Page 0 of 51 · 2018. 10. 5. · Page 1 of 51 Runcit Malaysia Magazine Issue 9 Tinjauan Runcit Stay smart & competitive There are always ups and downs in business. All too often,

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Runcit Malaysia Magazine Issue 9Tinjauan Runcit

Stay smart & competitive

There are always ups and downs in business. All too often, when business declines or slowsdown, we naturally assume that the economy is not doing so well or the competition is gettingthe better of us. Either way, we think that the business environment is just no good. While thissometimes may be true, more often than not it is merely a perception. We think this waybased on our own experience. And if our experience is limited to what we see in our ownshop, it is not reflective of what is happening in the market.

Recognising that most retailers like you have all these limitations, Runcit Malaysia hascollaborated with The Nielsen Company to mount a survey comprising of 1,888 members of the traditionaltrade to find just what is happening out there. Are they doing better, worse or the same as in the previous year?We also interviewed business and community leaders to find out their views. Read our Rencana Runcit articleentitled “How’s business?” to find out what’s really happening. You might be surprised to compare yoursentiment with the general sentiments out there and be motivated to take measures to make the best of theprevailing business conditions.

One man who actually took steps to ensure his business is able to grow regardless of economic conditions isfeatured in our Wira Runcit article. Starting off at the lowest point of the economic crisis, he has proven thatgood business sense, careful management and modern business practices can turn dreams and ambitions ofsuccess into reality.

For all retailers, strong category management is the key to operating a viable and profitable business.Recognising the importance of this area, we at Runcit Malaysia have decided to present our category profiles ina much simpler and clearer manner to generate a better understanding among our readers. We hope that youwill find this new format more effective.

All these improvements you find in this issue are made possible by the cooperation of those who believe in theimportance of sharing – caring partners whom we heartily thank. Clearly everyone will be happy to benefit bythe information provided by others. But there are many who are selfish and unwilling to contribute to theprocess. We urge such people to start thinking about sharing and participating in exercises in the future as themore sharing will bring greater benefits to everyone.

Happy reading!

WILLIAM KHOOExecutive DirectorInfovantage Sdn [email protected]

mailto:[email protected]

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Runcit Malaysia Magazine Issue 9Rencana Runcit

“HOW’S BUSINE$$?”

While we all have managed to adapt to the various price hikes that shook the market last year,business has become more challenging than ever.

It was in 2006 that life in Malaysia suddenly became moreexpensive. It started with the petrol price hikes, followed byincreases in the cost of raw materials, certain goods as well asservices. As though that wasn’t bad enough, we also had to startpaying a little more for our utilities and even highway tolls.

Everyone feared that inflation would get out of control. In order tocontain the situation, Bank Negara Malaysia feverishly adjustedinterest rates. At the same time, the Ministry of Domestic Tradeand Consumer Products launched a massive consumereducation campaign to promote prudent spending. Manymanufacturers also played their part by raising their product

prices as little as possible. Some even increased their promotions. After all, without a rise in pay, consumers’disposable incomes had shrunk. It would take a great deal more effort to get consumers to make a purchase.

With all that going on, we wondered how the traditional retailers were coping. As some of you will remember,Runcit Malaysia magazine published the findings of a survey involving 447 traditional retailers in June2006. Happily, it was found that most were unaffected by the petrol price hikes (76% of respondents). This wasdespite 65% of them reporting a modest increase in product prices and clearly observable changes inconsumers’ shopping behaviours, such as buying more economical packs (73%) and stocking up less thanbefore (61%).

Exactly one year later, Runcit Malaysia magazine has again taken the step to review the business climate.This time, we present the views of 6 key opinion leaders and the findings of a massive survey of 1,888respondents from the traditional trade, jointly conducted by Runcit Media Sdn Bhd and The Nielsen Companyfrom April 2 to May 3, 2007.

In general, what we found was as follows:

1. The economy is growing and business remains viable.2. The traditional trade is generally lagging behind, mainly because many cannot keep up with the pace of

market changes.3. The days of ‘business as usual’ are truly over; it’s now ‘business unusual’.

This is not a cheerful picture for many traditional retailers. But it’s NOT TOO LATE! Read the advice containedin this cover story, re-examine your business and modernize your operations. You, too, will be able to beat thechallenges of doing business today and thrive.

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VIEWS FROM THE TOP

Runcit Malaysia magazine thanks the key opinion leaders featured here for sharing their views onbusiness today and what the traditional retailers need to do to prosper.

Ho Mun Woh,Managing Director,Southern Lion Sdn Bhd

“The Economy Is Looking Good”

Southern Lion Sdn Bhd is of the view that oureconomy is strong and business continues to beviable in Malaysia. This is especially reassuringcoming from a company that, after 20 years ofrapid growth in this country, is planning to increaseits investments and further strengthen its presencehere.

According to Managing Director Ho Mun Woh, thecompany’s confidence stems from theGovernment’s measures to spur economic growthwhile successfully curbing inflation through variousmeans, including subsidizing certain basicnecessities like cooking oil, sugar and such.

He says: “The Government’s efforts are well-complemented by strong global demand for thecountry’s basic commodities, like palm oil, crudepetroleum, rubber and timber. I believe theeconomic outlook will remain positive at the 5.8%to 6% growth level as forecasted.”

On the consumer front, Ho declares that they are now more price-sensitive than ever but continue to place ahigh priority on quality. He urges the traditional trade to optimise their businesses by stocking up oneconomical packs of quality goods. This is consistent with how and what most consumers would buy intraditional retail outlets. He says: “Besides stocking products that consumers want, traditional retailers shouldtry and keep up-to-date with consumers’ shopping trends.”

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Azlam Shah Alias,Corporate and Legal Affairs Director,Tesco Stores (M) Sdn Bhd

“Exciting Year Ahead for Retail”

Tesco Stores (M) Sdn Bhd is optimistic about2007. Corporate and Legal Affairs DirectorAzlam Shah Alias says: “Overall, the retailindustry has seen quite a good run and I believethis will continue throughout the rest of the year.‘Visit Malaysia Year 2007’ and the upcoming50th Merdeka celebrations are creating a lot ofexcitement which will spur consumer spending.Based on this, the retail market will continue togrow into the year-end.”

Azlam believes that the traditional trade shouldalso feel upbeat. However, he reminds them tooffer the right kind of products at the rightprice, quality and service level. “This principleis crucial to retail success. Even in Tesco, wemake every effort to find out what our shopperswant in order to serve them better. Traditionalretailers should do the same,” he says.

Tesco aims to do its bit in assisting thetraditional retailers. Earlier this year, Tescoacquired Makro Cash and Carry and re-brandedthe stores as Tesco Extra. Through this move,Tesco will offer retailers products at wholesale

prices plus a host of other benefits. Eight Tesco Extras are due to be opened in phases throughout thepeninsula. The new store format will also cater for individuals and families.

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Lean Hing Chuan,President,

Federation of Sundry GoodsMerchants Associations of Malaysia

“You Can Survive!”

No story about the economy would be complete without a viewpoint from the retail trade, which is why wetracked down Lean Hing Chuan, the President of the Federation of Sundry Goods Merchants Associations ofMalaysia for his opinion.

Lean says that although consumers are more cautious now and are not spending as much as before, salesof most fast-moving consumer goods (FMCG) will not be affected significantly as most are necessities.

This is good news for both the traditional trade and the manufacturers – two parties who greatly depend oneach other. He explains: “FMCG manufacturers generally like to deal with the traditional trade not onlybecause it is the biggest distribution channel for many products but also because most transactions are incash, unlike the modern trade who buy on credit.”

Having said this, he stresses that the traditional trade still needs to work hard and smart. “For a start, offerwhat consumers seek. Unlike in the modern trade, consumers usually visit traditional retail outlets onlywhen they want to buy something. If they come to your shop but do not end up buying, chances are youdon’t have what they need.”

Lean also advises traditional retailers to cultivate a good network of distributors and wholesalers, as this isimportant to ensure that they get the best deals.

“Consumers Are Cautious”

N Marimuthu, President of the Federation of MalaysianConsumers Associations (FOMCA) observes that consumersare cautious about spending despite indications that theeconomy is doing well. He explains that this results from theincreased cost of living and believes the sentiment is likely tocontinue until the new National Budget is unveiled inSeptember.

Marimuthu understands that these could be difficult times for thetraditional trade and has some suggestions to make. He says:“Try to offer value-added services, especially those that themodern trade is unable to provide, eg home-delivery services.

They can also implement loyalty programmes, lucky drawsand other promotions to make shopping fun.”

N Marimuthu, Marimuthu adds that retailers should consider selling some ofPresident, their loose items (like onions, garlic, potatoes and rice) in smallFederation of Malaysian ready packs. He strongly advocates having a pleasing shoppingConsumers Associations environment i.e one that is clean, well-ventilated, systematic and(FOMCA) friendly.

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Owen Ow,Managing Director & Chief Executive Officer,Yeo Hiap Seng (M) Bhd

“Business Unusual”

As far as Owen Ow, Managing Director andChief Executive Officer of Yeo Hiap Seng (M)Bhd is concerned, the days of ‘business as usual’ are over; it’s now ‘business unusual’. Having worked inseveral markets and lectured internationally, this keen observer of the world can see the shift towardsglobalization taking effect in the Malaysian business environment itself.

