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Government shows support for traditional trade.

Hypermarkets will not be allowed in some parts of the country

The Malaysian government has stated that it will not permit hypermarkets to operate in certain areas of the country. The announcement is intended to support the traditional channel, also known as kedai runcit, and to allow them to continue operations.

The minister of Domestic Trade and Consumer Affairs, Datuk Seri Saifuddin Nasution Ismail said, “The hypermarkets really want the government to lift the restrictions, so they can also operate in the interior areas. We will not allow that because it will affect the small retail industry.”

Although the minister acknowledged that hypermarkets have the advantage of cheaper products, he also said that the government had to weigh the overall situation and the impact hypermarkets may have on these smaller sundry stores.

If they allow them to go to the fringe areas, it would benefit the consumers, but the result will be that the sundry shops will die off, so we have to weigh the situation,” he said.

 

Find out more about the Malaysian grocery retail market here.

 

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We have seen several retailers across Asia launch their own e-wallets recently, including AEON in Malaysia, and FamilyMart and Carrefour in Taiwan.

AEON launches its own e-wallet

Earlier this year, AEON introduced its e-wallet app. Available to download on Google Play and Apple App store, AEON's e-wallet allows shoppers to pay and earn points at participating AEON stores (AEON Big Hypermarkets, AEON MaxValu Prime and AEON Wellness) seamlessly. Users can pay by scanning the QR code at the point of sale and earn points for credit when making purchases with the app.

Users just need to add their credit card to the e-wallet and will then be able to monitor their balance and transaction history real-time. The app has a biometric login feature and multi-factor authentication to help reassure users any concerns about security.

AEON Asia Sdn Bhd.'s Managing Director, Shinobu Washizawa, said, "We realise that there is an increase in the use of mobile payments, thus the AEON e-wallet will not only provide our customers with convenience, but also a safe and secure payment system [...]."

Last year, the retailer announced plans to invest JPY500bn (US$4.4bn) in online operations over the next three years. It posted a robust set of H1 results earlier this month.

Other epayment solutions in Asia

The introduction of mobile payment services in Taiwan has been relatively slow despite high smartphone penetration. Many shoppers still prefer to purchase online and collect and pay in cash in-store. However, retailers are beginning to invest in more digital solutions, for example, FamilyMart (My FamiPay) and Carrefour (Carrefour Pay) have recently launched their own e-wallets in Taiwan. The latter allows users to add up to five credit cards in one app. Two of the most well-known epayment solutions in Asia are Alipay and WeChat pay.

Partnership with BingoBox, a well-known Chinese unstaffed store operator.

Two stores opened as trial

Following on from recent trials in Indonesia and India, the unmanned store has now entered the Malaysian market. A Malaysian startup, Scientific Retail Sdn. Bhd., has partnered with e-wallet provider Boost and BingoBox, who runs over 400 unmanned stores in China.

The innovative convenience store can be found in two locations – at Bukit Ceylon and the Shell Select at Jalan Tun Razak, Kuala Lumpur. If successful, Shell Malaysia is ready to roll out a similar concept to 300 more stations. In addition, Scientific Retail is expecting to transfer this technology to help 500 small retailers grow its business by the end of 2019.

A seamless shopping experience

The technology is relatively simple: download the BingoBox app and scan a QR code to enter the store; after selecting your items, an automatic checkout counter will total up your purchases and charge your credit card or your Boost e-wallet. BingoBox promises a retail experience that can be completed in under one minute.

Shairan Huzani Husain, Managing Director of Shell Malaysia Trading Sdn Bhd said, “We are proud to be the first in the industry to provide this innovation to our Shell customers. Our mission is to make life’s journey better for our customers and we believe that Shell Select powered by BingoBox Retail Technology will do exactly that.”

 

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Tesco has released its interim results for 2018/19, with sales in Asia reaching £2,365m, down 5.0% at constant exchange rates.

Thailand dragging on overall Asia performance

As predicted by the Tesco management, performance in Asia improved throughout the period as the business annualised its decision to stop bulk-selling. Asia LFL sales declined 9.0% in Q1 and although remaining negative, improved to -4.8% in Q2. However, it continues to see sales impacted by nearly 2% in Thailand, due to the goverments scheme of welfare cards that cannot be redeemed in modern retail chains. Profitability was down 29.1% to £100m due to the impact of sales, higher price investment and renegotiated promotional investment from suppliers into everyday low prices in Thailand, something that is expected to continue in H2. 

Repurposing stores remains a top priority

Tesco continued to open and repurpose space in Asia in H1, opening 42,000 sq ft of net space. This included 314,000 sq ft of new space, with 39 net new stores, mainly related to new convenience store openings in Thailand. The business also closed 105,000 sq ft of space and repurposed 167,000 sq ft. Tesco repurposed nine stores in the half, the majority of which were again in Thailand, where it has formed new partnerships with third party businesses, such Mr.DIY, Echo Game & Karaoke and Cosmo Beauty.

Group sales show improvements in home market

Across the broader Tesco Group, the results were more positive with sales up 12.8% to £28.3bn, boosted by the retailers new partnership wth wholesale chain Booker in the UK.. Performance in its core, UK and ROI business, was impressive with total sales up 17.7% and LFL sales up 3.8%. While European sales declined 3.5% and 1.5% on a total and LFL basis respectively, impacted by store closures and Sunday opening hour restrictions in Poland.

Improving quality and value in all markets

Tesco CEO, Dave Lewis, commented, "We have made a good start to the year. We completed our merger with Booker in March and are delighted with performance so far. We announced a strategic alliance with Carrefour in July which goes live this month. We are firmly on track to deliver our medium-term ambitions and are continuing to improve the quality and value of our offer for customers in all of our markets."

 

 

This in-depth guide to Malaysia explores the key trends in grocery retail and the growth strategies of the leading retailers in the country.

Five year growth forecasts for the grocery market, the leading retailers and modern trade grocery channels in Malaysia+.

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