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The Feasibility of Establishing a Grocery Store in Singapore : By a Foreign Promoter?

The Feasibility of Establishing a Grocery Store in Singapore : By a Foreign Promoter?

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Foreigner wants to register company and open a grocery shop / 7 eleven in Singapore. [Feasible?]

Singapore is widely known for its pro-business environment, which encourages almost all kinds of foreign business owners to start and grow their businesses in the country. One common business idea that many foreign promoters plan to pursue in Singapore is establishing a grocery store, convenience store like 7-11, or a mini mart. The idea is grocery and similar mini mart is a retail store. So there is a ready business. So it must be easy to set it up and start making profits.

However, locally people are available to do these businesses. Also the grocery and similar retail businesses often require significant investment. When converted it into home country currency, the promoter often find it difficult to manage this level of funding.

Before making the decision you need to consider the following aspects.

Who Will Manage Your Grocery Store in Singapore?

The feasibility of establishing a foreign grocery store in Singapore depends on who will manage it, and in this regards you have two options.

Apply for an EP or EntrePass and relocate to Singapore to Manage Your Grocery Store

Grocery stores typically require consistent management due to numerous purchasing and retail activities this business involves. Presence of a key manager is a must. In this case It is highly recommended that you, as the grocery store owner, apply for an Employment Pass (EP) or Entrepreneur Pass (EntrePass) and relocate to Singapore to manage the store. However the key question here will be, whether your employment pass will get approved?

Fesiblities of establish store - Your Grocery Store

Hire a Singapore Citizen or Permanent Resident as the Manager of Your Grocery Store in Singapore

Alternatively, you can hire a Singapore citizen or permanent resident as your store manager while you oversee the store operations from overseas. In this case obviously you are leaving control in the hands of the person whom you know barely. Many promoters will not like this option especially if they want to have control over the operations and growth.

Figuring out Your Options

Fesiblities of establish store - Your option

Applying for an EP or EntrePass

  • Employment Pass is generally granted to applicants with in-demand skills. To date, finance, manufacturing, construction, health care, IT, communication, digital media, and tourism are the most in-demand industries in Singapore. Apparently, operating a grocery store is not included in the list. Also, there are many Singapore citizens and permanent residents who are already qualified to operate their grocery stores in the country.
  • EntrePass may not be suitable for all business owners now due to the recent changes in its criteria. EntrePass currently requires its applicants to be funded by an approved investor, intellectual property holder, incubatee, or entrepreneur with significant track records. So while in past, it was possible to apply for EntrePass for this kind of business idea, it is no more possible.

Fesiblities of establish store - Hiring

Hiring a Singapore Citizen or Permanent Resident : A local Person

This arrangement will likely become less efficient if the hired manager does not have enough expertise and skills. Hence, you have to consider hiring someone with substantial experience in store management. This also means investing in a decent amount of salary (at least S$4,000) for him or her. Even in that case, the question will arise, if the hired person will work with the motivation and zeal of that of the original promoter?

If you will be hiring a manager, you need to fully trust him or her and shell out an ample amount of money at the start of the store operations.

Investment Required

Fesiblities of establish store - Investment requirement

The last and the most important part is about the cost of entire project of setting up the store and making it operational. Lets start with the store manager salary. Taking it to be approx.. 4000 SGD per month, and presuming that you need to keep in reserve his or her salary for at least three months, you will need to plan at least S$12,000.

In addition, you will need to allocate a deposit of at least three months of rent (the typical S$5,000 monthly rental – deposit amounts to $15,000). For a space that measures 1,250 sq. ft., the typical monthly rental is at S$6,500. You also need to give your store an allowance of at least two months for it to actually start operating; hence, saving for at least a two-month rental will cost you around S$10,000 to S$13,000.

Then you need to arrange for furniture, shelfs and any other setup that might be required for display of items. There will also be investment in Fridge, chillers, cash machine, POS etc.

And then you will need to buy the stock. Which will cost you another few thousand dollars. It will largely depend on the size of store and the value of typical goods you sell.

In general the entire upfront investment needed for this option is around S$40-50,000. Other unexpected expenses, like facility renovation and additional furniture or workforce, should be considered as well.

Many foreigners, find it difficult to arrange this much amount for a grocery store startup.

On a Final Note

Since the chances of having an approved EP or EntrePass application are quite low due to their criteria, hiring a Singapore citizen or permanent resident as your store manager in Singapore would be the most feasible action to take. However the question is, are you ready to make such an investment, when most probably you will not be able to get and Employment Pass and relocate here in Singapore. You will mostly be leaving control in the hands of a local manager?

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