He says: “Consumers are managing their money better these days. They are getting savvier and buyingless because they are keeping better inventories. This increases the competitive stakes among retailerswhich often causes them to reduce their pricing or give heavy discounts.”

Ow remarks that this is one of the major ways in which consumers are changing. “They are becoming moremodern in how they think and behave. Sadly, many traditional retailers are not keeping up with the changes.They need to better understand their customers and make the necessary adjustments to their businessmodels and processes,” he says.

Despite this, Ow believes the traditional trade will continue to be an important channel for the fast-movingconsumer goods (FMCG) industry because of its sheer number of outlets and how they are spread out allover the country. He says: “Manufacturers cannot just think of selling through urban retail establishments.Especially in areas where the modern trade is not present, traditional outlets are a vital gateway formanufacturers to reach the community. If a manufacturer does not make its products available to traditionaltrade outlets, some other brand owner will seize the opportunity.”

As more manufacturers try to get their products sold through the traditional outlets, new challenges arise forthe retailers. “All the brand owners will want to do business with you as they are vying for your ‘share ofcash’. If you are not careful in picking the right brands to sell or order excessively, your money could get‘locked up’ in unsold stocks and you will suffer cash flow problems. Avoid getting into this situation bymanaging your business more prudently,” he advises.

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Runcit Malaysia Magazine Issue 9Selidik Runcit

Views From The Trade

Runcit Malaysia magazine examines the business sentiment of the traditional trade.

The interviewees featured in the earlier section generally agreed that the Malaysian economy is doing relativelywell but the business environment is now a lot more challenging. This made us wonder about how thetraditional trade might have fared over 2006 to date.

So, we sought the cooperation of both Runcit Media Sdn Bhd and The Nielsen Company (Malaysia) SdnBhd to jointly conduct a survey of the traditional trade throughout Peninsular Malaysia from April 2 to May 3,2007.

Area of Coverage

31%

26%

30%

13%

Central North South East Coast

Respondents Profile

72%

4%

2%

21%

1%

Sundry Shops Chinese Medical Halls Mini Markets Coffee Shops Others

N=1,888Source: Runcit Media & ACNielsen, Retailer Sentiment Survey 2007


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1. THE ECONOMYA. Trade Sentiments

The respondents were almost equally divided on whether the economy had in general, declined (36%),remained unchanged (34%) or improved (28%).

What you need to know

GDP for 2007 is forecasted to reach 6%, boosted by the implementationof the 9th Malaysian Plan projects.

The inflation rate has settled to 3.1% in February 2007 from a high of4.8% in March 2006.

In May 2007, The Government has announced a significant pay rise forcivil servants. This is expected to see the release of an additional RM8billion ringgit into the economy which will boost consumer spending.

Malaysia’s GDP has been growing.

Current economic situation compared tothe past 3 months

34%

29%7%

2%

5%

23%

About the same Somewhat worse Much worseDon't know Much better Somewhat better


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1. THE ECONOMYB. Trade’s Perceptions of Consumer Sentiments

Evidently, the respondents felt that their feelings about the economy were largely shared by consumers withthe majority of them believed to be pessimistic.


Everyone would agree that consumers were shaken by the petrol pricehikes, inflationary fears and other changes of early 2006. However, morerecent research now suggests that consumer confidence is rising.

According to the Government’s economic think tank, Malaysian Instituteof Economic Research (MIER), the Consumer Sentiment Index (CSI)had risen to 124.1 points at end 1st quarter of 2007, the highest sincethe 3rd Quarter of 2000. The CSI is based on regular, periodic surveysof 1,200 households, conducted by MIER.

In its report, MIER also stated that “shopping plans are on again”.

Perception of consumer sentiments

28%

33%

20%

19%

Optimistic Pessimistic No Change Not SureN=1,888Source: Runcit Media & ACNielsen, Retailer Sentiment Survey 2007

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2. TRADE PERFORMANCE

The proportion of respondents (40%) who reported decline in business performance was significant. Amongthem, 36% experienced a 10% drop in sales.

Level ofsales declining

36%29%

16%8%

2% 2%7%

0

0.1

0.2

0.3

0.4

10% 11-20% 21-30% 31-40% 41-50% > 50% Don'tknow

Business performance comparedto last year

14%

45%

40%

1%

Better No change Worse Don't know



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Further investigation revealed that businesses in towns and suburbanareas were the most affected (43%), compared with market centres(26%) and rural areas (26%).

According to the recently launched Nielsen Retail Census 2006 report,the retail landscape in Peninsular Malaysia saw a 7% increase in thenumber of FMCG outlets in the country (see following pages).

The increase of outlets was surely spurred by the positive economicclimate of the country but it also increased the amount of competition.It is possible that, unlike their counterparts in market centres,respondents in the smaller towns and suburban areas were lessequipped to deal with the new wave of competition.

Conversely, businesses in the rural areas were the most to reportgrowth (43%), compared against market centres (30%) and urban andsuburban areas (26%).

3. SHOPPERS’ PURCHASING HABITS

Respondents viewed their shoppers as becoming more conservative, buy only the necessities in smallerquantities and pack sizes, and choose cheaper alternatives.


Malaysian consumers are now spoilt for choice when it comes to havingmore outlets to pick and choose.

The shopping behaviours described by the respondents reaffirm the fact thatmost shoppers visit traditional trade outlets for ‘quick trips’ to get theiremergency and incidental supplies.

Although buying less at a time, shoppers have actually increased theirnumber of visits to traditional retail outlets (now, once every three days)(see following pages).

Changes in Consumer Habits

69%

50% 46%38%

19%5% 3%

Buying only thenecessities

Buying less Buying cheaperalternatives

Buying smallerpack sizes

No change Delay in settlingmonthly credit

purchases

Buying more

% RespondentsN=1,888Source: Runcit Media & ACNielsen, Retailer Sentiment Survey 2007

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4. RESPONDENTS’ STOCK PURCHASING HABITS

What the survey found

The majority of respondents were found trying to source cheaper products and offer more economicalpacks that shoppers want. What is surprising is that only a small minority of respondents were asking forlonger credit terms.


There is an increasing trend of retailers buying directly from wholesalers.

The emergence of Tesco Extra (previously, Makro Cash & Carry) is awelcome addition to the sources of cheaper costing products that thetraditional trade can sell.

The low number of respondents asking for extended credit terms is mostlikely a sign of having good cash flow management practices.

Changes in Stock Purchase Patterns

69%

52% 51%

16%

Buy from a cheapersource

Buy economical packs Keep less stock Ask for longer creditterms

% Respondents


5. ROLE OF MANUFACTURERS/SUPPLIERS

What the survey found

About 90% of rspondents reported that manufacturers had raised the prices of their products. This wasmatched by positive actions, including launching more economy SKUs and increasing trade deals andpromotions.

N=1,888Source: Runc

54.45

0%

10%

20%

30%

40%

50%

60%

Launched morSKUs/p

Page 13 of 51

it Media & ACNielsen, Retailer Sentiment Survey 2007

%50.80%

29.56%26.00%

e economicacks

Increased trade deals &promotions

They have not helped at all Provide longer credit terms

% Respondents

Help from manufacturers/suppliers

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Higher prices for goods are inevitable but most manufacturers have tried tokeep it to a minimum.

The manufacturers are trying their best to generate better sales, so youwould do well to give your utmost support.


54%

37%

9%

About 5% About 10% More than 10%

Average Rate of Price Increase of Products

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More Thoughts for the Journey Ahead

With input from ACNielsen’s Shopper Trends Report 2006

Runcit Malaysia would like to thank Barry Ooi, Executive Director of TheNielsen Company (Malaysia) Sdn Bhd for his input and insights gatheredfrom this Runcit Malaysia Retailer Sentiment Survey 2007.

1. Business Opportunities

Malaysia’s retail landscape and consumers are changing, followingtrends that are also happening around the world.

While the modern trade will continue to grow in importance, thetraditional trade will still have a role to play if they can modernise theiroperations and become more effective in catering to consumers’needs and busy lifestyles.

The traditional trade still has plenty of room to grow in rural areas,mainly because of the absence of the modern trade.

2. An Expanding Market

The total FMCG market grew across both Food and Non-Food categories in 2006.

Value Growth (%)Fast Moving Consumer Goods (FMCG)

4.4%3.4%

7.9%

0%1%2%3%4%5%6%7%8%9%

2006 vs 2005

All categories Foods Non-Foods

Source: ACNielsen Retail Tracking of 63 FMCG Categories (Pen. Malaysia), 2006 vs 2005

Barry Ooi,Executive Director,The Nielsen Company(Malaysia) Sdn Bhd

2. Growing Competition

The increase of outlets was surely spurred by the positive economic climate of the country but it alsoincreased the amount of competition.

