Supermarket and hypermarket operators in Malaysia are shutting down under-performing stores, Retail Group Malaysia managing director Tan Hai Hsin said.
A report by the Star today quoted Tan saying: “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 also said the situation is not expected to be worse next year, unless a recession occurs. Tan said Malaysian consumers are not completely replacing supermarkets and hypermarkets with mini-markets like KK Mart and 99 Speedmarts.
“Based on our observation, they are shopping less in hypermarket and buying more often in mini-market. 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, he said. According to Tan, small-format grocery stores are now able to offer very competitive prices as compared to hypermarkets and this has prompted major hypermarket operators to open new grocery stores in smaller sizes.
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.