Why Cold Storage Was Sold — DFI's CEO Says Shifting Retail Trends Forced the Call

Group will focus on 7-Eleven and Guardian stores which it believes are better placed for growth and will deliver better margins.

- Ravi Velloor

Blame it partly on the rail links being planned or under consideration to connect Singapore with destinations across the Causeway.

A few weeks ago, when DFI Retail Group — the company formerly known as Dairy Farm International — announced it was selling its Singapore food business, including the Cold Storage and Giant outlets, to Macrovalue, eyebrows went up around the island.

Following the Cold Storage sale, DFI, whose parent is the Jardine Matheson Group of Hong Kong, will focus on developing its 7-Eleven convenience store chain and Guardian health and beauty business in Singapore and the region. It believes these businesses are better placed for growth, and will deliver better margins.

What was behind the sale decision? After all, the business had seemed to have turned around after years of losses. And was not the $125 million price a tad low when you look over at Sheng Siong and see the stock market pricing that company at more than $2.6 billion?

I put these questions recently to Mr Scott Price, the 64-year-old American-born group chief executive of DFI Retail Group.

"We have done well," he acknowledges, referring to the turnaround of the Singapore food business last year. "But my job is to look around corners and think forward five years, not the next quarter.

"I see the amount of traffic going across (the Causeway), and I see the train system that's being set up, and I see a porous border set up, so truckloads of baskets can be digitally ordered online and brought into Singapore as personal goods, as opposed to commercial transactions.

"These are the sort of trends that tell me that a Singapore-only brick-and-mortar business is going to be really challenged moving forward."

On the other hand, he says, Macrovalue's huge presence in Malaysia means that it could bring a scale to its Singapore operations that would make much more sense for Cold Storage and Giant's future.