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RUNCIT MALAYSIA MAGAZINE ISSUE 16

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STAY POSITIVE

The world is gripped in an economic downturn, the likes of which has not been seen in the last 50 years. Ma-laysia is not spared and is at real risk of recession.

However, the FMCG industry is holding its own. Despite the shrink-

ing wallets, consumers’ needs for the necessities like foods and beverages as well as home and personal care products remain.

Nevertheless, these are very trying times for all retail-ers. Everyone will have to work doubly hard to pre-vail. Those who are farsighted should also take this opportunity to start implementing changes to further strengthen their businesses for the longer term.

In order to help you, we have filled this issue with various insightful articles. Our Rencana Runcit on “Challenging Times” views the economic downturn from consumers’ perspectives. Learn of how con-sumers are affected and adapting to this situation.

We are also pleased to feature YB Dato’ Shahrir bin Abdul Samad, Minister of the Ministry of Domestic Trade and Consumer Affairs Malaysia. We hope his message – “Be Strong and Hold On” will inspire you to thrive in this period. In addition, we bring you closer to Nestle in our Sahabat Runcit section. Read the article entitled “Our Strength, Your Assurance” to find out how the company plans to support the tra-ditional trade.

We also have a few articles with suggestions for you to maximise your sales, reduce shrinkage as a result of theft and manage your finances. We hope with these articles, you will be encouraged to adopt a posi-tive mindset to face these challenging times with exu-berance and perseverance.

William KhooExecutive Director

Infovantage Sdn [email protected]

TINJAUAN RUNCIT

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CHALLENGING TIMES

RENCANA RUNCIT

A good understanding of the economy will help you go through these times more effectively

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Malaysia is being assailed by an economic downturn that tethers on the brink of a reces-sion. Rest assured, our Government is mak-ing every effort to stimulate the local econ-omy.

An important part of all this is continuing to encourage consumer spending. There has been a decline in this due to falling asset prices, rising unemployment, reduced/lost earnings by households and businesses, and increased efforts to raise savings.

You can’t blame consumers for being cau-tious about spending. Right now, everyone knows the situation is bad but nobody knows how much worse it can get or how long it will take us to recover. So, in such times of uncer-tainty, having cash is king.

Nevertheless, it is counter-productive when people curb their spending too much. De-mand for many goods and services will fall, sparking off a vicious cycle that can adversely affect entire industries. Fortunately, fast-

moving consumer goods (FMCG) do not ap-pear to be as badly hit.

Indeed, consumers cannot escape the need for food and many essential non-food prod-ucts. Even then, they are starting to alter their shopping habits and product preferences in the effort to stretch their ringgit.

UNDERSTANDING THE ECONOMIC CRISIS

The problem with living in a globalised econ-omy is that we can be affected by troubles in a distant country. This is what has happened today – half the world’s countries (including Malaysia) are languishing under an economic downturn that started in the US. The story is as follows.

• ! Want a housing loan (who cares if you

can’t afford it)? In the mid-1990s, US banks began offer-ing subprime mortgages to citizens with low incomes or poor credit worthiness. The banks didn’t care that the borrowers would face difficulty paying back their loans. More important was converting the mortgages into stocks that could then be traded among the financial institutions. Unfortunately, interest rates rose drasti-cally in 2006, causing throngs of people to lose their houses to bankruptcy. The subprime mortgage market collapsed and left the financial institutions involved with a massive loss.

• ! The world’s biggest economy stag-

gers. With its financial system seriously weak-ened, the US experienced a ‘credit crunch’ where there was either insuffi-cient funds or lack of confidence to lend money to businesses. Without credit to fund operations, many businesses fal-tered and that led to business closures, massive job losses, shrivelling consump-tion and shrinking imports.

• ! Global contagion.

Countries that depend on trade with the US started to suffer a decline in business. Malaysia was not exempted. By end 2008, our exports had dropped. Our GDP (an indicator of our economic health) fol-lowed suit and fell 11% (RM22 billion) between the third and final quarter of 2008. At the same time, we experienced an outflow of foreign capital (about RM61.4billion) in the third quarter of 2008. Up to February 2009, 15,000 workers (mainly from the manufacturing sector) lost their jobs.

RENCANA RUNCIT

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SHOPPING IN ECONOMIC DOWNTURN

Nelson Woo Regional Director New Business Development TNS Worldpanel Asia www.tnsglobal.com

As retailers, you need to be fully aware of changes in Malaysian consumers’ spending habits. Nelson Woo, Regional Director of New Business Development, TNS World-panel Asia, shares some insights from the research firm’s continuous efforts to track consumer and shopper behaviours.

• Consumers still spending on fast-moving consumer goods, FMCG. Accord-ing to the company’s most recent Malay-sian data, there has been an 8% increase in overall spending on FMCG and 2% re-duction in the number of items bought as consumers start to restrict their spending.

