DAIRY Farm Giant Retail Sdn Bhd has forecast its just-launched RM4mil price reduction strategy will cause margins to drop by 1.5% this month, further depressing its already declining month-on-month margins.
However, the price reduction strategy was expected to stimulate sales volume to offset the low margins in the longer run, said country manager John Coyle.
Dairy Farm is the operator of Giant supermarkets and hypermarkets, Guardian Pharmacy stores and Cold Storage outlets. Speaking to reporters after the launch of Dairy Farm's 59th anniversary celebration in Shah Alam yesterday, Coyle said margins for Giant supermarkets and hypermarkets were definitely lower than one to two years ago.
Due to the one-month price reduction strategy, he expects sales from all Giant supermarkets and hypermarkets to increase 25% this month to RM200mil, up from RM160mil on an average month. To date, its best performing Giant store is in Plentong, Johor, which contributed 10% to the group's annual sales.
Coyle said advertisements by suppliers in the company's retail brochures and glossy billboards would attract customers to spend more in Giant outlets. We are lowering operating costs by cutting down middlemen to reduce prices. We are trying to get the message across to customers that our prices are 'everyday low', he added.
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