The number of supermarkets and hypermarkets in Malaysia has seen tremendous growth since 1980s. The big players include Dairy Farm Giant Retail, Jaya Jusco, Makro, Parkson, Carrefour and Tesco. After making their debut in 1990s, hypermarkets are fast gaining popularity in Malaysia, attracting customers with their ‘one stop’ and ‘all under one roof’ concepts.
The escalating cost of living and the need to stretch the ringgit have increased the opportunity and demand for lower-priced consumer goods retailed at the hypermarkets. Retailers are able to offer consumer goods at lower prices and win higher sales from consumers who are now increasingly prudent in their expenditure.
It is fairly clear that Malaysians have changed their shopping habits and preferences towards supermarkets and hypermarkets. High and middle-income households spend most of their money at hypermarkets, followed by supermarkets and traditional grocery shops.
Since the emergence of hypermarkets, Malaysians who live in urban areas have become accustomed to shopping for groceries at hypermarkets and supermarkets. Meanwhile, the rural people continue to purchase from the traditional grocers, convenience stores and mini-marts. This had an impact on the survival and growth of the ‘wet markets’.
While consumers may gain through lower prices, the traditional and wet markets will lose out. There are several reasons why the wet market is losing out to hypermarkets. The major reason is economies of scale where hypermarkets often purchase goods in huge bulks and in return this translates to a cheaper cost of production in the form of lower price for the consumers.
On the other hand, wet markets do not order in bulk. Secondly, a rise in transportation costs can affect small traders more than hypermarkets. Besides that, hypermarkets have creative ways to attract customers and maintain their customers’ loyalty. For instance, Tesco’s Clubcard allows customers to collects points on their daily purchases for vouchers in return.
Most people feel uneasy by having to bargain and haggle over prices. Some are worried of being shortchanged or cheated by unscrupulous traders. Whereby in hypermarkets, all the prices and the weights of the products are clearly stated.
At the same time, hypermarkets have more proper technology to preserve the freshness of their food. Stocks are brought daily at 6am to the stores where it is transported straight to the cold room to preserve its freshness. Consumers, especially modern housewives prefer to shop in an air conditioned and clean environment instead of getting their feet dirtied by the often stinking wet walkways. Besides, the strong stench from poultry and fish sections is a huge turn-off.
Will this scenario ‘kill’ the small scale traders in Malaysia? The arrival of hypermarkets has weakened the opportunities for small entrepreneurs and has increased the unemployment rate among the small-scale merchants.
Relatively, we consumers are now more dependent on one source and this results in less competitiveness as hypermarkets dominate the market. Due to this, hypermarkets have become a dominant retailer that will dictate the prices to the farmers and ‘kill’ small farmers.
The wet markets which are a remnant of the nation's past are being forced into extinction by the entry of giant retailers. Is this an advantage or disadvantage to the consumers?
The writer is attached to the Consumer Research and Resource Centre (CRRC).