• More ‘topping up’ in traditional trade outlets. Price increases have caused con-sumers to cut down on discretionary items. Also, instead of stocking up on big baskets of goods at hypermarkets, they are now visiting smaller outlets more frequently just to ‘top up’ on supplies that are running low. At end-2008, the traditional trade managed to maintain its market share at about 28%.

• More value-conscious. When shopping in the modern trade, more consumers are shifting towards private labels or ‘house’ brands. Such products are usually cheaper than branded equivalents and proliferate basic categories where consumer involve-ment and product differentiation are low. However, not all private label products are comparable with branded products in terms of quality or suitability to local tastes and product performance expectations.

TNS Worldpanel delivers insights into consumer pur-chasing and usage habits in over 55 countries worldwide. TNS Worldpanel Malaysia was established in 2001. Weekly, it tracks over 100 different FMCG categories including foods (excluding fresh food) and non-foods through a sample of 2,500 households (representing approximately 4.74 million households across Peninsular Malaysia). TNS Worldpanel Malaysia works closely with a wide range of clients including multinational and local FMCG manufacturers, retailers and more, delivering actionable insights into consumers purchasing habits.

LESSENING THE RAKYAT’S BURDEN

Concerned to prevent the country from sliding into an eco-nomic recession, the Government unveiled its 2nd stimulus package, amounting to RM60 billion on March 11, 2009. To be implemented over two years, the package reflected the gov-ernment’s hopes to tackle three major issues facing the Ma-laysian economy ie job losses, poor credit flow to businesses and declining private investments. So far, most people have responded positively to the stimulus package. Below are the four thrusts of the 2nd stimulus package.

1 PROBLEM

Job loss. Malaysian being retrenched and laid off because of factories reducing production due to a declining export market.

SOLUTIONRM2 billion to reduce unemployment, increase employment opportunities and pro-vide incentives for students to take up post-graduate courses instead of joining the job market.

2 PROBLEM

Burden on rakyat. People finding it tough to survive with what they have and do not want to spend.

SOLUTIONRM10 billion to ease the burden through tax breaks, welfare for retrenched workers, subsidies for food, toll & fuel.

RENCANA RUNCIT

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LESSENING THE RAKYAT’S BURDEN

3 PROBLEM

Businesses in difficulty. Companies cannot get loans, have to downscale operations, lay off workers or close down entirely.

SOLUTIONRM29 billion through the provision of loans for small-medium enterprises (SMEs), easing regulations for companies to raise capital, allowing current losses to be carried forward to preceding year.

4 PROBLEM

Preparing for economic turnaround. Malaysia has to prepare to take advantage of opportunities as they happen.

SOLUTIONRM19 billion to build capacity for the future through major infrastructural projects, liberalisation and development of certain economic sectors.

CONCLUSIONChart Your Survival Course

These are definitely challenging times but there is much that you can do to ensure your survival and success. Here are a few suggestions to put into action:

1. Focus on what counts. As traditional retailers, continue to focus on the ba-sics and staples. Many consumers have now begun to cook more at home instead of eating out. This earns you more frequent visits for fresh, frozen and ready-to-cook food products. Make sure your shelves and chillers are clean and well stocked at all times.

2. Offer what sells. Especially during these times, consumers tend to stay loyal to brands that they trust will de-liver the quality and satisfaction that is expected. So, do not waste your re-sources by experimenting with new brands that might not sell. Allocate more shelf space for products that are popular with your shoppers.

3. Best deals always. Consumers look for value that combines quality and function at the best possible price points. Prioritise payments to suppliers so as to command better deals from them. Then, set fair prices for your shoppers. Be prepared to accept a lower margin from sales, if necessary.

Resist the urge to exploit your custom-ers; they last longer this way.

4. Capture your share of mind & heart. Try to mount more promotions to in-crease consumers’ awareness of your shop. Treat them with warmth and cour-tesy and you will stand a better chance at gaining their loyalty. Add personal touches to your customer service, like a simple greeting, assistance or help in delivering goods to your shoppers’ homes. When they feel appreciated, they will keep coming back. Make them think of you every time they need to shop.

5. Look forward to the future. Many changes that consumers are making now are likely to last. Update your serv-ices and product offerings so that you will be able to continuously offer them shopping experience that serve their changing needs.

We hope this information will increase your understanding on the current economic downturn. In the next issue, we will publish results of our major survey on how retailers are managing in these challenging times and more insights from other manufacturers & experts on this topic. Be sure to remain positive as you ride out the storm.

RENCANA RUNCIT

Stephen Tan & Freda Abd Manan – Runcit Malaysia

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TRENDSETTER FOR YOUNG ASIAN MEN

Since its launch in 1978, GATSBY has distinguished itself through active innovation to continuously appeal and cater to the grooming needs of young Asian men. Today, it is the undisputed trendsetter in four key segments: Hair Styling, Hair Colouring, Body Care & Face Care.