No. of StoresStore Type2005 2006

% Change

Hypermarkets 45 50 11Cash & Carry 8 8 0Supermarkets 474 494 4Provision stores 25,693 26,444 3Convenience stores 2,194 2,502 14Hawker stalls 10,073 10,960 9Coffee shops/restaurants 26,895 29,573 10Chinese Medical Halls 2,100 2,210 5Drugstores/Pharmacies 1,377 1,531 11Sundry Toiletry 2,888 2,844 -1Total FMCG 71,745 76,616 7

Source: Nielsen Retail Census 2006

4. Malaysian Consumers

Two-thirds of consumers continue to shop at the closest store.

Three-quarters of consumers go to the same store out of habit.

Although shoppers would usually shop in the larger stores (eg hypermarkets, supermarkets and mini-markets) when they need more items to ‘stock-up’ the family pantry but most shoppers visit traditional tradeoutlets for ‘quick trips’ to get their emergency and incidental supplies .

Average Monthly Consumer Visits

2.8 3.11.7

4.7

7.8 8.3

2.4 2.61.4

5.9

9.1

6.3

2.8 2.51.5

6.3

10.5

8.2

0

2

4

6

8

10

12

Hypermarkets Supermarkets Personal CareStores

Petromarts Sundry shops Markets

2004 2005 2006

Page 16 of 51

Source: ACNielsen Shopper Trends Report2006

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5. Your Shop

Consumers select their stores based on the ‘overall offer’ of quality products, convenience of access, asafe and pleasing environment, product availability, ease of finding the products they want, reasonablepricing, and even their ‘emotional connection’ to their store.

Ensure that the brands you sell fit your store and the needs of your neighbourhood.

Continue to sell more (smaller) SKUs, not less.

Practise good category management and tell your shoppers to take part in the brand owners’ promotions.

Build trust, run loyalty programmes. Make your shoppers see your shop as ‘their’ shop.

Make your shop more attractive to shoppers. Look at how the kopitiams and kedai mamak have evolvedand are now doing roaring business!

6. Your Partners

Continue to collaborate with partners who have your interest at heart – the manufacturers, Runcit Mediaand The Nielsen Company – in the sharing of information and knowledge about consumers to keep abreastof important developments in Malaysia’s ever-changing retail landscape.

Article in collaboration with Runcit Media & The Nielsen Company

Stephen Tan – Runcit Malaysia

Thanks to:

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FORGING TO THE TOP

Delighting Consumers with International Quality and LocalInnovation

Southern Lion Sdn Bhd was established in 1987 as a 50:50 joint venture between Lion of Japan and Lam Soon(M) Bhd. It was a strategic partnership, designed to combine world-class Japanese technology with a ready,extensive local sales and distribution network to reach retailers and consumers, alike, throughout thecountry.

Powered by such advantages, Southern Lion launched into the Malaysian mass consumer market withproducts specially formulated to suit local needs and conditions. The tremendous success of pioneer brands –like Dobi and Bio-Zip – that continues to this day set a solid foundation for the company’s continued advance inthe country.

In its next phase of expansion, Southern Lion set out to introduce more innovative products catering to thelifestyles of more affluent and discerning urban consumers. The move saw the company delighting the marketwith a succession of innovative brands that quickly became household names, such as Shokubutsu liquidshower foam, Fresh & White toothpaste, and TOP detergent.

It has since been 20 illustrious years of high-impact product launches; effective advertising and promotioncampaigns; and a host of exciting trade initiatives, especially the ‘Lion Fair’ that all retailers eagerly lookforward to year after year. Today, Southern Lion products can be found in more than 7 out of every 10Malaysian households and the company itself is a leading player today in the Fabric Care, Beauty Careand Oral Care segments.

Determined to succeed from the very start, Southern Lion has carved itself a well-earned reputation forvisionary leadership, a deep understanding of local consumer needs, relentless product innovation and asteadfast commitment to grow with the precious trust and goodwill of Malaysia’s traditional trade.

In Malaysia’s ultra-competitive FMCG (fast-moving consumer goods) industry, Southern Lion is themanufacturer to watch, the rising star that will continue leading the way for the next 20 years and beyond.

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The Premier Manufacturer

From the onset, Southern Lion has invested heavily instate-of-the-art plants and sophisticated processes – proofof confidence in the Malaysian economic strength and thecompany’s own potential for growth. The companycommenced operations in April 1987 in Larkin IndustrialEstate, Johor. In March 1990, the manufacturing facilitieswere relocated to Tebrau Industrial Estate – a move

designed to help meet ever-increasing consumer demand. It is here that Southern Lion producesall its products (including laundry detergent, for which the company has the largest productioncapacity in the country) and conducts intensive Research & Development. Upholdinginternational quality standards, Southern Lion has distinguished itself by becoming the firstlaundry detergent manufacturer in the country to be ISO9001-certified. The company is also oneof few Malaysian manufacturing companies with ISO14001EMS certification for environment-friendliness. The Malaysian Government awarded Southern Lion GMP (Good ManufacturingPractice) status in 2003 and halal certification in 2006.

Market Leadership

World-class Japanese technology, intensive consumer research and innovative sales and marketing strategieshave made Southern Lion a leading player in several key segments today.

Fabric Care Beauty Care Oral Care

Bio-Zip is No 1 in the totallaundry detergent category (since2006). It is also the No 1 polybagpowder detergent of Malaysianhouseholds (since 2001).

Top is No 1 in the premiumpowder detergent in Malaysianhouseholds (since 2006), thereward for 2½ grueling years todevelop the product.

Shokubutsu is one of the top 2bath care brands in Malaysia.

While strongly established in theregular toothpaste segment throughFresh & White, Southern Lion hasalso established a solid position inchildren’s toothpaste (Kodomo),whitening toothpaste (Zact) andgum-care toothpaste (Systema).

The Caring Company

As a responsible corporate citizen, Southern Lion actively engages in social contribution programmes. In 1988,it established the LION Dental Hygiene Centre to increase awareness of oral care among the Malaysian public.The LION Dental Hygiene Centre has managed to reach out to more than 200,000 children across Malaysia,including Sabah & Sarawak. Apart from this, Southern Lion also participates in social events, such as theannual Bon Odori Festival. In December 2006, the company also contributed towards the Flood ReliefProgramme by giving out supplies to flood victims.

Stephen Tan & G Retnam – Runcit Malaysia

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LET’S KEEP GROWING TOGETHER

Southern Lion invites traditional retailers to celebrate its 20th Anniversary.

Many readers will still remember how Southern Lion first emerged on the scene 20 years ago. Back then, youmight have needed some convincing to sell the company’s (then unknown) brands, like Bio-Zip and Dobi.Today, it’s a whole different story. Those brands have not only become household names, so have the manyothers that the company has introduced over the last two decades, eg Top, Shokubutsu, Kodomo Lion, Fresh &White, and Zact. In fact, they’re all brands that are selling very well in your stores!

According to Mr Ho Mun Woh, Managing Director of Southern Lion Sdn Bhd, those brands and thecompany itself owe much of their success to the traditional trade. He says: “The traditional trade has beensupporting us from the time we started operations to this day. So, on the occasion of Southern Lion’s 20th

Anniversary, we would like to say a ‘thank you’ and pledge to continue growing with every traditional retailerout there.”

Great Expectations

Ho remarks that, above all things, Southern Lion will constantly keep the retailers’ interests at heart as reflectedby the many initiatives that have been planned for the company’s anniversary celebrations.

So as to further enhance consumer affinity with its brands, the company recently established a ConsumerCare Hotline (1 800 88 0133) whose number is now printed on Southern Lion products. This initiative will befollowed by the launching of the company’s website (www.southernlion.com.my) in June. Ho invites retailersto call the Hotline and, if possible, also visit the website to gain instant information and also offer their insightsand feedback to the company.

Ho adds that the trade can definitely look forward to exciting new product launches that will be stronglybacked by advertising and promotions to excite consumers and generate sales. Accordingly, the company alsoplans to increase in-store media support for its brands and, towards this end, is already in discussion withRuncit Media Sdn Bhd, the country’s traditional retail media specialist.

Last but not least, there will be a host of innovative promotions to enhance this year’s Lion Fair, aptly named‘Leading the Way’ in line with the anniversary theme. Details will be made available to retailers soon.

Ho Mun Woh,Managing Director,Southern Lion Sdn Bhd

http://www.southernlion.com.my

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The Partnership Continues

Southern Lion’s 20th Anniversary sets new hopes for the company and itsvalued retail partners, the traditional trade. But the principles ofpartnership are not about to change, thanks to the steadfast vision andvalues of Ho who, over 15 years as Managing Director, has steered thecompany to its heights of success today.

He says: “We will always remain a lean and trim organization thatcontinually develops its core competencies in production efficiency andlow-cost leadership so as to quickly respond to consumers’ changingneeds.

“As for our partnership with the traditional trade, we will continue tostrengthen the mutual trust and goodwill built over the last 20 years.Just as we depend on their support, they also depend on us tocontinually deliver innovative products with effective marketingstrategies. Quality cannot be compromised and we will continue tohonour our terms of business with the trade.”

With sights set on continued growth and expansion, Southern Lion seizes the present as time to take the lead.

CORPORATE MISSION

At Southern Lion, we strive to continuously improve the quality of life of Malaysian consumers by offeringthem products of innovative concepts at affordable prices.

We do this by consciously listening & understanding the needs of our consumers. We challenge to wintheir hearts so that we can have a lifetime of profitable business.

