Aeon to resist price increases for now
Company cautious amid inflationary pressures
“We are resisting a lot of these requests for us to raise prices. These are from our suppliers. But at the same time we understand that our suppliers and partners are also continuing to see an increase in costs.”
Shafie Shamsuddin
PETALING JAYA: Aeon Co (M) Bhd is withholding any potential price increases to the end consumer amid rising food supply chain pressures.
The group, a supermarket grocer and also a general merchandise store operator, is on guard and ready to face high inflationary pressures,” managing director and CEO Shafie Shamsuddin assured.
“We are resisting a lot of these requests for us to raise prices. These are from our suppliers. But at the same time we understand that our suppliers and partners are also continuing to see an increase (in costs),” he said at a media conference after its AGM yesterday.
“For perspective, some of these products will increase between 3% and 5% – but we have been able to hold back these price increases as much as possible,” Shafie added.
He said Aeon has been discussing very intensely on how to cope with the current situation with all its suppliers with regards to this issue, adding that the group is doing its best to reduce costs to help it sustain profit margins.
“We are committed to updating each other and in the event of any potential increase, we will find different ways to work together to reduce the impact on all our consumers.
“We have to face this and do our best to reduce the cost of running this business in order for us to hold back as much as we can to restrain prices from going up.
“It is very difficult for us to guarantee that prices will not go up as these are challenges which are beyond our control.”
Shafie also highlighted that there is no wheat shortage in the country presently.
“When we speak to our suppliers we are being told that there are no issues with supply at this moment in time. But it is just a concern for us to ensure that prices will not go up and we have to find ways to work together (with the suppliers),” Shafie said.
On the government’s latest move to ensure adequate food supplies in the country, he said that it is a very good solution and is welcomed.
“We will then allow demand and supply to (truly) dictate prices. We hope that we would be able to bring better quality products – whether from Japan or any parts of the world at the least costs possible.
“This will really help all retailers including the (supporting) services that would then provide lower cost, then we can give this savings back to our customers,” he said.
Shafie said Aeon’s imported foods constitute a low single digit percentage of the total food inventory that it sells to the end consumer.
The group will also soon launch an anti-inflation campaign next month which will see it offer a bundle of about 14 essential items together to be sold with savings of about RM15-RM20 per bundle.
On its capital expenditure (capex) plans, Shafie said that it has invested Rm40mil for its Alpha Angle store renovation; up to Rm40mil for a new general merchandise departmental store in the last quarter of 2022; while another 20% of its capex plans will be allocated towards its digitalisation initiative.