Website: www.gatsby.com.my

HAIR STYLING

• ! Moving Rubber

• ! Wax

• ! Gel

• ! Hair Spray

• ! Hair Foam

• ! Water Gloss

HAIR COLOURING

• Hair Colour

• Hair Bleach

• Hair Remake

BODY CARE

• ! Roll-On Deodorant

• ! Deodorant Perfume Spray

• ! Cologne Spray

FACE CARE

• Oil Clear Film

• Facial Paper

• Refreshing Wash Scrub

PARTNERING FOR GROWTH

So as to further grow the brand, Mandom Malaysia Sdn Bhd (MMSB) has appointed Lein Hing Sales & Marketing Sdn Bhd (LHSM) as the sole distributor for GATSBY products in Selangor and West Pa-hang, effective from March 1, 2009. LHSM’s strong distribution infrastructure will enhance MMSB’s efforts to conduct aggressive marketing and promotion programmes to generate higher brand aware-ness and strengthen the GATSBY brand equity.

For orders and enquiries, please contact:Lein Hing Sales & Marketing Sdn Bhd,

Lot PT 1756, Jalan Persiaran KIP Utama, Taman Perindustrian KIP, 52200 Kuala Lumpur.Tel: (03) 6286 8686; Fax: (03) 6286 8682

ADVERTORIAL RUNCIT

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BE STRONG AND HOLD ON

YB Dato’ Shahrir bin Abdul SamadMinister of Domestic Trade and Consumer Affairs Malaysia

YB Dato’ Shahrir bin Abdul Samad, Minis-ter of Domestic Trade and Consumer Af-fairs Malaysia (MDTCA) strongly believes that the traditional trade will survive this challenging economic situation. ‘Lose some to win some’ is the challenge that retailers will have to take.

Recently, Runcit Malaysia had the chance to get up close and personal with YB Dato’ Shahrir bin Abdul Samad. Learn of his out-look on 2009, the traditional trade and the measures that the government and his minis-try are taking to maintain survival of this trade sector.

RUNCIT MALAYSIA (RM): Dato’, what is your outlook on the rest of 2009?YB Dato’ Shahrir bin Abdul Samad (DS): We anticipate a very challenging year ahead. The main priority for the government now is to develop programs and campaigns to help people face these times. We are most worried about unemployment and retrench-ment. We will come up with programs to en-sure that people who lose their jobs are able to gain sufficient income to continue support-ing themselves and their families. There will be retraining and job-hunting programs to counter the effects of retrenchment. In addi-tion, we will also have welfare programs to make sure the wellbeing of single mothers, old and physically challenged people are taken care of.

RM: Is the government taking any initia-tives to maintain survival of businesses?DS: Definitely, we want businesses to stay alive so that they can keep their employees. First of all, manufacturers need to remain competitive in the global market. We have reviewed the electricity tariff for this purpose. Then, we would also like to address the issue

of pricing. This will be brought up in the par-liament when we discuss the next stimulus package.

My ministry would request for the continua-tion of the food security program that was launched in April 2008. There may be about RM4 billion set aside for this program. We want to continue subsidising food items so that prices would remain the same as last year because people need to have more money in their pockets. However, we would reduce certain subsidies since prices of some raw materials have come down. Flour will be one of them since price of wheat has de-creased.

RM: Why did the government choose sub-sidies over food coupons?DS: The main reason is because Malaysians prefer it this way. They want retail prices to be lower. Therefore, our subsidies are not direct but are made available to them through pric-ing. Food coupons actually allow people to spend as they like. The method does not do much to help them go through a bad eco-nomic situation.

RM: What is your opinion on the tradi-tional trade?DS: I believe traditional retail outlets have a role to play, especially in a small commu-nity. They sometimes act as an intermediate channel as they buy and sell products from local farmers and small medium industries (SMI). The challenge however, is to keep up with the changing business environment. I have seen a lot of shops close down because they could not compete with the modern trade.

TOKOH RUNCIT

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Traditional retailers need to realise that they have to modernise in order to survive. Look at how much the manufacturers have changed. Today, their production process, packaging and product safety have improved greatly. While the downstream retail and pro-duction side have improved, the distribution side is still not as efficient as it should be. This is what hinders some Malaysians from enjoying the benefit of subsidised foods.

RM: How does the government plan to help the traditional trade?DS: We have initiated a distribution program called the Distribution of Essential Goods Scheme. Basically, we adjust the distribution setup to make it more effective. By cutting down the middleman’s cost, distribution and logistics, prices can be lowered. With this, consumers everywhere would be able to benefit from subsidised goods and retail-ers too will be able to perform better.

Take for example our pilot project in Pekan, Pahang. Our objective was to get all the sub-sidised foods into the rural areas to be sold at the same prices as in the city. We appointed a wholesaler to do the job and paid the extra cost for distribution. After 45 days, we stopped the project. However, the same wholesaler was then willing to distribute the goods at his own cost. Other wholesalers too began to take interest in the same areas.

This proves to us that the problem of distri-bution can be cured but someone has to

open the channel. Because of the effective-ness, we will extend this program to all rural areas in Peninsular Malaysia, Sabah and Sarawak within this year. We are also reacti-vating floating petrol stations and starting mini petrol stations and depots so that petrol can be sold at the same price in Sarawak.

