No room for large hypermarkets now

PETALING JAYA: The days of having large grocery stores and retail shops are over, according to a seasoned hand of the retail industry.

CEO of Tesco Stores (Malaysia) Sdn Bhd Paul Ritchie said that due to intensifying competition in the industry, including from online retail sales, large hypermarkets were no longer feasible and grocery stores were becoming smaller.

“Grocery stores that are larger than 60,000sq m are challenging to sustain.

“Instead, the optimal solution, which we are implementing in some of our stores, is to use space better by putting a wider and improved range of products in a smaller floor space,” he said.

He added that Tesco Malaysia’s objective is to make shopping more convenient for its customers.

However, despite the online retail trend, Ritchie noted that online grocery shopping is growing much slower as Malaysians still preferred to visit traditional markets or grocery stores.

“Consumers still want the physical aspect of grocery shopping. They want to touch, see, smell and pick groceries by hand,” he said at the Star Media Group’s Power Talks Business Series yesterday.

Shop till you drop: Ritchie talking about the trend of online shopping in Menara Star.
Shop till you drop: Ritchie talking about the trend of online shopping in Menara Star.

More than 250 people attended the talk, which focused on the challenges and trends of the grocery business and how Tesco is positioning itself.

Ritchie felt that the trend going forward would be higher demand for fresh food as more people adopted healthy eating practices.

“More people are consuming healthy food,” said Ritchie.

Tesco was the first grocery chain in Malaysia to introduce online grocery shopping two years ago.

Since 2014, Tesco Malaysia’s online sales have totalled RM179mil, with more than a million orders, and its delivery coverage has grown to reach 50% of the nationwide population.

Ritchie expected Tesco’s online sales to improve this year, in line with Malaysia’s online shopping growth of 18% a year.

This year, Tesco Malaysia will open two new stores and four or six next generation stores.

Tesco’s next generation stores are defined as smaller-sized stores with a proportionally wider range of products.

Ritchie began his career at Tesco sorting out trolleys in 1980, climbing up the ranks from trainee manager to store manager and later on, retail director.

Ritchie, who has 37 years of experience, both in Britain and internationally, is responsible for developing and growing Tesco’s business in Malaysia.

He was appointed CEO of Tesco Malaysia in 2015, developing the next generation of hypermarkets, while entering the competitive online market. Ritchie has since led Tesco Malaysia to be ranked the #1 Retailer by Kantar Worldpanel in 2016.

Prior to that, Ritchie was CEO of Tesco Retail and Property business based in Shanghai, China.

Tesco Malaysia celebrates its 15th anniversary this year with 56 hypermarkets, two distribution centres and over 7,000 staff.

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