An asset light business model lowers operating costs and risks. However Sheng Siong has went against the odds. Sheng Siong announced the acquisition of a property in Bedok Town Centre for S$53 million. The property is an existing store that Sheng Siong has been operating for 10 years.
I can see the rationale why Sheng Siong acquires the property. The 30.6k sf store is conveniently located within walking distance from Bedok Mall, Bedok Bus Interchange and Bedok MRT Station which enjoys excellent shopper traffic. According to analyst reports by CIMB, the store contributes 5 to 10% of Sheng Siong’s revenue. Thus, this is a pretty important store to Sheng Siong.
Including the Junction 9 store which is opening in 2Q16, Sheng Siong will now own four out of the 41 stores that the group operates.