In addition, we are now encouraging manu-facturers to look into value brands. Per-haps for this period only, they can come up with products with basic functions and quality. They can then drive sales of these products in the traditional trade because the channel would be able to provide them a better mar-ket.

RM: What is your advice for the traditional trade?DS: There are three things that I would like to emphasise here. First of all, retailers should think about managing costs and dealing with suppliers in the right manner. In these trying times, everyone is price sensitive. You will survive if you take a smaller margin. Per-haps retailers can work together to demand better terms from suppliers. They can try pur-chasing in bulk or joint branding to create their own brands that can be sold at lower prices.

Secondly, retailers need to provide what consumers want, not just what they feel like selling. Small stores can get away with less presentation, but they cannot do without pro-viding the needs and wants of consumers. Pay attention to your shoppers’ purchasing habits and if possible, respond to every change you notice.

Thirdly, retailers must be more knowledge-able about the products they sell. Only then will they be able to educate and influence consumers on products that they want to drive. Sometimes, all consumers need is just encouragement. Remember, nothing is more convincing than human’s words.

RUNCIT MALAYSIA thanks YB Dato’ Shahrir bin Abdul Samad for his advice and encouragement.

TOKOH RUNCIT

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PRICE REDUCTION CAMPAIGN

MDTCA launched this campaign in October 2008. It involves both the modern and traditional trade. The ministry also conduct ongoing price monitoring to educate retailers to be ethical and to ensure that they do not manipulate prices. This is done through the National Goods’ Prices Council (NGPC) that was formed in January 2008.

According to YB Dato’ Shahrir bin Abdul Samad, some manufacturers have stated that they need time to work their low prices into all channels of the trade. Therefore, through price monitoring by NGPC, MDTCA ensures that the manufacturers keep to their promises and retailers respond positively towards the manufacturers’ action. NGPC monitors and collected prices of 350 essential goods which are displayed on MDTCA’s website (www.mdtca.gov.my) under its Price Watch campaign. NGPC is also responsible of monitoring the execution of the Distribution of Essential Goods Scheme.

BUY MALAYSIA CAMPAIGN

This campaign was launched by MDTCA in January 2009 and is supported by FOMCA. It is a con-tinuation from the Buy Malaysian-Made Goods campaign that was conducted in 1998. It is aimed at creating opportunity for consumers to get good prices, finding new market for manufacturers and to increase consumers’ awareness of Malaysian-made products. YB Dato’ Shahrir bin Abdul Samad stated: “The domestic market has the potential to grow and our manufacturers are capable of produc-ing products that meet international standard. We hope this campaign will encourage manufacturers to produce more for export and local consumption.”

Malaysian goods are classified as all goods that are made, assembled and manufactured in Ma-laysia as well as services that are offered here. To help both consumers and retailers to be more informed of Malaysian goods and services, MATRADE has started an online directory of Malaysian brands at www.matrade.gov.my. In addition, MDTCA is organising a nationwide Buy Malaysian trade fest that will run throughout 2009.

THE GOVERNMENT’S INITIATIVES

The government through various ministries is taking many proactive measures to boost economic growth and lessen the impact of economic downturn on Malaysians. The following campaigns are among the measures taken by MDTCA.


TOKOH RUNCIT

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OUR STRENGTH, YOUR ASSURANCE

Nestle takes steps to improve business in the traditional trade

Victor Seah Sales Director Nestle Products Sdn Bhd www.nestle.com.my

Expecting tougher market conditions ahead, Nestle Products Sdn Bhd has begun rolling out a number of measures to drive sales, es-pecially through traditional trade outlets. The company’s Sales Director, Victor Seah, ex-plains the initiatives.

RUNCIT MALAYSIA (RM): How does Nestle view the current economic downturn?VICTOR SEAH (VS): Being in food & bever-ages, we are not as greatly affected as com-panies in other industries. As such, we are confident of being able to grow ahead of Ma-laysia’s GDP (gross domestic product) this year. However, we remain concerned over the economic situation. While hoping for the best outcomes, we still have to plan for the worst.

RM: What is Nestle’s commitment to the traditional trade at such times?VS: The traditional trade has been, and will continue to be, crucial to Nestle. After all, we owe much of our success (eg the growth of MILO) to their support. Today, the sector still contributes about 60% of our annual sales. As you would expect, we are making every effort to increase our support to the trade during these times. We wish not only to help them overcome the current challenges but also to inspire them to further strengthen and modernise their businesses in the process.

RM: What are some opportunities you see for the traditional trade?VS: Consumers want to have more cash in their pockets. So, they are changing their spending habits to ‘stretch’ their ringgit. Some of the changes may actually benefit tradi-

tional retailers. For example, by eating out less frequently, consumers are creating more sales opportunities for in-home consumption products. Another example is the shift in shopping trips – instead of buying everything for the month in a single visit to a modern trade outlet, more consumers are now prefer-ring to frequent traditional stores just to ‘top up’ what they need. We in Nestle hope to help traditional retailers take advantage of these changes.