In this process, we strive to enhance the values to shareholders, customers and employees.

VISION STATEMENT

In every field that we compete, we aim to be the market leaders or within the top 3 positions in themarket.

We endeavour in every effort to make and build brands that are synonymous with high quality and carefor the environment.

In operations, we strive to attain and sustain our core competencies in cost-efficient production andmarket innovations.

Stephen Tan & G Retnam – Runcit Malaysia

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Runcit Malaysia Magazine Issue 9Kedai Runcit

AN ATM MACHINE IN YOUR SHOP

For Shoppers to Pay Directly from Their Bank Accounts

Scenario 1: NotEnough Cash

Scenario 2: Too MuchHassle

Scenario 3: Robbed! Scenario 4: Victim ofDebt

En Jaafar walks into ashop. He only intendsto spend RM50 oncertain items. He seesa very attractivepromotion that costsanother RM30. Jaafardoesn’t have enoughcash in his wallet. Heregretfully decides togive the promotion amiss for now.

Jamie was heading toKedai Runcit Safirah whenshe realised she didn’thave enough cash. Shenoticed only one ATMmachine in the vicinity.Since there was such along queue, she left andnever entered the shop.

Mrs Lim needs to buysome groceries. Shegoes to the ATMmachine at the bank towithdraw some cash. Acouple of ‘bad hats’mark her and, a fewminutes later, rob her ofher money. Mrs Lim willnot be grocery shoppingtoday.

Mr Suren has beenshopping for years atKedai Runcit Tee. Hemostly bought on credit.He made monthlysettlements but they werealways followedimmediately by morepurchases charged to hisBuku 555 ‘account’. Forthe last two months, Surenhas not visited the shop.The retailer eventuallyfound out that Surenmoved to another town.What is to happen to thedebt he owes?

Have you ever lost business as a result of any of the abovescenarios? Here’s good news! You can overcome all theseproblems by installing an Electronic Draft Capture (EDC)terminal at your cashier counter. It lets shoppers pay youdirectly from their bank accounts, using their normalATM cards. It’s almost like having an ATM machine rightinside your shop!

This payment concept is called e-debit in which the value ofthe shopper’s purchase is deducted (in other words, debited)from his bank account and transferred to yours. Not having tocarry cash in the wallet makes consumers more likely tospend. For retailers, like you, this means more business!

According to Alex Tay Beng Lock, Group Managing Directorof GHL Systems Berhad, the more affluent consumersbecome, the less they prefer to carry a lot of cash. They wantto avoid attracting robbers as well as the hassle of having towithdraw money from the bank.

As a result, such consumers are quite willing to pay for goodsand services using either a credit or debit card. Tay says,“Outlets that allow consumers to pay by card generally enjoyan increase of 30-40% in sales.”

He adds that, while credit cards have been around for a long time, e-debit cards are now rapidly being madeavailable in hypermarkets, restaurants and other types of outlets as the great new way to pay. “It’s onlya matter of time before e-debit cards become as widely used in Malaysia as the Nets Card in Singapore,Canada, US and elsewhere,” he remarks.

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Improve Your Business with e-Debit

Our Government itself hopes that more retailers will provide e-debit asa payment method so that Malaysian society can start going‘cashless’. This will not only improve business in general but also helpreduce the incidence of cash-related crimes (such as snatch thefts androbberies) while enhancing the safety of our citizens.

In fact, the Government is so serious about promoting e-debit thatplans are under way to mount a massive consumer educationcampaign before the end of 2007.

Chan Chun Fee, Chief Operating Officer of GHL Systems Berhad,advises all traditional retailers to be ready by the time consumerscome asking to pay for purchases using their ATM cards.

He says, “e-debit is very well suited to the business needs of traditional retail outlets. It’s a small but importantstep towards modernising your business to give your sales a boost. Besides making payment ever so easy, theEDC (e-debit) terminal will also make it possible for you to offer value-added services (such as Touch n Go andPrepaid reload) that never fail to attract shoppers to your outlet.

E-DEBIT BENEFITS To Shoppers To RetailersHassle-free No need to withdraw cash from the

bank.No more ‘sales-on-credit’ or having to worryabout shoppers defaulting on payment.

Safe Carry less cash in the wallet. Carry less cash in the shop.

Secure Every EDC (e-debit) terminal comeswith privacy shield to prevent othersfrom seeing your PIN number as youpunch it in.

Less exposure to counterfeit notes.

Freedom Purchases not limited to amount ofcash in the wallet.

Consumers are likely to buy more, whetheron impulse or in response to promotions inyour shop.

Trustworthy The EDC (e-debit) terminalautomatically issues a receipt aftereach successful transaction

Sales slip is automatically issued to confirmthe transaction.

WHICH CARD DO YOU CHOOSE?

It is estimated that there are 9 millioncredit cards being held by 3 millionadults in Malaysia. However, there areat least 19 million ATM cards in thecountry. Which type of card would smartbusinessmen, like you, choose as thepayment option to offer in their shops?

Hemala Devaraj – Runcit Malaysia

Article produced in collaboration with GHLSystems Berhad, a leading paymentservice enabler that is recognised by BankNegara Malaysia and appointed by MEPS.GHL is listed on the Main Board of theKuala Lumpur Stock exchange. Thecompany has a paid up capital of 63 millionwith an authorised capital of 120 million.

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Runcit Malaysia Magazine Issue 9Kedai Runcit

Opening & Closing Procedures

As a retailer, you cannot afford to ignore certain basic procedures relating to the opening and closing of youroutlet to ensure your business runs smoothly.

To ensure your retail business runs like clockwork without any hitches, there are several housekeepingfunctions which every retailer should perform before the business opens and closes for the day.

Shop-Opening Tasks:As a rule, set aside at least 30 minutes each day tocarry out these essential pre-opening tasks.

Tasks To Be Performed After Closing:Once you have closed for the day, it’s time to surveyyour shop and take note of what needs to be done orrectified before you reopen the following day.

1. HousekeepingEnsure the following areasare clean and tidy because ifthey are not, your customersare bound to take notice,reflecting badly on your shop.

Entrance Cashier counter Sales area Shelves and display units Merchandise on display

1. Closing Of Daily AccountsSet aside time to carry out thisprocedure. Confirm the totalsales from the cash registeragainst the total sales from thecash memo. Then, proceedwith the physical counting ofthe money. Once you havecounter-checked the amount,put the money and cash memo into an envelope andlock it in your safe to be banked in the next day.

2. Facilities & EquipmentIt is important to ensure that allyour essential equipment andfacilities, such as fans,air-conditioners, lighting,refrigerators and otherequipment and fixtures, are ingood working condition, asfaulty gadgets can hinder your daily operations.

2. Replenishing EssentialsReplenish packaging materiallike plastic and paper bags.Ensure there are sufficientreceipts and cash memos for thecash register.

3. Stock ReplenishmentWell-stocked shelves create agood impression, as it will givecustomers the confidence thatthey will find what they need inyour shop easily. This is why itis so important that youreplenish merchandise beforeopening.

3. Damage to facilities or equipmentAlthough this is not somethingyou would encounter on a dailybasis, it would be prudent tocheck for defects and damageso that you can get it fixedbefore you reopen for businessthe next day.

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Setting StandardsThe above guidelines serve as a general standard practice for traditional retailers. However, as every retailformat might vary, retailers are encouraged to develop their own set of standard practice which will suit theirbusiness. There are two ways to go about this:

Get tips from established retailers. Not all their standard procedures will apply to you, but you mightbe able to get some useful pointers.

Think like a customer; if you were a customer in your shop, what sort of retail standards wouldenhance your shopping experience?

Opening and Closing Time

It is very important for every retailer to have a fixed Opening andClosing time. This is so your regular consumers are fully aware of it incase some of them want to make an emergency purchase or do somelast minute shopping.

Ideally you should display a sign indicating your opening and closinghours in a strategic location at the shop entrance.

Opening Time Closing Time Generally most retailers would commence

business at 8.30am, however if the shop islocated near a wet market or a school it would bewise to open as early as 7am or 7.30am tocapitalise on the early morning crowd.

A savvy retailer should fix the opening time tosuit the morning crowd in the area or risk loosingout to other shops in the vicinity.

As most working consumers tend to shop afteroffice hours, having an early closing time couldaffect your business.

Likewise if the area where you operate becomesrather quiet say about 6pm, and you find thatthere are hardly any consumers coming in, itwould be wise to close earlier.

Jothi Jeyasingam – Runcit Malaysia Magazine

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Runcit Malaysia Magazine Issue 9Peragaan Runcit

Using the Five Senses to Attract Customers

Tips on how to use sight, sound, smell, touch and taste effectively to help you sell better.

The five senses of sight, sound, smell, touch and taste are powerful sensory receptors, which have theability to create an impression in the mind of the consumer. Thus, retailers should make as much use of thesesenses as possible to create a favourable in-store ambience which will attract customers to come in, staylonger and buy more.

How the senses work for youAll that we learn and do involves the five senses and this also applies to the evaluation of product quality. Byusing all, some, or even one of the five senses (depending on the product being evaluated), customers will gainan immediate perception of the product quality.

