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13 June 2014

MYDIN SEES A DIFFICULT 2018 AS CONSUMERS LIMIT SPENDING

 

P4s1 Ameer Ali Mydin

 

Hypermarkets are expected to face another difficult year in 2018 as rising prices and higher cost of living are forcing consumers to buy less, said Mydin Mohamed Holdings Bhd MD Datuk Dr Ameer Ali Mydin (picture)The hypermarket operator and retailer is already seeing a challenging period with the “per basket” purchases dropping from an average of RM53 to RM49 per basket. “Increasing footfall is one thing, but the basket size is going down which shows that people don’t have enough money. “We have noticed that hardlines and softlines have declined by about 15% to 20%, which is normal when prices go up, but now even groceries — a necessity have fallen. That is where we are very concerned,” he said at the launch of Mydin’s takaful coverage tie-up with AmMetLife Takaful Bhd in Subang Jaya yesterday. The retailer has experienced contraction this year, which he said to be worse than last year for Mydin’s same-store sales (revenue generated by existing outlets). With the upcoming 14th General Election, the retailer hopes the government will take measures to increase consumer spending, while 1Malaysia People’s Aid hand- outs are expected to boost purchasing power.“We pray for the hypermarket segment to go from a 5% drop to perhaps 2% to 3% growth. But, it doesn’t look like it’s going to grow. If everything remains as it is the sector will not grow—not up to 5%, I am sure. I don’t see anything changing that will make it grow very fast,” Ameer. According to data from Retail Group Malaysia, Malaysia’s retail sales fell 1.1% in the third quarter of 2017 (3Q17) from a 4.9% growth in the immediate preceding quarter due to lower spending power. The supermarket and hypermarket subsector plunged 5.2% in 3Q17 against a 0.8% increase in 2Q17, the largest contraction among retail subsectors for the quarter. “While the retail segment overall has fallen, what is really scary is the slowdown in the hypermarket business because this caters to the mid-and lower-income brackets. If these people can’t afford to buy groceries, I don’t see the country growing,” Ameer said. Meanwhile, Mydin has collaborated with AmMetLife Takaful to provide iMeriah, a Shariah-compliant takaful plan managed by AmMetLife Takaful, which provides coverage against death with takaful benefits in the form of goods instead of cash. Mydin Meriah Card members between 18 and 49 years old who cumulatively spend a minimum of RM600 at selected Mydin stores during a particular month, will receive free coverage in the following month. Should the death of the covered member occur, said member’s nominee will be given RM300 per month for a year to spend on daily necessities at selected stores. The cost of iMeriah coverage will be borne by Mydin. Ameer said the retailer currently has some 400,000 Meriah Card members and is prepared to cover the total cost of takaful coverage, though the exact figures were not revealed. AmMetLife Takaful CEO Noor Azam Mohd Yusof added that the coverage is aimed at both the M40 (middle 40%) and B40 (bottom 40%) of households.

 

Source : The Malaysian Reserve