RM: How does Nestle intend to help the traditional trade?VS: First, we’ll continue to emphasise trusted brands – like MILO, MAGGI, NES-CAFE and so on – that sell well through the traditional trade. Second, we’ll keep gather-ing insights to better understand how con-sumers shop in traditional trade outlets. Third, from the information gained, we will develop innovative products in the SKUs (stock keeping units), price points and packaging formats that will work best in the traditional trade.

RM: When you mentioned ‘innovative products’, were you referring to Nestle’s Popularly Positioned Products (PPP)? VS: Yes, indeed. Our PPP reflect Nestle’s philosophy of serving all consumers in health and wellness. For this reason, PPP have to meet the quality and nutritional requirements set by Nestle as well as Ministry of Health Malaysia. The unique thing about PPP is that they come in pack sizes and prices that would appeal more to traditional trade shoppers. Catering to those consumers’ in-clination to ‘top up’ what they need, PPP also serve to prevent traditional retailers from get-ting caught in the modern trade’s price wars. On this note, whenever the modern trade sells our products at way below cost, please know that Nestle is not funding those reduc-tions.

RM: In terms of packaging, is Nestle giv-ing more emphasis to single-sachet for-mats?VS: Single sachet products enable traditional retailers to sell the exact small quantities shoppers require. Displayed near the counter, these products also decrease the likelihood of pilferage, which is a constant problem. We are actively looking at other packaging innovations to help reduce pilfer-age in the traditional trade.

SAHABAT RUNCIT

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RM: Is there help on the display & mer-chandising front?VS: I’m glad you asked. Some retailers stock a lot of high-margin products but fail to prac-tise good merchandising. In the end, they get stuck with leftovers. We have the Nestle model shop concept to help retailers achieve better stockturns. Product displays are organised by categories and combine high margin products that consumers really want to buy. By increasing turnover, retailers would be able to make more profit.

RM: Nestle recently reduced the prices of MILO. Can we expect more such reduc-tions?VS: Decreasing ingredient costs have made it possible for us to roll back the prices of some of our key products. On February 16, 2009, we reduced the prices of all MILO SKUs – a welcomed boon for Malaysians as they are the biggest MILO consumers in the world! Also, effective from March this year, consum-ers will get to enjoy more milk with every pack of NESPRAY and EVERYDAY. The additional quantity actually translates into a 10%-12% price reduction. As a rule, we always try first to optimise costs in the value chain and re-duce our prices whenever possible. Should

we ever need to raise prices in the future, it will be as a last resort to partially cover the input costs of the raw materials.RM: Is there anything else that you would like to add to this interview?VS: These are trying times for everyone. That’s why retailers can rest assured that their credit terms will not be unduly shortened as long as they conduct themselves respon-sibly.

RUNCIT MALAYSIA thanks Victor Seah for his detailed explanations on Nestle’s ini-tiatives that will definitely help the tradi-tional trade face these challenging times.

NESPRAY CERGAS

!" The lowest-priced milk powder in Nestle’s range. !" High in protein and packed with iron, calcium and vitamins A, B, C and D to overcome common nutrient deficiencies in Malaysia.!" Ideally targeted at suburban and rural mothers with children aged 1 to 10 years.

NESTUM SARAPAN BERKHASIAT

!"Only RM2.50 for 4 bowls of tasty breakfast!!"Made only of wheat (unlike NESTUM ORIGINAL that is made of wheat, rice

and corn).!"More protein than NESTUM ORIGINAL.!"Also contains skimmed milk powder. !"Just add hot water and it is good to eat.

MAGGI CUKUP RASA

!" Made from the perfect blend of garlic, onion, salt, pepper and spices to make every dish taste delicious.!" Ideal for stir- or deep-fried dishes, stews, and soups – whatever the family desires!

DESIGNED TO SELL

Get to know some of Nestle’s Popularly Positioned Products (PPP), developed especially for traditional trade shoppers.

SAHABAT RUNCIT

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Did you know that MILO has been in Malay-sia for over 60 years and that our country has the highest consumption of MILO per capita in the world? Today, MILO is continuing to grow from strength to strength. As leader, the brand commands 90% of Malaysia’s choco-late milk drink market. Yet, it continues to in-novate and evolve in form, format and formu-lation, ever improving upon its ability to serve the nutritional needs of all MILO lovers.

This legacy of success is owed to the support of the traditional trade to the brand all these years. Nestle wants you to continue benefit-

ting from the sales of MILO. Therefore, in February 16, 2009, the company took one step further by reducing the prices of MILO across the board. This makes it even easier for consumers to get the goodness and sales volumes that only MILO can offer. After all, it is not just any chocolate malt drink.

SAHABAT RUNCIT

GO FURTHER

10 Reasons Why MILO Is The Best For Your Child

1. Natural goodness of malt, milk and cocoa.

2. Only MILO has Protomalt, the special Nestle malt extract

with a mixture of different types of carbohydrates that

provide energy and nutrients the body needs.