Utilising the five senses in a retail outlet

Sight: A product can succeed or fail based on sight or appearance alone, so make sure all the merchandise

stocked on your shelves look clean and presentable, and remove dented cans or torn packs.

Create attractive displays in a highly visible spot. Colourful and interesting displays never fail to attractattention and draw in the crowds.

Sound: A favourable sound has the effect of drawing people to its source and this can also be applied in a retail

context. Playing good music, which can be heard out on the streets, will attract people to your shop andencourage them to stay longer by creating a pleasant shopping experience.

The music you choose, however, has to suit the majority of your target audience. For instance, don’t playloud rock music when most of your customers are housewives.

Smell: Smell can either attract or repel, so for starters, make sure that your shop does not smell bad. Unpleasant

smells can result from expired products, especially ‘fresh’ items, and dead insects or animals, to name afew. You should also note that sometimes, unpleasant odours near your shop can also turn awaycustomers. So, for instance, if the garbage outside your shop has not been cleared for some time, or ifthere has been a dead cat lying there for several days, inform the relevant authorities.

For smells that attract, restaurants as well as perfume and cosmetic outlets have the advantage. There is,however, no reason why the traditional trade retailer should lose out in this aspect. Have an air freshener inplace or place some potpourri near the entrance of your shop and other strategic locations in-store.

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Some products, especially beauty products such as soaps, colognes, powders and shampoos, areevaluated based on the quality of their fragrance, which means customers normally pick them up to smellthem before deciding to buy. So, make sure that these products do not have dust or dirt on them.

Touch: Most customers evaluate a product by touching and handling them. Many products are tactile and only by

feeling them can their appeal be appreciated. So, merchandise your stock in a way that makes it easy toreach. Also, remove those products which are not in good condition, as they create a bad impression withregards to the quality of the products in your shop. The only exception for this would be for valuable, easilystolen items, or those that are fragile.

Taste: This only applies to food products. Most modern trade outlets use the product-tasting tactic to introduce

new food and drink products to customers. There is no reason why traditional trade retailers should notemploy this highly effective tactic to promote new flavours and variants too.

Based on the following insights, we hope you will now be able to fully capitalise and exploit the five senses formaximum gain in your retail business.

Jothi Jeyasingam – Runcit Malaysia Magazine

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Runcit Malaysia Magazine Issue 9Kategori Runcit

PROMOTIONS FOR BRISK SALES

Promotions make good business sense to increase sales irrespective of where and how big you are.

Promotions are a way of life for the modern trade, where traders try to outdo each other to lure shoppers andgenerate more sales. The traditional trade, however, does not employ this useful tactic often enough. In today’scompetitive retail environment, savvy retailers must do all that they can to remain competitive.

Why Promotions?Promotions are an effective strategy for all types of retail businesses irrespective of size and location. However,the extent of the promotion will depend on how elaborate you want it to be. Furthermore, most consumerscannot resist bargains, value-for-money products, savings and discounts. Thus, mounting a promotion is a sureway to increase sales.

What To Consider Before Mounting A Promotional Campaign1. Set your objective, whether it is to:

Increase sales by a certain percentage, say 25%, Induce impulse or bulk purchase, Widen your consumer base, or Promote a new product or special pack size.

2. Before deciding on a promotion, you should consider whether your target customers will be receptive to it.To determine this, you have to take into account their disposable income, purchasing power, whether theyare likely to be influenced by a promotion, and when they shop and how often.

3. The success of your promotion also depends on choosing the right products. Product selection is importantbecause it will help you realise your sales objectives. When selecting products, bear in mind that they haveto be appealing and induce customers to go for volume purchases.

4. The promotional price must be attractive enough to induce purchases. It should preferably be bulk orvolume purchase to make it a worthwhile investment for you. It is very important that you feature the rightpricing and use it as a carrot to lure the crowd.

Common Promotional Tactics:

Festive sales - This is for items which are ‘hot buys’ during festive seasons like soft drinks andingredients which consumers use to bake cakes and cookies.

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Back-to-school promotions – This is especially effective for shops in rural areas where customers live faraway from the nearest modern trade outlet. You could serve them better by selling school uniforms andbags, and also giving special deals on stationery during this period.

Clearance sales – Every once in a while, you might notice that you have stock that is not moving fastenough, with the expiry date fast approaching. Why not offer special deals for items like these, like twofor the price of one? Most customers cannot resist special-offer products, as they perceive it to be valuefor money.

Store-opening promotions – This is a good way to make an impact on customers if you are new to theneighbourhood.

Closing down/renovation sales – This will help you clear off your merchandise.

Promoting complementary products – This tactic helps to boost sales for certain items in a category thatdoesn’t sell well. For example, you could give customers a discount for mouth rinse if they purchase acertain pack size of toothpaste. This could also coincide with the festive period and give rise to seasonalopportunities. For example, during the Moon Cake festival, you could tie up with a teabag promotion.

Ensuring The Success Of Your Promotion

A good promotion must create an impact among customers for it to gain the desired results. To achieve this,you should ensure that your promotions are noticed by your target audience. You can do this by: Printing flyers that advertise your promotional items. Having signs prominently displayed inside and outside your shop informing customers about your

promotions. Displaying the promotional items prominently in a location within the shop where it is sure to be noticed. Putting stickers on the promotional items to indicate the ‘special offer’.

Chow Nyuk Loong & Jothi Jeyasingam – Runcit Malaysia Magazine

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Understanding LIQUID MILK

It’s the No 1 RTD (ready-to-drink) nutritional product for children & adults,alike.

Remember the days when vendors used to go around the neighbourhood sellingmilk, fresh from the cow and right out of the urn on the back of their bicycles?You hardly see them nowadays. But, thankfully, consumers are still able to getthe goodness of milk daily. State-of-the-art processing and packaging technologyhas made this highly nutritious food more convenient to buy and store, and muchsafer to consume. Coupled with consumers’ growing understanding of proteinand calcium for growth and healthy bones, liquid milk has become the mostpopular ready-to-drink (RTD) nutritional product for children and adults, alike.Category growth has traditionally beenfueled by flavours and the availability oflow-fat and high-calcium variants. More

recent boosts have come from the introduction of advanced value-added features, eg fat-free, fibre, Omega 3 & 6, and other additions.

Below are some more insights to help you optimise the selection,storage and selling of liquid milk in your shop.

CATEGORY STRUCTURE

According to The Nielsen Company, the category includes all milk that is processed using the pasteurisation,sterilisation and UHT methods. It excludes coffee and tea containing milk.

SEGMENTS PROCESS DESCRIPTION SHELF-LIFEUHT UHT or Ultra High Temperature is best reflected by the aseptic

processing and packaging technology developed and patentedby Tetra Pak. The milk is briefly exposed to intense heat todestroy all harmful bacteria, viruses, yeast, spores andother harmful micro-organisms it contains. Taste andnutrients, however, are not affected. The milk is filled intoaseptic packages that prevent micro-organisms in the externalenvironment from entering the product.

Remains safe andhygienic, with no needfor preservatives. Theunopened product canbe kept for 9 months toa year at roomtemperature.

Sterilisation Sterilisation involves prolonged heat treatment to destroy allthe micro-organisms present. Sterilised milk has a distinctivetaste because the heating causes a reaction between thesugars and protein in milk. It is packaged in plastic bottles.

Unopened, sterilisedmilk can last for severalmonths at roomtemperature.

Pasteurisation Pasteurisation is the process of heating the milk to reducethe number of micro-organisms so that they are unlikely tocause disease. Milk is usually heated below boiling point for 30minutes, followed by quick cooling to about 4°C. Usuallypackaged in gable top paper cartons.

Must be keptrefrigerated and canlast for two to threeweeks.

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GROWTH TRENDS

The liquid milk category has been growing healthily. From 2005 to 2006, it grew by 8.5% in terms of value and6.7% in terms of volume. Below are some other important indications.

Liquid Milk: Segment Contribut ions

58%

28%

14%

60%

27%

13%

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

UHT Pasteurized Sterilised

2005 2006

Liquid Milk: Channel Contribution (Pen Malaysia)

65.3 66.4

33.8 32.4

0

20

40

60

80

2005 2006Modern Traditional

UHT commands the biggestshare of the liquid milk market.Source: ACNielsen

Source: ACNielsen

The traditional trade continues to supply about

one-third of the total liquid milk consumed.

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STORAGE AND CATEGORY MANAGEMENT TIPSCreate A Category Section Liquid milk is a fast growing segment. Dedicating adequate shelf and

refrigerator space to liquid milk will help boost sales for your shop.

Stock The Types Consumers usually buy pasteurised milk as it is perceived as being fresherdue to its short shelf life and need for refrigeration. Storeable at roomtemperature, UHT and sterilized milk caters to convenience, both theconsumer’s and yours.

Carry Popular Flavours Children prefer flavoured milk, especially chocolate and strawberry. Whitemilk is consumed more by adults.

Offer Different Variants As much as your space allows, carry different variants of each leading brandthat you stock. Consumers invariably look for ‘Low-Fat’, ‘Full Cream’ and‘High-Calcium’ milk. These claims are printed on the packs.

