Specialised indicator may be required to track food delivery expenditure

Singapore

WITH food delivery services becoming a substantial component of Singapore's overall food and beverage consumption, it may be time to consider establishing an indicator to reflect the shift in such purchasing habits here.

According to latest figures by the Department of Statistics (Singstat), the proportion of online food sales has been increasing, with the peak coming in May 2020 at almost 45 per cent online food sales for that month.

Even after the circuit breaker was lifted in early June, Singapore saw a sustained demand for delivery services, with the proportion of online sales stabilising around 20 per cent from July to November, according to Singstat's Food and Beverage Index.

This figure is higher than the months before the circuit-breaker kicked in on April 7 last year.

Associate Professor Tomoki Fujii from Singapore Management University's School of Economics said: "Given that people are increasingly using food delivery services and the current situation is likely to remain so, it makes sense to have an index for it, whether or not it is included in the CPI (consumer price index) basket or reported as supplementary statistics for now."

According to Singstat, prices of delivered meals are currently monitored under the CPI in the "food serving services" category, while delivery charges are separately monitored under the "other transport" category.

However, it may be difficult to get a complete picture of the food delivery scene due to the other components included in these categories.

For example, other charges tracked under the "other transport" segment include sea fares, moving services, airfares and more, while other charges under the "food serving services" segment include restaurant food, fast food, hawker food and catered food.

Although delivered food comes at a higher price, many still choose delivery services for various reasons.

Ho Lian Shun, 21, who uses delivery services at least twice a week, turned to food delivery as often as five times a week during the circuit breaker.

"That period made me realise that I am willing to spend extra for people to deliver food to me as I can use the time to do more important things instead of having to buy from outside," he said.

The trend could spell long-term changing consumption patterns, with more willing to pay extra to have their meals sent straight to their doorstep.

Professor Yohanes Eko Riyanto from the Nanyang Technological University's School of Social Sciences said that Covid-19 has triggered the formation of a habit, and there has been a constant and steady shift in people utilising food delivery services since the onset of the pandemic.

"People's preferences are shaped and shifted by the habit formed during the pandemic," he said.

"The shift in preferences towards food delivery services would naturally increase people's willingness to pay to use the food delivery services. Their maximum reservation price for the services provided is now higher than before."

According to venture capital firm Momentum Works' report, the food delivery gross merchandise value (GMV) in South-east Asia grew by 183 per cent from 2019 to an estimated US$11.9 billion in 2020.

Singapore was one of the three largest delivery markets in South-east Asia, contributing to US$2.4 billion in GMV.

The report also said that there was a 2-2.5 times surge in downloads of food delivery apps in Singapore during March and April last year.

Selena Ling, head of treasury research and strategy of OCBC Bank, said that it would make sense to rebase the CPI basket accordingly if the food delivery trend sustains over the next few years.

The CPI is rebased once every five years to reflect the latest consumption patterns and composition of goods and services consumed by resident households.

The latest base year for the CPI is 2019.

Given the growing trend of food delivery services, it is becoming more important to track these changes to better understand the expenditure on such services.