3. Only MILO has Actigen-E, a combination of 8 vitamins and 4

minerals to optimize release of energy from food.

4. High in protein for the building and repair of body tissues.

5. High in calcium for strong bones and teeth; and magnesium

for better absorption of calcium into the body.

6. High in Iron and Vitamin B12 for red blood cell formation;

Vitamin C for iron absorption.

7. Nutritionally balanced in protein, fats and carbohydrate.

8. Halal assurance.

9. Trusted heritage of MILO – nourishment you can count on

anytime, anyplace.

10. The great MILO taste – the unique choco-malty taste that

Malaysians love.

For more information, please contact Nestle Consumer Care LineFree Phone 1 800 88 3433


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RETAILERS’ COMMON FINANCIAL PROBLEMS

To find out the common financial problems faced by retailers, we have conducted a survey. The fol-lowing are our findings.

1 What is the biggest commitment for retailers?

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2%

8%

4%

10%

15%

61%

Paying suppliers is the biggest commitment for 61% respondents.

2 What is/are the financial problem(s) faced by most retailers?

57%

56%

45%

42%

37%

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More than 50% of respondents have experienced difficulties paying themselves and supporting their own families.

WANG RUNCIT

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WORK TO A BUDGET

To better manage your finances

Scenario 1: Couldn’t Care LessHamid knew his income was low but he still spent beyond his means. Now, he has a lot of outstanding debts to settle.

Scenario 2: Couldn’t Control Chee is very careful when it comes to spend-ing but he always ends up using more than what he has planned.

If you have experienced any of these situations, you might wonder if there is help. Try budgeting. Al-though it might be tough to stick to, you will definitely be better off with it.

Budgeting helps you to:

• ! Differentiate and better manage your business & personal financial commitments.

• ! Prioritize your financial commitments within each area.

• ! Set aside money for unavoidable expenses.• ! Set and achieve financial goals (eg settle long outstanding debts/save for investment)

• ! Keep track of important expenses.

3 When cash flow is low, how do retailers manage their business expenses?

42%

66%

20% 22%

33%

7%

2%

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66% respondents use personal savings to solve cash flow problems.

WANG RUNCIT

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START WITH A BUSINESS BUDGET

1. How much do you earn?Look at your financial statements for the past 3 – 6 months. Pick a figure; you can take the minimum or the average amount. Use this as a benchmark for your budget.

2. What are your financial commitments?List them down and split them into fixed and variables. Fixed are regular ex-penses you make (eg shop rent) while variables are those that change every month (eg stocks). Try to estimate your spending for each commitment.

3. What’s the balance?Use this formula:Income – Projected Expenses – Contin-gencies = Cash BalanceContingencies are back-up amount that can be used as petty cash or standby fund. What you do with the balance de-pends on your judgement. You can opt to

take all as your personal salary or save some aside as business’ savings.

Note:• ! Don’t leave money unbudgeted. Spare

cash promotes unnecessary expenses.• ! Always set a bit more for expenses &

only draw on contingencies when you really need to.

• ! Keep track of a budget by putting it in a table or on computer (eg Microsoft Excel or small business accounting system can provide you a running tally of all your ex-penses).

• ! Have an actual spending column in your

budget & record every expense accu-rately. Review & modify your budget from time to time.

• ! Try exploring cost-cutting measures after

a few months. You’ll realise when you have overspent & which expenses you can cut/better manage (if at all).

LET’S GET PERSONAL

1. Personal expenses are easier to set but nevertheless, you should have a written budget for it.

2. Just follow the same principles as in budgeting for your business.

3. Remember to incorporate an amount from the balance as savings for emergencies.

Note:• ! Try to resist any temptation to dip into the cash register.

• ! Don’t be afraid to trim the variables (eg entertainment) if you think the amounts are too high.

• ! Update your budget to suit your family’s growing need.• ! Don’t be discouraged

o If you blow your budget, you can always try to do better next month.

o By your present financial situation. Budgeting will restore you to better shape over a

period of time.

Dip Into Your Own Pocket?

Even as shown in our survey, you have to be prepared to put your own money into the company when cash flow problem arises. However, do note that this should not be a regular affair. If it happens too often, it could either mean that your sales are bad or your expenses are just too high. You should try to avoid & manage both situations in order to generate a good balance into yours, your family’s & your business’ savings.

We hope these tips will help you manage money better and get you & your business through these difficult times. Good luck!

WANG RUNCIT

Chow Nyuk Loong & Freda Abd Manan – Runcit Malaysia

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STAND OUT Do what others are not doing

Business may be more challenging now. In-stead of worrying, why not take the opportu-nity to shine? These are some savvy tips that you can practice to gain your share of shop-pers’ wallets, without ripping your own.

KNOW YOUR STRENGTHSDoing promotion with small budget? This should not be a problem. Cut your cost by doing things yourself. Here are some ideas for you:

1. Take Advantage of TimeMake use of your early business hour by doing morning promotions or a ‘morning specials’ section for wet ingredients like fish, chicken & vegetables for the home-makers and instant coffee, fresh milk & quick bites for working adults & school children who miss their breakfasts. Just allocate a small space at the entrance for display of the promotional items.

