‘One retail chain’s results do not speak for whole economy’

KUALA LUMPUR: It is unfair to draw conclusions on the health of Malaysia’s economy based on the performance of one retail chain or retail segment, Barisan Nasional Strategic Communications director Eric See-To said.

This, he said, was especially so as the retail industry had grown increasingly competitive and complex with changing consumer habits.

He said changes in consumer preferences were not unheard of, and this could be seen in the growth of online shopping, including online grocery shopping.

Citing Lazada as an example, he said it continued to experience triple digit growth, while others, like Jaya Grocer, had reported that its online sales had increased by 30 per cent in recent years.

See-To said this in response to news report on comments made by the managing director of Mydin retail chain that despite Malaysia’s strong economic growth, people did not have money to spend.

The statement, See-To said, had generated much attention, with politicians from Pakatan Harapan capitalising on it “to spread untruth and run down Malaysia”.

He said even Minister in Prime Minister’s Department (Economic Planning Unit) Datuk Seri Abdul Rahman Dahlan had pointed out that domestic demand and consumption continued to increase, but there was a shift in in how consumers shopped.

“His statement was backed by a veteran of the retail industry, who said in April last year that the days of having large grocery and retail shops were over.

“The chief executive officer of Tesco Stores (Malaysia) Sdn Bhd Paul Ritchie said due to intensifying competition in the industry, hypermarkets were no longer feasible and grocery stores were becoming smaller.

“Grocery stores that are larger than 60,000 sq m are challenging to sustain.

“Instead, the optimal solution, which we are implementing in some of our stores, is to use space better by putting a wider and improved range of products in a smaller floor space.”

See-To said other retail analysts also noted that smaller grocery stores were taking back market share from hypermarkets.

“This observation is backed by the explosive growth of smaller and more nimble competitors.

“For example, NSK Trade City, which is known for offering lower prices, has embarked on an aggressive expansion plan in recent years.

“Last month, NSK opened its 19th and 20th outlet in Kota Damansara and Jalan Peel, and is scheduled to open at least two more new outlets this year,” he said.

He added that 99 Speedmart’s growth was even more explosive.

He said between 2000 and 2008, 99 Speedmart opened 100 outlets, and from 2008 to 2010, it opened another 100 shops.

By the end of 2013, the number of outlets was around 500.

It then hit 600 in 2014, 700 in 2015, 800 in 2016, 900 in early last year, and had 1,000 stores by the middle of last year.

He said retail outlet Jaya Grocer had grown from almost nothing in 2008 to 22 outlets by last month.

Jaya Grocer, he said, was also opening another five outlets this year.

See-To said this proved that Malaysia was not in crisis, unlike during the many recessions experienced during former prime minister Tun Dr Mahathir Mohamad’s time when chains such as Kimisawa, Yaohan and Hankyu Jaya “disappeared”.

“If the overall disposable income of Malaysians has declined, then it would not be possible for the three grocery chains I mentioned to expand over the past few years.”

He said car sales — especially for middle-end brands, such as Honda and Toyota — average manufacturing wages and other macro economic indicators also showed that consumers’ spending and disposable income had increased.

He said the Mydin managing director had remarked that the ringgit’s weakness over the past two years had caused prices to increase and discouraged shoppers from buying more.

However, See-To said, with the recent strengthening of the ringgit, “perhaps it was also time for Mydin to consider reducing their prices to attract more shoppers to their outlets”.

If the overall disposable income of Malaysians has declined, then it would not be possible for the three grocery chains I mentioned to expand over the past few years.

ERIC SEE-TO Barisan Nasional strategic communications director