Smart SKUs Smaller pack sizes sell more easily in traditional trade outlets. It is advisableto keep stocks of 200ml and 250ml packs. In neighbourhoods with lots ofyoung children, stock up also on the 125ml packs as these are popularamong children aged 3 to 10 years old.

Stack Carefully Tetra Pak packaging (which is used for most liquid milk products) is quiterobust but still requires careful handling. In the store room, do not placeheavy loads on the trays, avoid over-stacking and never stand on them.Damaged packaging will result in leaking and product contamination.

Merchandise Effectively At your shelves, place six-packs of 200ml and 250 ml packs at eye-level (thebuy level), 125ml children’s packs on the lower levels (for kids’ easy reach)and family-sized 1 litre packs on the upper levels.

Place your refrigerator near the front of the shop so that your shoppers willeasily notice liquid milk products more easily and be more inclined to buy apack or two on impulse. Most people prefer consuming liquid milk chilled.

Know Your Products It is an advantage if you, as a retailer, know more about the benefits of eachproduct as you can then advocate the right ones to your shoppers.

Article in collaboration with and

Darius Chan – Runcit Malaysia

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LIQUID MILK Brand Owners

DUTCH LADY MALAYSIAAddress : 13, Jalan Semangat, 46200 Petaling Jaya, Selangor Darul EhsanCustomer Services Tel : 1 800 88 1191

MALAYSIA MILK SDN BHDAddress : No. 7, Jalan 19/1, 46300 Petaling Jaya, Selangor Darul EhsanCustomer Services Tel : 1 800 88 5587

NESTLÉ PRODUCTS SDN BHDAddress : 4, Lorong Persiaran Barat, 46200 Petaling Jaya, Selangor darul Ehsan.Customer Services Tel : 1 800 88 3433

SUSU LEMBU ASLI (MARKETING) SDN BHDAddress : Lot 31, Jalan 213, Section 51, 46050 Petaling Jaya, Selangor Darul Ehsan.Tel : 03-7785 8811

F&N FOODS SDN BHDAddress : 70, Jalan Universiti, 46700 Petaling Jaya, Selangor Darul Ehsan.Tel : 03-7952 6000

FONTERRA BRANDS (MALAYSIA) SDN BHDAddress : Lot 12,Subang Hi-Tech Industrial Park, Batu Tiga, 40300 Shah Alam, Selangor

Darul Ehsan.Tel : 1 800 88 3122

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BLACK TEA

The tea drinking tradition is alive and well in Malaysia.

Historically, black tea originated in China. Centuries later, it is enjoyed all over the world. In Malaysia, it has astrong following, especially among Malay and Indian consumers, who have their own long-standing traditions oftea drinking, including the well-loved teh tarik. The popularity of tea has contributed to the continuous growth ofthe category, helped along by the traditional trade’s dominant role as a channel for distributing the product tothe masses as well the brand owners’ own efforts to introduce innovations to this age-old beverage. Theinsights below will give you a better perspective of the black tea market.

CATEGORY STRUCTURE

Black tea is defined as a beverage made by adding hot or cold water to the dried leaves of the Camellia teaplant. Sugar and/or milk can be added to taste. The black tea category excludes Chinese tea, digestive tea,organic tea, jasmine tea and chrysanthemum Tea.

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GROWTH TRENDS

The black tea category has been growing healthily. From 2005 to 2006, it grew by 15.8% in terms of valueand 9.1% in terms of volume. Below are some other important indications.

53.5%49.7%

26.7% 26.8%

13.5% 14.6%

3.9%7.1%

2.4% 1.9%

0

0.1

0.2

0.3

0.4

0.5

0.6

Packet Tea Bags Pot Bags Hot Instant Tea Mix

Black Tea: Segment Contributions (Pen Malaysia)

2005 2006Source: ACNielsen

36.1% 36.0%

63.9% 64.0%

0

0.2

0.4

0.6

0.8

Modern Traditional

Black Tea: Channel Contr ibution (Pen Malaysia)

2005 2006

Source: ACNielsen

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The Brand Owners

BOH PLANTATIONS SDN BHDAddress : No 9, Persiaran Hampshire, Off Jalan Ampang, 50450 Kuala Lumpur,

Wilayah PersekutuanCustomer Services Tel : 03-2164 6555Product Segments : Packet Tea, Potbags, Teabags, Instant Tea, Tea DustMain brands : BOH Cameronian Gold Blend, Garden Teas, Seri Songket Collection,

BOH Iced Teas, BOH 3-in-1, BOH Teacino

UNILEVER (MALAYSIA) HOLDINGS SDN BHDAddress : Level 33-35, Menara TM, Jalan Pantai Baru, 50672 Kuala Lumpur.Customer Services Tel : 03-2246 2246Product Segments : Packet Tea, Potbags, Teabags, Instant Tea, Tea DustMain brands : Lipton Yellow Label Tea, Lipton Uncang Teko Teh, Lipton Ice Tea

POWER ROOT (M) SDN BHDAddress : 2, Jalan Sri Plentong 5, 81750 Masai, Johor Darul Takzim.Customer Services Tel : 07-386 6868Product Segments : Instant TeaMain brands : Power Root Alitéa

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Category Management Insights

Runcit Malaysia magazine speaks to Chen Chaw Chang, Senior MarketingManager of BOH Plantations Sdn Bhd

Q: What is BOH’s ranking in the black tea market?A: BOH Plantations is market leader. We supply 70% of all black tea produced in the country and cater to morethan 50% of the local tea drinkers’ market.

Q: What are the category objectives that BOH shares with other brand owners?A: Malaysia’s black tea market currently stands at a total of RM92 million in value terms and 3.6 million kg interms of volume. However, category players would certainly like to see this increase. We all strive to increasetea consumption against other types of beverages. Among current tea drinkers, we also look for ways for themto drink more tea.

Q: How is BOH contributing towards meeting these objectives?A: As market leader, we are in a strong position to continually strengthen Malaysians’ tea drinking culture. Ourstrategy is to project the ‘ummph’ of a tea drinking lifestyle while promoting the health benefits of tea. We alsokeep innovating to offer new products to satisfy consumers’ need for convenience. Last but not least, weemphasise mass marketing and ensure excellent product availability through good distribution.

Q: Is black tea generally considered a price sensitive category?A: Pricing and sensitivity varies according to the segments. For example, branded tea dust can range fromRM6.80/kg to as high as RM11.00/kg. Tea leaves can range from RM17.00/kg to RM22.00/kg.

Q: What are some important category trends occuring today?A: While black tea in bags and packets remain as important common grocery items, more consumers aremoving towards tea products that offer convenience and product innovation.

Q: To whom are these types of products targeted?A: Instant tea mixes (like BOH 3-in-1 and 2-in-1) makes life more convenient for modern urban and suburbanconsumers. Product innovations, like BOH Teacino with the instant frothy indulgence it offers, is a new kind ofbeverage that would contemporize the tea category.

Q: What about your recently launched BOH Green Tea?A: BOH Green Tea is intended to make good quality, affordable green tea available to the mass market. It isprepared using a famous 900-year-old traditional Japanese process to preserve the natural qualities of a truegreen tea. Its delicious aroma, light and refreshingly brisk taste complements its natural antioxidant properties,giving you a green tea that soothes, refreshes and revitalises your mind and body.

Q: What are the right ways to handle tea products?A: Tea products should be stored in a cool dry place; avoid humid or wet areas as tea absorbs moisture easilyand this can affect the tea taste. Do not throw the cartons or stack them too high as those at the bottom areeasily crushed.

Q: How can traditional retailers optimise product sales?A: Never let ‘must have’ items (especially packet tea and tea bags) go out of stock. There is such high loyaltyamong tea consumers that they will not hesitate to go to another shop if they cannot find the products theywant in yours. When comes to merchandising, arrange your displays, according by brand. Give the mostprominence to the most saleable brands. Clear and well-organised merchandising always helps consumerslocate the brands or products they seek. Do not let dust settle on your tea products and practise good stockrotation to ensure product freshness.

BOH Plantations is one of the world’s few ‘vertically integrated’ tea companies ie with operations ranging from growing,picking, processing, packaging and marketing tea. ISO19001-certified for quality, the company has also successfullyobtained ISO 22000 certification, a leading international standard to ensure safe food supply chains worldwide. BOH teasare certified as Halal.

Article in collaboration with The Nielsen Company & BOH Plantations

Stephen Tan – Runcit Malaysia

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Runcit Malaysia Magazine Issue 9Media Runcit

THE BRAND NEW SHELF-E

Longer, Bolder, More Visible for Maximum Impact!

Are you stocking leading brands that shoppers want? If you are, well done! This is one ofthe golden rules for running a successful store.

However, this alone is NOT enough – shoppers must be able to easily SEE andLOCATE the brands. This is important not just on normal days but especially duringlaunch periods and when the brand owners are running promotional campaigns.

Having said this, it can sometimes be a challenge to give those brands the prominencethey deserve, mainly because of your store layout, space limitations inside the shop, andclutter on your shelves. How can these problems be overcome?

THE ATTENTION-GRABBING SOLUTION

In its commitment to continually develop practical and effective IN-POP(in-store point-of-purchase media), Runcit Media Sdn Bhd (RMSB) nowproudly introduces the brand new SHELF-E (shelf-edge) that’sdesigned to help enhance your brand promotion efforts!