2. Be Focused Quality, value and affordability. Do your own market research and focus product offerings on brands that offer all these. Provide a few brands from the same categories that vary in price to suit your shoppers’ budgets. Reduce or eliminate products that do not sell well and allocate t h e m o s t v i s i b l e shelves in your shop for popular products.

3. Promote, Promote, PromoteDo your own leaflets with messages like “Come & Save Here” & “Get The Most Out Of Your Money” and spread them around. You don’t have to drastically cut down all your prices, focusing on a cou-ple of items from the main categories should be sufficient.

CAN MY SUPPLIERS HELP?Suppliers can do you much favour if you know how to deal with them. Here are some favours that you may ask from them:

1. Buy More Get Better DealWhen you eliminate budget for slow-selling items, you can afford to stock more on popular items. Do not be too pushy in bargaining & always follow your

payment schedule to maintain good rela-tionship with suppliers.

2. The Right MediaSome suppliers would give you promo-tional media even when you do not ask for it, but some wouldn’t. Be friendly and don’t be shy to ask for it. If they haven’t got any, get their advice on how to g e t s o m e . Y o u d e f i-nitely need these media to drive your sales.

HOW DO I ATTRACT SHOPPERS?In order to get more shoppers to come in, you need to make your shop inviting to them. De-velop strategies to keep your existing shop-pers and welcome new ones. Here are some tips for you to practise:

1. Please Your PatronisersMake shoppers come back for good serv-ice. Make them realise that it is more convenient & pleasant to come to you. Greet, talk and thank them during each visit. Ask questions like “Are you sure these are enough?” or “Have you tried this product?” Be honest, especially about a new product.

2. Welcome New OnesMake sure your signboard is clear, the front of your shop is clean & not cluttered and if you are using blinds, don’t let it block half the view inside your shop! First impression is crucial so prepare your shop for first visits. This requires good product offerings, display & service at all times. Redesign sections in your shop that you pay less attention to (eg station-ary sections are often messy & incom-plete in grocery stores).

Times may be hard but if you persevere, you will find light at the end of the tunnel. We hope you will make good use of these tips. Good luck!

KEDAI RUNCIT

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MINIMISE SHRINKAGEFrom theft & poor administration

Polly Tan Managing Director Checkpoint Systems Sales (M) Sdn Bhd

Malaysia’s retail industry might lose R M 1 b i l l i o n t o shrinkage from July

2008 till June 2009. This shocking estimate was made by Checkpoint Systems Sales (M) Sdn Bhd. The company is a subsidiary of US giant manufacturer and marketer of loss pre-vention systems, Checkpoint Systems Inc. (US).

Checkpoint recently released the findings of the Global Retail Theft Barometer 2008 that it sponsored. The study involved 36 countries including, for the first time, Malaysia. Accord-ing to Polly Tan, Managing Director of Check-

point Malaysia, the retail world lost RM378 billion to shrinkage from July 2007 to June 2008. “Surprisingly, Malaysia’s shrinkage rate amounted to 1.53% of total sales or RM920 million. This made us the country with the fifth highest rate of shrinkage. By June 2009, we estimate a 15% increase.”

“19% of shrinkage resulted from administra-tive errors like failure to record stocks accu-rately. However, theft contributed largely with 81%. We believe that retailers are not doing enough to prevent loss from theft,” Polly added.

The effects of the economic downturn might have led to the increase in theft. Some peo-ple might be driven to steal out of desperation while others do it due to psychological rea-sons. Whatever the reason, you should try your best to minimise your loss to theft espe-cially in these trying times.

TECHNOLOGY TO GUARD YOUR BUSINESS

Tips for using the most commonly used security tools around the world

CLOSED CIRCUIT TELEVISION (CCTV)

A CCTV consists of a camera and a monitor-ing unit (which can be watched inside your shop, at home and/or via the internet). Al-though it may not completely stop theft, it can definitely discourage thieves. Those bold enough to try and steal will have their images recorded and these can be used to track them down and have them arrested. The re-cordings will also be very useful when making insurance claims.

Getting a CCTV1. Buy from professionals. Their consulta-

tion & proper installation will ensure that your CCTV functions properly.

2. Test it regularly. From time to time, check the indicator light & recordings to ensure that the unit is working.

3. Clean the lens regularly – Dirty lenses will produce bad recordings.

ALARM SYSTEM

An alarm system helps deter theft by alerting you, the neighbours and/or the police in the event of an incident.

Common Types1. Anti-Theft Detectors. Special tags are

attached to merchandise. When anyone tries to sneak them out of the shop with-out paying, the tags will set off the alarm when passing the detectors at the en-trance. Best used to prevent shoplifting.

2. Robbery Alarm. Usually installed at the cashier counter. In the event of robbery, a button can be pressed to ring the alarm to alert neighbours or police.

3. Burglary Alarm. May either detect mo-tion or break-in (forcing open a locked door or window). The alarm can be sent to the vendors’ security centres where offices will immediately alert the police.

