Business owners in Penang are resisting the opening of what is to be the sixth mammoth retail outlet in their hypermarket-saturated district.

While hypermarkets are the pinnacle of modern convenience, where a huge variety of cheap goods are available under one roof, for local traders, it spells the end to their livelihood.

giant hypermarket and mesra mall terengganu 281008 building The economies of scale practised by the giant retail chains is said to be strangling their lifeline by luring customers away.

The problem was perfectly illustrated in the 1998 romantic comedy ‘You've Got Mail'.

In the movie, the market-hungry book retail chain Fox Books, gobbled up the independent local book store ‘Shop Around The Corner'.

This is what business owners in Jalan Rozhan, Seberang Perai Tengah, Penang, say will happen with the proposed construction of a Tesco outlet in their neighbourhood.

Calling themselves the ‘Committee against the New Hypermarket in the Seberang Perai Tengah District', the traders are "strongly protesting the proposed construction of a new hypermarket in Seberang Perai Tengah".

However their two-year crusade may come to naught as the Seberang Perai Municipal Council (MPSP) had issued notices on Sept 2 to adjoining landowners that Tesco's newest outlet will soon be built.

Residents and traders have 20 days from the date of the notice to file any objections.

As their final gambit, the committee has sent a 2.5cm-thick pile of documents to relevant authorities and the media over the matter.

An accompanying letter with the documents have been sent to Penang Chief Minister Lim Guan Eng and his deputy P Ramasamy, who also heads the Hypermarket Committee.

Slated to be built on a 6ha plot in the middle of the densely populated area in Bukit Mertajam, the proposed hypermarket will join seven other major retail chains already operating in Seberang Perai Tengah.

Five of these are foreign-owned ventures, just like Tesco.

Against cabinet guidelines

The local traders said the proposed location of the outlet contravenes the federal government's guidelines on foreign hypermarkets.

The guidelines require such facilities to be on a freestanding basis with basic amenities, and only on the outskirts of towns.

NONE What this means is the building structure cannot have other substructures or secondary buildings as part of its business premises and it must be located away from densely populated areas.

But the proposed outlet is to be situated to be in the middle of a major population centre in Jalan Rozhan and with plans to include attached buildings and facilities.

The new Tesco outlet is also said to violate three other conditions relating to the environment and public interest:

  • A hypermarket must not operate within a 3.5km radius of a residential area and town centre.
  • Only one hypermarket is allowed in any area of 350,000 residents or less.
  • An impact study on existing retail businesses should be carried out before the opening of a hypermarket is considered.

As the proposal stands, the outlet is slated to be right next door to a major residential area and town centre with hundreds of nearby businesses and traders all less than 3.5km away.

Seberang Perai Tengah, is a district with a population of around 400,000, slightly above the 350,000 mark.

However the district now is already home to six major hypermarkets. An additional one would be six too many, said the traders.

The traders said they doubt if an impact study on the local business climate required for all hypermarket proposals has been done at all because none has been made available to them.

The traders also allege that the "proposed Tesco outlet will also disrupt their quality of life".

The most drastic effect will be to the traffic situation in Jalan Rozhan. The two-lane road is the major link between Bukit Mertajam and Seberang Perai Selatan.

At present, the area is home to nine schools, a fact that is already causing major traffic jams to Jalan Rozhan every time a school session ends.

Local business owners allege that should Tesco open its doors in their neighbourhood, "it would threaten the livelihood of traders in seven night markets, seven wet markets and hundreds of retail businesses within a 3.5km radius of the proposed outlet".

Tesco's wide range of products and low pricing are impossible for local businesses and traders to match.

Especially in the current economic crisis, consumers will go where the price is lowest, loyalty to their favourite local grocers aside.

Study: Costs outweigh benefits

Despite claims that hypermarkets bring jobs to the local economy, a US study claims that for every two jobs that it brings, three jobs are lost from the closure and bankruptcies of local shops and traders caused by its presence.

sundry shops kedai runcit everyday goods 250907 aisles Should Tesco continue with the planned construction of its newest outlet, the traffic situation is expected to worsen.

The fear is that the local economic meltdown that will come, will far outweigh any gains from Tesco's presence.

"The loss of jobs and hardship from the closure of local businesses may even lead to increased social pressure and an increase in the crime rate," the traders said.

They also claimed that the so-called low prices offered by retail chains like Tesco are actually untrue.

Mainly this is done by psychological pricing and advertising, mentioning an overseas survey, which found that only two percent of the 60,000 types of goods carried by hypermarkets are cheaper than in normal stores.

As proof they even conducted their own survey compiling 144 receipts showing a comparison between prices in hypermarkets and other stores.

Their survey showed that 87 percent of hypermarkets goods are more expensive averaging at 12.6 percent higher than in other stores.

Without local businesses to provide an alternative, residents will slowly become dependent on Tesco and will have to pay more for goods ultimately.

The convenience that the hypermarkets bring may be too high a price for local traders and residents to pay, they added.