Mydin’s warehouse sale hype underlines hypermarket gloom

The shopping frenzy at Mydin’s warehouse sale is every retailer’s dream at a time when consumers shift their purchases online

By ALIFAH ZAINUDDIN / Pic By BERNAMA & www.mydin.com.my

STANDING in a warehouse aisle and dressed in a company shirt, Mydin Mohamed Holdings Bhd MD Datuk Wira Ameer Ali Mydin speaks enthusiastically to the camera about his company’s first ever warehouse sale.

“We have RM15 million worth of goods to clear out. Everything must go!” he said in a four-minute clip on Mydin’s official Facebook account.

The 17-day promotion is offering discounts of up to 70% on more than 5,000 items ranging from packed food to back-to-school supplies, apparel and electronics.

It is the kind of video that is destined for viral magic and attracts thousands of bargain hunters to Mydin’s doorstop.

True enough, the first day on Friday last week sold over RM2 million worth of goods, and the crowd was even bigger over the last weekend at Mydin.

In fact, the crowd got so big, staff had to do some creative crowd control measures.

“We have to give out free mineral water bottles and little cans of sardine to keep the crowd under control,” Ameer Ali said, speaking to The Malaysian Reserve within hours after the opening bell last Friday.

“If we keep this up, we will probably clear up all the stock in less than 17 days.”

This shopping frenzy is every retailer’s dream at a time when consumers shift their purchases online.

But, while knockdown sales often translate into a spike in physical traffic, their contribution to the bottom line is often negative.

“We are a wholesale hypermarket, which means our prices are already low. When we give out 50%-70% discounts, we are losing money. But the objective here is to clear the goods, which have accumulated because of the slowdown in the economy.

“That is the whole idea of having a warehouse sale,” Ameer Ali said.

While year-end clearance sales may not be revolutionary, Mydin’s first go at an all-out warehouse sale is just another indicator local grocers are facing a hard time.

The supermarket and hypermarket segments continue to be the worst performers of the retail industry this year

The supermarket and hypermarket segments continue to be the worst performers of the retail industry this year, with growth falling 3.8% and 7.9% in the first two quarters of 2018 respectively.

The disappointing growth came despite hopes of improvement after the sector’s forgettable performance in 2017.

The poor show has forced many heavyweights in the business, including Mydin, to review their modus operandi in recent months. GCH Retail Sdn Bhd, which operates Giant Hypermarket in Malaysia and several other countries in the region, is looking to shrink its footprint in Singapore.

GCH, which has 60 stores across Singapore, is expected to shut its VivoCity outlet next year after closing two stores in Bukit Panjang and Jalan Tenteram in Whampoa estate.

Giant closed five outlets in Malaysia last year upon the expiration of leases at the premises.

AEON Big (M) Sdn Bhd has also resorted to closures, shutting down three hypermarkets in 2017 to reduce its number of outlets from 25 to 22.

Others like Tesco Stores (M) Sdn Bhd have opted to downsize their stores, while Mydin made the decision to dispose of its loss-making MyMydin convenience store business in April last year.

“I think all hypermarkets are reporting negative same-store sale growth, maybe some are slightly positive. But there is no real growth in the supermarket and hypermarket businesses.

“I would add and say it has nothing to do with online grocery shopping. There is a big hype about it, but online sales do not play a significant part in the total trade that is being done. The bottom line is people don’t have enough disposable income,” he said.

Following efforts to dispose of its non-profitable convenience store venture and discontinue Kedai Rakyat 1Malaysia shops, Mydin’s earnings improved and operating losses narrowed from RM75.94 million in financial year March 2016 to RM5.85 million in financial year March 2017.

While the reduced loss gap is something of an achievement, the company’s performance for the year remains under par.

Currently, Mydin has 78 outlets nationwide and caters mainly to those in the B40 (bottom 40%) and middle- income groups, particularly the Muslim consumer segment.

As such, Ameer Ali believes the government could do more to get the general public to spend.

“I agree with not having wasteful and irresponsible spending but the government has to spend to pump prime the economy. The concern now is they are still not clear about how they want to drive the economy forward.

“To be honest, I’m very pessimistic as far as the outlook is concerned for the supermarket and hypermarket segments. I do not expect there will be positive growth. We will be lucky if we are able to just have what we had last year,” he said.