Overall biz environment is tough with low net disposable income and high cost of living
By ALIFAH ZAINUDDIN / Pic By TMR
Big supermarkets are at the wrong end of a shift in Malaysian shopping habits that show they prefer to shop at the local corner shop for daily goods and groceries.
The shift may indicate that ordinary Malaysians are making smaller purchases per shop visit and are more likely to opt for the convenience of sundry shops.
Mydin Mohamed Holdings Bhd ED Datuk Dr Ameer Ali Mydin said that “convenience” was an area where hypermarkets are losing to sundry shops.
“The overall business environment is tough. Net disposable income is low, prices are up as our currency is weak, so the overall hypermarket segment is down by 4% to date,” he told The Malaysian Reserve (TMR).
Lack of promotional pricing, as well as inconveniences connected with shopping at hypermarkets including Giant, Mydin and Tesco, have pushed consumers to look for value deals in neighbourhood mini markets, he said.
Smaller sundry shops like 99 Speed Mart Sdn Bhd have expanded swiftly in the last few years, and is expected to become even more popular in the next five years with the opening of 2,000 stores nationwide.
Speedmart 99 has also spoken about tapping into the e-commerce market and expanding the business overseas over the next 10 years — clearly a bright future for the mini-market operator.
In response to heightened competition, large hypermarkets such as Giant and Tesco have recently introduced downsizing measures to make shopping more convenient.
Ameer Ali said customers have become more selective in their purchases due to higher prices of goods and prefer not to go to a big hypermarket to buy a couple of items.
Apart from their smaller rivals, online grocery shopping is also slowly gaining traction in Malaysia. Tesco, the first grocery chain in Malaysia to introduce online grocery shopping in 2015, has since recorded over a million orders worth a total of RM179 million in online sales.
Last week, Giant brand owner GCH Retail (M) Sdn Bhd said it will cease operations of five Giant stores located in Sri Manjung, Sungai Petani, Shah Alam City Centre Mall, Sibu and Selayang Lama on Nov 5, 2017, at the expiration of leases at the premises.
Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Hamzah Zainuddin has downplayed the closures to a “retail crisis” in the country. Instead, he said the decision made by GCH Retail was part of the company’s downsizing strategy.
“They have to downsize their outlets and look for other smaller premises. They are still negotiating and this has nothing to do with the country’s economy,” he said on Tuesday. At present, GCH
Retail operates 54 Giant stores in Malaysia.
Unlike Giant, Ameer Ali said Mydin is not closing down any of its 67 outlets nationwide but plans to open four more within this year and in 2018. However, business will continue to be a challenge.
The announcement came as the retail sector enjoyed a slight recovery for the second quarter of the year (2Q17), compared to the first three months of 2017.
Retail sales expanded 4.9% from April to June, reversing a dismal performance from January to March, when total sales fell 1.2% year-on-year.
However, industry players downplayed it as a temporary feat and said they were not optimistic on their businesses in 3Q17. The rest of the year is expected to see a further weakening as consumers continue to tighten their belts in an uncertain economy.
A consumer who spoke to TMR said the higher cost of living meant that she had to limit her spending at hypermarkets to monthly bulk items — such as detergent, paper towels and packed food.
“There are certain things that you shop at different places to get good products at good prices. Pharmacies have weekly promotions, so buying toiletries and medication there is cheaper. I buy baby diapers and formula at sundry shops, and grocery items at the wet market,” she said.