A gap in the food retail modernisation in Malaysia

• Main Author: Holst, H.P.
• Format: Conference or Workshop Item
• Language: English
• Published: 2011
• Subjects: HB Economic Theory
• Online Access: http://eprints.um.edu.my/12813/1/17-HansPeterHolst.pdf; http://eprints.um.edu.my/12813/

One food retail concept is missing among the food retail offerings in Malaysia in 2011: the hard discount grocer, a chain store format. At 300 - 1,000 square metres floor area, a typical hard discount food store in Europe offers a limited assortment of 600 - 2,000, typically own brands / labels. This is a fraction of both space and assortment as compared to the typical hypermarket and supermarket in Malaysia. Nevertheless, the hard discount concept has been achieving above average food retail industry growth in Europe and USA in the past ten years. Being the antithesis to the hypermarket, the hard discount concept has become a voracious competitor to supermarkets and small neighbourhood shops. The hard discount stores locate in residential and densely populated neighbourhoods, potentially serving local community needs for proximity shopping. According to ACNielsen (2007), hard discount’s price across categories is lower by 30 - 40 per cent on average; the quality of the own brands is typically good. Food shoppers in Malaysia, being among the most price conscious shoppers in Asia (ACNielsen, 2002) might - or might not - be attracted by the hard discount offer were the concept to appear in Malaysia in the future. However, retail on < 2,000 square metres floor space is currently reserved for Malaysian retailers by regulation. Therefore, hard discount food retail needs reinventing in Malaysia by Malaysians - or consumers and local communities will be deprived of the experience. The regulation bars Foreign Direct Investment and, effectively, the entry of foreign, experienced chains into the hard discount food segment. This essay contributes a philosophical discussion of the absence of hard discount grocery in the retail modernisation of Malaysia and makes comparisons with mature food discount markets Denmark and Germany. The discussion is based on synthesis of secondary data, observations by the researcher, and interviews. The essay will be suggesting that a future successful hard discount food launch in Malaysia could potentially change food- and some non-food retail in Malaysia and perhaps as dramatically as the hypermarket did beginning in the mid 1990s.