KUALA LUMPUR: It is unfair to draw conclusions on the overall health of Malaysia's economy based on the performance of just 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 rapidly changing consumers habits.
He said changes in consumer preferences in the retail grocery industry was not unheard of, and this could be seen in the continued growth in online shopping - including online grocery shopping.
Citing Lazada as example, he said it continued to experience triple digit growth while others like Jaya Grocers had reported that their online grocery sales had increased 30 per cent in recent years.
See-To said this in a statement to rebut news report on comments made by the managing director of Mydin retail chain that despite Malaysia’s strong economic growth, the people didn’t have money to spend and this was evidenced by the continued contraction of hypermarket sales.
The statement, See-To said, had since generated much attention with politicians from Pakatan Harapan capitalising on it “to spread further mistruth 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 change in shifting habit with hypermarkets now comprising a smaller share of Malaysian consumers' spending habits.
“His statement was actually backed up by a veteran of our retail industry who said in April last year that the days of having large grocery stores and retail shops are over.
"The CEO of Tesco Stores (Malaysia) Sdn Bhd Paul Ritchie said that due to intensifying competition in the industry, including from online retail sales, large hypermarkets were no longer feasible and grocery stores were becoming smaller.
“Grocery stores that are larger than 60,000sq 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,” he said.
He said other retail analysts also noted that the smaller grocery stores are ironically, now taking back market share from hypermarkets.
“This observation is backed up by the explosive growth of smaller and more nimble competitors.
“For example, NSK Trade City outlets which has a reputation for cheaper prices have embarked on an aggressive expansion plan in recent years.
“Last month, NSK opened its 19th and 20th outlet in Kota Damansara and Jalan Peel respectively and is scheduled to open at least 2 more new outlets this year,” he said, adding that the mini-market chain 99 Speedmart's growth was even more explosive.
He said between 2000 to to 2008, 99 Speedmart opened 100 mini-markets but in the two years from 2008 to 2010, they opened another 100 shops - totaling 200 shops.
By the end of 2013, the number of outlets more than doubled to 500 shops.
They then hit 600 in 2014, 700 in 2015, 800 in 2016, 900 in early 2017 and had 1000 stores by the middle of 2017.
He said, another retail outlet, Jaya Grocers had grown from almost nothing in 2008 to hit 22 outlets by January this year, with the latest outlet opening in Sunway Iskandar Citrine Hub in Johor.
Jaya Grocer, he said, was also opening another five outlets this year.
See-To said all this proved that Malaysia was not in crisis today unlike during the many recessions experienced during Tun Dr Mahathir Mohamad's time when well-known chains then such as Kimisawa, Yaohan, Hankyu Jaya “disappeared”.
“If the overall disposable income of Malaysians have declined as badly as what the Mydin owner and certain opposition members allege then it would not be possible for the 3 grocery chains I mentioned above to expand so rapidly over the past few years,” he said.
He said there were other indicators such as Malaysians traveling on holidays, car sales - especially for middle-end brands such as Honda and Toyota, average manufacturing wages and other macro economic indicators to show that consumer spending and disposable income had indeed increased.
See-To said in his widely followed interview, the Mydin owner had remarked that the the weakness in the Ringgit over the past two years had also caused prices to increase and discouraged shoppers from buying more.
However, he 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”.