When you pass by a ValuDollar store in Singapore, you will most definitely see its multiple bright yellow signages that scream “Fire Sale!” and “Everything Must Go!!!”.
Authorities such as Consumers Association of Singapore (CASE) and the Competition and Consumer Commission of Singapore (CCCS) have dubbed these endless sales as misleading marketing tactics, and are in talks for stricter regulations on price transparency.
Such an act apparently counts as unfair practice, as businesses promote items or services supposedly for a fixed period of time but keep them on sale much longer. As a result, consumers end up doubting whether their purchases were really on sale at all, since prices remain low.
Regardless, we have to admit that this ‘tactic’ of theirs do work — Singaporeans are drawn to this popular chain because of its rock-bottom prices.
The budget store, which has a myriad of outlets scattered islandwide, stocks household items from shampoo to toothbrushes, and all sorts of snacks and beverages — all at heavily discounted prices.
This begs the question: how does ValuDollar manage to stay alive and even be profitable, despite offering astoundingly low prices?
#1: Achieving Economies Of Scale
Economies of scale can be achieved when the cost of production of goods are spread across a larger number of goods, which in turn translates to lower costs for consumers.
ValuDollar is founded by DD Private Limited, which is owned by Radha Exports. The latter is a supplier for high-quality fast moving consumer products at an “affordable cost”.
According to Radha Exports, it has 69 retail outlets all over Singapore and its own warehouse which spans 80,000 square feet in space.
The company has likely managed to achieve economies of scale by purchasing a large number of consumer goods in bulk, and passed on the lower costs to ValuDollar.
The company also carries products from all over the world, including countries like India, Malaysia, China and Indonesia. By diversifying their sources, the company also has the upper-hand to always choose the cheapest options.
#2: Selling “B-Stock” Products
The budget prices offered by ValuDollar might also be due to the fact that many of their products might be labelled as “B-Stock” products.
“B-stock” products include those that might have defects due to the packaging or labelling process. These defects might include scratches, dents, tears or other minor imperfections. Despite these small defects, the products are still safe for consumption.
Other products that might be labelled as “B-stock” might include those that are nearing their expiry dates.
Besides ValuDollar, many supermarkets, bakeries and food outlets also practice slashing their prices at the end of the day to allow their stock to be cleared.
If you are planning to consume the food before its expiry date, purchasing at such huge discounts is a win-win solution.
#3: Selling Off-Brand Products
ValuDollar and other discounts stores might import products from countries other than where the products are originally from.
For example, chocolate brand Lindt originates from Switzerland and is well-known for being a relatively premium brand of chocolate. How then is it sold for only S$2.95 at ValuDollar?
(For comparison, supermarkets like NTUC FairPrice, Cold Storage and Giant sells a bar of Lindt chocolate for around S$6.)
Instead of importing the Lindt chocolates from Switzerland, the store might have imported them from countries such as the Philippines, Indonesia or Malaysia.
Ingredients then might be of a lower quality than that of its Swiss counterpart, allowing them to be priced at a large discount as well.
#4: Entering The Grey Market
Most of us have heard about the black market — but what about the grey market?
Unlike the black market, grey market products are perfectly legal. It refers to goods that are sold outside a brand’s approved distribution channels.
For example, a distributor who is permitted to sell its goods to a supermarket chain like NTUC FairPrice might reach out to discount stores like ValuDollar when they have extra stocks.
These extra stocks might be sold at a heavy discount, but still allows the distributor to make a quick buck.
Maximising Your Savings At ValuDollar
Sometimes, the deals found at ValuDollar might seem “too good to be true” so do exercise discretion before purchasing.
Regardless, ValuDollar and other discount stores are undoubtedly welcomed by Singaporeans, evident from their rapid expansion into various neighbourhoods and malls all over the island.
Be it shopping for household essentials or buying branded chocolates in bulk for gifts, ValuDollar is always able to give consumers a bang for their buck.
Featured Image Credit: Vulcan Post