Supermarkets and hypermarkets in Malaysia going through consolidation

PETALING JAYA: Supermarket and hypermarket operators in Malaysia are going through a consolidation stage, Retail Group Malaysia managing director Tan Hai Hsin said.

“They expanded aggressively throughout the country during the 2000s. With the current economic condition that has not improved until now, it is not a surprise for them to close under-performing stores, ” he said.

“The closure is not expected to be worsened than this year, unless a recession occurred next year, ” Tan said.

On whether Malaysian consumers are turning to mini-markets instead of seeking bargains at hyper- and supermarkets, Tan said.

Malaysian consumers are not replacing hypermarket with mini-markets like KK Mart and 99 Speedmarts.

“Based on our observation, they are shopping lesser in hypermarket and buying more often in mini-market, ” he said.

Tan said the hypermarket format with 80,000 square feet and more was introduced to Malaysians with the arrival of Carrefour in 1994.

This format became very popular among Malaysian families because it was able to offer wide variety of goods under one roof.

They enjoyed hours of shopping at leisure pace in this super-large grocery store. It was a family outing, said Tan.

“In recent years, however, we believe Malaysian families are tired of spending hours in hypermarkets for basic necessities.

“They are still visiting hypermarkets for large quantity of purchases, but they are not going as often as 10 years ago.”

For purchases in small quantities, they are shifting to supermarkets and mini-markets.

“In addition, these small-format grocery stores are now able to offer very competitive prices as compared to hypermarkets. This trend has resulted in major hypermarket operators to open new grocery stores in smaller sizes, ” said Tan.

In the September 2019 Malaysia Retail Industry Report, Tan said supermarket and hypermarket sub-sector, which reported negative growth with closures of some stores, was the worst performer for the quarter under review.

This is the sub-sector’s eighth consecutive quarter of negative growth, the report said.

Two sub-sectors – pharmacy/personal care, and speciality stores – saw the strongest growth.

The department store sub-sector contracted 0.7%. This sub-sector has been facing slow growth for more than a year, the report said.

The department store sub-sector which comes with a supermarket, saw sustainable growth.

The fashion and accessories sub-sector saw a slowdown to 0.4% compared with the first quarter.

Source: TheStar