1. Combines retailers’ feedback with media innovationThe brand new SHELF-E was developed by combining RMSB’sexpertise, as Malaysia’s traditional retail media specialist, with thevaluable feedback of its panel of retailers.

2. Offers superior brand visibilityStanding out and standing tall has its advantages. Measuring 30inches long and 6.5 inches wide, the brand new SHELF-E protrudesfrom the shelf to signal to consumers that the brands they seek areHERE!

3. Communicates clearlyThe larger format of the brand new SHELF-E gives more space tobrand owners to more clearly highlight their promotions, offers andcontests. Shelf prices (not recommended retail price) can also bedisplayed.

4. Gives brand owners and you a vital competitive edgeWhile the brand new SHELF-E enables brand owners to ‘block out’their competitors, it remains a very useful and powerful medium thatenhances your store ambience and improve your sales.

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The Brand New SHELF-E is available in ...

Target areas: market centres, urban & suburban areas Outlet types: modern provision stores, mini-markets Coverage: Peninsular Malaysia

For more information, please call:Elenie Tan, Head of Client Services

Runcit Media Sdn BhdTel: (603) 7957 1718; Fax: (603) 7956 5109; Email: [email protected]

Stephen Tan & Jothi Jeyasingam – Runcit Malaysia

mailto:[email protected]

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Runcit Malaysia Magazine Issue 9Wira Runcit

Don’t be content and complacent

Better business acumen and the right attitude are important keyelements to a successful business.

Amidst the few smaller sundry shops that dot the landscape inSimpang, Taiping, you may be pleasantly surprised to see a largeMini Market that is bustling with customers as early as 10am. Yes,we are referring to Pasar Mini Sin Wai Huat, the one-stop shop forshoppers far and near.

Humble beginnings

The mini market has a humblebeginning as a small sundry shopback in the 1960s. In fact, it is stillthere, located just adjacent to thenewer, more spacious mini market.The former sundry shop now housesthe hardware, plastic goods,stationery, household utensils andshoes departments of the business.

Back in the 1960s, Mr Ng Chew Wah,Managing Director of Pasar Mini SinWai Huat, was just a small boyhelping out in his father’s small sundry

shop. The shop occupied half of the present shop lot back then. As Ng grew older, he also became moreinvolved in his father’s business.

“I was asking my father to expand the business and suggested taking over the entire shop lot to grow thebusiness. But he was contented with how his business was doing then which was only making about RM1,000a day,” mused Ng.

Learn and change

Ng persevered and continued to help in his father’s business. In 1998, Ng’s father passed the reins of thesundry shop business to him. The first thing that Ng did was to expand the half shop lot to a full shop lot.Learning from the modern and bigger shops and supermarkets, he started to take his big step forward bymaking his now bigger shop a more enjoyable place to shop.

“Creating a clean and friendly shopping environment is the most important thing to attract customers.Stocking the right products and displaying them in an uncluttered manner makes it easier for any shopperto locate and buy their groceries,” Ng stressed. All these paid off and Ng was seeing daily sales far exceedinghis expectations.

“Good financial management also has a lot to do with a successful business,” Ng added. Together with hiswife, Ng was working very hard and managed to save up enough money to expand his business further. In2000, three years after he took over the business from his father and with the money saved, Ng bought thepiece of land adjacent to his old shop. That gave birth to the new Pasar Mini Sin Wai Huat that stands proudtoday in Simpang, Taiping.

Ng Chew Wah,Managing Director, PasarMini Sin Wai Huat

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Category management

The new Pasar Mini Sin Wai Huat created an avenue for Ng to further use his growing knowledge in the retailbusiness to make a mark in the retail landscape of a small town like Simpang. His own research andunderstanding of modern retail business management like category management, use of moderntechnology, knowing the shoppers’ needs together with a hardworking and knowledgeable staff forcehelped Ng transform his business to a huge success. “Now my business has a sales turnover comparable to asupermarket,” Ng smiles.

Stay competitive

Today, Ng also offers monthly product promotions and special offers to attract more customers. He alsosupplies wholesale to customers and smaller sundry shops in the surrounding townships and cities like Ipoh,Penang and as far as Kuala Lumpur. His competitive pricing has earned him a place among the top threeplaces to shop in Taiping.

“It is very competitive now in the retail business. To stay one up a retailer must be very hardworking, gain thetrust of his customers and suppliers, practise good stock management and provide good customerservice,” Ng stressed.

When asked if the traditional trade can survive in this day and age, Ng smiled and added, “Of course, thetraditional trade can survive. The modern trade is only in the bigger towns and cities, and the traditional tradehas the share of wallet of the people who live in semi-urban and rural areas. In order to survive and succeed, aretailer must accept modernization. It will help expand and grow their businesses. Lastly, teamwork isextremely important because the boss cannot do everything. Your team of staff is like family. A happy familywill prosper together,” Ng ends with a smile.

Darius Chan – Runcit Malaysia

5 BASIC IMPORTANT TIPS

When you are in the retail business, the most important aspects to a successful business are often the mostbasic factors. Always remember to:

1. Keep your shop clean, bright and uncluttered. This makes for a better shopping experience and yourcustomers will appreciate it.

2. Provide good customer service. You and your staff must constantly strive to provide the bestcustomer service be yours a small or big shop.

3. Build close ties. It also helps to establish a good rapport with your suppliers and customers.

4. Know what sells. You must also know what sells and what doesn’t. This will help you manage yourstocks well. Good stock management will lead to good financial management.

5. Practise good financial management. When you are financially sound, you will earn the trust fromyour suppliers and can better negotiate with them. Good suppliers are usually very supportive and theycan help you grow your business by giving you better pricing for regular or promotional items.

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Runcit Malaysia Magazine Issue 9Cakap-Cakap Runcit

Boosting Business with the Baht

A wise retailer should adapt to his surroundings in order to prosper, and traditional trade retailer Tan Chui Keeis a fine example of this. Tan, whose shop is located in Kuala Perlis, accepts the Thai currency baht from themany Thai customers who frequent his shop.

“I decided to accept the baht after numerous requests from my Thai customers, who say it would be so muchmore convenient for them to pay me in baht. Most of my Thai customers live in the vicinity or are from acrossthe border,” he says.

Tan says many Thais like to shop in Malaysia because the goodsare cheap and of a higher quality.

Tan Chui Kee, Kedai Runcit Seng Fatt Brothers Sdn Bhd, KualaPerlis(Runcit Media Field Supervisor (FS): Rodi)

Giving Entrepreneurs A Head Start

Fatahiyah Haron is not only the successful owner of a mini market, but she is also avisionary who wants to educate the younger generation on what it takes to succeedin business. “I got the idea of offer ing an entrepreneurial development course after Idiscovered that there were many youths out there who wanted to start their ownbusiness but lacked the basic know-how to do so.”

Four trained facilitators have been employed to conduct the course. According toFatahiyah, each module takes a week to complete, and encompasses both theoryand practical aspects of entrepreneurship. Taking into consideration that some ofher students might be from different locations, she even provides accommodation.This, however, depends on the study package they have chosen.

To give her students a head start, Fatahiyah even provides assistance and supportto those who have completed the course and wish to start their own business. Infact, she proudly tells us that one of her former students now has a shop inMergong, Alor Star.

Fatahiyah Haron, Pasaraya F-Mas, Bandar Darul Aman(Runcit Media Field Supervisor (FS): Rodi)

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Thirty-One Years and Still Going Strong

This second-generation traditional trade outlet is asurvivor in the face of competition frommushrooming modern trade outlets in its vicinity.Kedai Runcit Syarikat Mohd Ali & Rakan-Rakan firstopened its doors in 1976 under the current owner’sfather. In 1992, Mohamed Ali Mohamed Hussaintook over the reins from his father and now runs theshop together with his younger brother MohamedIqbal.

The secret to the shop’s longevity? According toMohamed Ali, he keeps up with trends in the FMCG(fast- moving consumer goods) industry by sellingproducts which are sought after by customers. Asmost of his customers like to make pricecomparisons with items sold in hypermarkets,Mohamed Ali tries to make his pricing ascompetitive as possible.

Mohamed Ali Mohamed Hussain, Kedai Runcit Syarikat Mohd Ali & Rakan-Rakan, Beserah(Runcit Media Field Supervisor (FS): Rizal)

The “Medicine Man” of Pantai Remis

Yew Kean Teong has been a practitioner of traditional Chinese medicine forthe past 18 years and is well known among the folk in Pantai Remis for hishealing remedies. Not content with just running his Chinese Medicine Shop,Yew is also dedicated to promoting the usage as well as knowledge oftraditional medicine. Towards this end, he actually invites traditional medicinepractitioners from China to conduct talks.

“Most patients always seek the treatment of modern medicine first andusually turn to traditional medicine as an alternative when all else fails. Justas modern medicine has its benefits, so does traditional medicine. Forinstance, the herbs and roots used in tradit ional remedies do not have side-effects,” he explains.

