approach to private label. One example is its Meadows brand in its Food businesses, with the number of SKUs brought to market and range increasing. Customers can also find Meadows branded products across multiple banners including the retailer’s supermarkets and convenience stores.                                                                                                            Dairy Farm follows a similar private label approach in its health and beauty business, developing exclusive brands for Guardian and Mannings, e.g. KissHop, Simply Men, Natureco Garden, Argan Oil, Oriental Herbs and Crystal Moist. However, it also carries products that are branded Guardian and Mannings in the respective stores.
  • Price & promotions – different formats play keys roles, with often a value and more premium grocery format in most markets. Giant is focused on delivering the lowest prices with its ‘Dare to compare’ promise and big discount promotions, while more premium formats, such as Cold Storage and Jasons Marketplace, focus on good value for money. Promotions usually run on a fortnightly cycle, with monthly, weekly and sometimes daily offers available.
  • Marketing – Dairy Farm has marketing campaigns that are tailored to each of its formats and the markets in which they operate. Banners often use a combination of newspaper, TV and in-store flyers to communicate the latest promotions and campaigns, whilst customers can normally sign up for exclusive deals to be sent to them via email. Loyalty cards are used in some markets, such as Manning’s Mann Card in Hong Kong, Rustan’s Fresh Shopping Rewards Program and Shopwise’s Wise Card in the Philippines, but are not widely employed. Increasingly digital is playing a stronger role with the retailer using digital POS in-store, developing mobile apps and utilising social media as a channel of communication.

Channels

  • Hypermarkets – typically over 6,000 sq m and selling a wide range of grocery and general merchandise, trading under Giant. Through joint ventures and associates, the retailer operates Yonghui and Shopwise banners.
  • Supermarkets – main format for the retailer, contributing over 50% of total revenue. Mainly focused on grocery, but ranging in size and offer from mainstream to premium stores, banners include; Wellcome, Yonghui, Cold Storage, Jasons Marketplace, Giant, Hero, Mercato, Olivers, 3hreesixty, San Mui, Lucky Supermarkets, Rustans and Shopwise.
  • Convenience – has the license to operate the 7-Eleven banner in a number of markets and regions, with stores focused on ready-to-eat, top up grocery and services.
  • Health & Beauty – one of Asia’s leading retailers in this channel, with operations in many markets under four main banners; Mannings, Guardian, GNC and Rose Pharmacy.
  • Online grocery – a growing priority for the retailer, it already has online grocery operations across a number of markets including Hong Kong and Singapore.
  • Other Non-Grocery – operates IKEA home furnishing outlets in Hong Kong, Indonesia, Singapore and Taiwan.
  • Foodservice - Retail – Dairy Farm's restaurants business and key associate operate under Maxim's.