Yew Kean Teong, Kedai Ubat & Liquar Ban Onn Hoe KhaiKee, Pantai Remis(Runcit Media Field Supervisor (FS): Ng Chin Chai)

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The Power of Word-of-Mouth Advertising

Retailers are spreading the word around about the benefits of being a part of Runcit Media Sdn Bhd’s panel,and with good reason too.

Norshahrizal Mad Sani, or better known as Rizal among hiscolleagues at Runcit Media Sdn Bhd (RMSB), joined the companytwo years ago and is loving every minute of it. Rizal, who servicesoutlets in Negeri Sembilan as well as Muar, Tangkak, Labis andSegamat in Johor, says some of the retailers he has recruited are soimpressed with the positive benefits they have gained from beingpart of RMSB’s panel that they even have recommended it to theirfriends in the traditional trade.

“Believe it or not, some of the retailers I have recruited have actuallytold me that I should pay a visit to the outlets owned by their friendsand family members who were also keen to be recruited!” Rizal saysthis has resulted from the fact that the retailers who have becomepanel members have reported a 20% increase in sales at the veryleast.

According to Rizal, in most of the outlets he has come across, sales were rather lacklustre until they were fittedout with RMSB’s media products, after which they improved substantially. Citing an example, Rizal says forshops in rural areas, the installation of STRAMS (Structured Ambient Media) improved visibility, as they couldbe seen from a distance, resulting in more customers visiting the shop.

Rizal says another reason why most of the retailers he approached were very receptive to being recruited wasthe fact that they were savvy and constantly on the lookout for opportunities that will help them succeed. “Theyknow a good thing when they see one,” he quips.

He, however, concedes that there are retailers who are more resistant to being recruited. The ever-perseveringRizal, however, sees this as a positive challenge that simply requires more persuasion from him and his fellowRMSB Field Supervisors.

Jothi Jeyasingam – Runcit Malaysia

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Runcit Malaysia Magazine Issue 9Halaman Pak Runcit

Question:My customers place their orders via the telephone and I delivertheir products to their houses by car. My shop is a small one. Withthe petrol price hikes recently, what should I do?

- Low Lai Huat Trading, Nibong Tebal

Answer:Home delivery is a very important aspect of ‘customer service’, and washighly common among traditional retailers in the past. However, overtime, this form of service has been constantly reviewed, as it requiresadditional manpower support, and not to mention that the recent price

hikes in petrol prices have further inflated the cost of doing business.

In view of the highly competitive market and the fact that consumers are very sensitive to product pricing,retailers have no choice but to bear the additional cost, which will be at the expense of their margins.

In view of this, it is highly recommended that you review your ‘terms of transaction’ and embark on a cost-saving exercise, or you may have to seriously consider doing away with the home delivery service.

Your customers will surely understand the situation you are in, and if you stop providing such a service, webelieve you will not run a high risk of losing your client base.

Remember, in business, we have to make money and if your transactions are not giving you the requiredmargins, then you should put a stop to them before they erode your profitability further. This is a businessdecision you have to make and we suggest you conduct a check on the surrounding areas to determinewhether your competitors are still providing such a service before you effect the change.

All the best!

Question:I provide credit terms to my customers as a form of service. But what should I do if my creditors do notpay up? Do I call the Police or refuse them entry to my shop?

- P/M Sri Royal Store, Ulu Tiram, Johor

Answer:Extending credit to your customers is usually based on ‘trust’ and this facility is generally extended to loyalsupporters and those who are creditworthy. For such transactions, no documentation whatsoever is involvedand as such, you cannot resort to legal means to recover your debts. Even if you did have the necessarydocumentation to support all the transactions, the high cost of recovery may not be worthwhile for you topursue the case, unless the amount involved is substantial enough.

Please note that for such transactions, you cannot report to the Police and neither can you stop the affectedcustomer from coming into your shop. In the event that you are caught with a lot of unpaid bills, the followingare our recommendations.

a) You may have to review your credit policy and tighten your terms and conditions for all your customers.Besides the high credit risk, you are also not putting your funds to effective use. We believe a lot ofyour purchases are done on a cash basis and that one fine day, you might get caught with a tight cash-flow problem.

b) Assuming that you cannot do away with this facility immediately, you will have to take the followingprecautions:

Review your list of customers and try to weed out all the poor paymasters, Do not extend this facility to any new customer, Make sure your customers settle their bills promptly at the end of each month, failing which, all

transactions are to be suspended, No extension of credit terms should be given to any customer,

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A credit limit is to be given depending on the size of your business and the transaction with each creditcustomer, and must be tightly controlled, and

Set a timeframe to do away with the credit facility and make sure you work towards it.

Kindly take note that if your customers only patronize your outlet because of the credit facility given, then youhave to be very careful with this category of shoppers.

If you have been reading our Runcit Magazine regularly, then you will be aware that there are many ways inwhich you can grow your business and win over your customers. However, the extension of credit is certainlynot included in our list of recommendations.

We sincerely hope that you can very quickly recover all your outstanding debt, so that you can do away withthe credit facility once and for all.

All the best!

Chow Nyuk Loong – Runcit Malaysia

Runcit Malaysia Magazine Issue 9Halaman Pak Runcit

In any business environmenon two key factors.

a) The Category or Tyb) The number of Play

Doing business is always a

1) Viability2) Profitability

On a more positive note, copportunities, provided thetheir profits! This usually grultimately will not benefit anBrand Owners are ‘squeezmore shoppers to their outle

While such "heavy price disTraditional Retailers in the sthe Operators involved also

To operate a profitable busidevelopments. This allows y

1) The Rapid Changina. Economy of thb. Urbanisationc. Products thatd. New substitut

rising cost ofe. Birth of new uf. Population be

2) Changes in Consuma. Have a rougb. Are your Cuc. Be sensitive

Mo Imp

Page 47 of 51

t, competition is something that is inevitable and the extent of it hinges very much

pe of business you are iners involved around your place of Operation

big challenge. Before we start a business venture we have to consider 2 factors:

ompetition should be viewed as a healthy activity which will bring about a lot ofOperators involved play by the rules, without going overboard at the expense ofavitates towards the practice of non-standardisation of the retail selling prices thatyone, except the Consumers. This often happens in the Modern Trade where the

ed’ to sell below the recommended retail, with the primary objective of attractingts and ultimately to spend more money!

counting" activities will inadvertently result in a chaotic market and greatly affect theurrounding areas, fortunately, it is only for a limited period of time and furthermore,serve a very different type of clientele base.

ness, you have to be very knowledgeable and sensitive to some of the latest marketou to compete effectively with the other outlets in the surrounding areas.

g Market Environmente country.

– How is this affecting your business?have become obsolete and outdated.es or cheaper alternatives to cater specifically for your Customers, as a result of thegoods, due to inflation.sers – Are you prepared and ready to capitalise on this?coming more health conscious.

ers' Attitudes and Preferencesh idea of the disposable income of your Customers.stomers upgrading to better quality products or vice versa?to the changes in shopping habits, arising from:

re affluent societyroved living conditions

Competition

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d. Consumers are now better educated, more discerning and more demanding.

3) Competitiona. Identify your key competitors in the surrounding areas and focus only on the Traditional outlets.

We must compare apples with apples.b. What are their strengths and weaknesses?c. Conduct a price check comparison of the Top 20 selling items.d. Are you stocking the right products with the correct range and sizes?e. Have you been losing or gaining customers lately?f. Take the feedback/complaints from your customers seriously.g. Do you expect any new Players in the near future?

Complacency can adversely affect your business. To stay above the competition, you will need to:

1) Remain in the forefront and be committed to improve your business all the time.2) Build up a strong clientele base by attracting new customers.3) Grow your business with the view to increasing the volume turnover and profitability.4) Protect/safeguard your business for long-term survival.5) Business expansion, to branch out to more outlets.

Now that you are clear on what competition is all about, formulate your strategies on the most effective ways toface your competitors, without drastically eroding into your profitability. Remember that you are in business tomake money and any unethical activities at the expense of your profits, must be avoided! Starting a "price war"is the last thing you want to see happening in the neighbourhood!

The following are some of our recommendations that you canuse effectively to give you the winning edge.

1) Take full control and ownership of your business.You must be a hands-on Operator and know exactlywhat is happening in the daily activities.Do not be too overly dependent on your staff to theextent of losing control.

2) Create an enjoyable and conducive shoppingenvironment. The shop front must be clean and tidy. Walkways must not be cluttered. Make sure there is no over crowding of POP (Point-of-Purchase) materials and remove old

POP materials.

3) Be more Creative and Innovative – be different and better, be more productive and efficient Creativity sells, especially with in-store promotional ideas. Do not be afraid to try new things – does your shop look like any other shops in your

neighbourhood?

4) Review the current Store lay-out and change/upgrade where necessary Adopt a logical shelving arrangement. Correct the placement of products – relay, change or replace. Carry a good assortment of products.

5) Check and review current Pricing Strategy What is your profit objective – is it too low or far too high? What is your costing structure – is it based on gross margin or mark-up?

6) Upgrade your

Documents

Page 0 of 51 · 2018. 10. 5. · Page 1 of 51 Runcit Malaysia Magazine Issue 9 Tinjauan Runcit Stay smart & competitive There are always ups and downs in business. All too often,