OPERASI RUNCIT

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Freda Abd Manan – Runcit Malaysia


PROTECT YOUR BUSINESS FROM THEFT

Here are 3 major forms of theft and some tips to handle them.

SHOPLIFTING

1. Greet Your ShoppersWelcome your shoppers and look them in the eye. A good shopper will feel appreciated while a shoplifter will be alarmed by such attention.

2. Watch Out For Suspicious PeopleLook out for suspicious individuals and cloth-ing (eg baggy shirts/pants). There is no age limits to shoplifters so watch out for children too. Avoid clutter & disarray of products as these could create opportunity to steal.

3. Guard your MerchandiseKeep valuable merchandise away from exits, in locked cabinets, behind counters or lock them with chains. If you have no choice but to display certain fast moving high valued products on the shelves, consider displaying just the box. However, remember to provide assistance to inter-ested shoppers.

4. Forewarn Potential ShopliftersPlace a few signs in different locations of your shop to forewarn your shoppers (eg All shoplifters will be prosecuted and handed over to the police). This will help to avoid them from stealing.

BURGLARY

1. Locking-Up ProcedureDevelop a locking-up routine for your shop. Do 2 checks everyday, one for the inside of the premise and another at all entry points. Then, do a periodic check for all your fixtures.

2. Make It Uninviting to Bur-glarsInstall lightings in the front and back cor-ridors and turn them on after closing up. Secure all possible entry points (eg win-dows & toilet). Use resistant locks and grills to avoid them from being cut off by burglars.

3. Help from the NeighboursBe friendly to those who live/work nearby your shop so they can help watch it. If the crime rate in your area worries you, lodge a police report. Usually, police do frequent rounds in high-risk areas.

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ROBBERY

1. Handle Money WellAlways leave just the needed amount in the cash register to ensure smooth trans-action and deposit the rest. Change your depositing time regularly to avoid being attacked on your way to the bank.

2. A Recording EyeIn robbery, CCTV helps by providing the authorities the means to identify the rob-bers. You may not get your money back but you can reduce the chances for it to reoccur.

3. Do Not ResistMost robbers are armed and desperate so don’t resist them. The longer you keep them, the worse the situation will get.

BETTER ADMIN REDUCES SHRINKAGE

1. Avoid Being Short-ChangedCheck every stock delivery. You should buy goods t ha t a re r e tu rnab le /exchangeable in the event of damage or expiry. Do not buy promotional items that will expire soon.

2. Keep Your RecordsRecord every transaction or better yet, get a barcode system. It can be inte-grated fully to keep track of every stock item that you have purchased & subse-quently sold, thereby giving you a running tally of the balance stocks. The barcode system also helps ensure correct pricing thus preventing you from accidentally undercharging your customers for a given product.

EMPLOYEES CAN HELP TOO

1. Your Extra EyesGet your employees to help you watch out for shoplifters, especially if you are not always around. Get them involved in stocktaking with suppliers so that you will not overlook anything.

2. Be a Good EmployerPrepare your employees for worst-case scenarios by sharing these tips with them. Be considerate in their pay, allow-ance and accommodation (if you provide any). Be at the shop as often as you can to supervise and assist them.

OPERASI RUNCIT

Article in collaboration withMalaysia Crime Prevention Foundation

Tel: (03) 2260 1954; Website: www.emcpf.org

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LICENSES & PERMITSBe a law-abiding retailer

The law requires you to be licensed in order for you to conduct any business activity. There are also permits that you have to apply for. To avoid fines and penalties, make sure you know all the requirements.

LICENSED TO OPERATE

Business RegistrationEvery business must be registered with the Companies Commission of Malaysia. Your business may be registered as a sole proprie-torship or partnership (owned by not more than 20 persons). Registration must be made not more than 30 days from the day you start your business. You will have to pay a fee (amount based on type of registration).

Business PremiseAfter registering your business, you have to apply for a business license at your respec-tive city council. Every council has different requirements so you need to check on this. Business registration form, floor & location plans and pictures of the premise are among the documents that you may need to prepare.

CARRYING OUT BUSINESS-RELATED ACTIVITIES

Signboard This license needs to be applied at your city council. There are guidelines that you have to follow (especially in terms of size). Usually you have to provide a sketch of the sign-board. Remember, you must not put up the signboard before obtaining the license.

Advertising There are certain licenses that you need to apply for this purpose. Most council require licenses for banners and posters. This is to ensure that every advertisement displayed conforms to the rules and regulations (eg does not contain faulty information & exceed time limits).

Note: Runcit Media Sdn Bhd (RMSB) can help you apply for signboard & advertising licenses. For example, when you sign up for the Retail Advertising Panels (RAP) and Horizontal Banners, RMSB will take care of the applica-tion processes and even the fees.

Cheap SalesFor this purpose, you have to send a notice to the Ministry of Domestic Trade & Consumer Affairs (MDTCA). Visit their website at www.mdtca.gov.my to find out about the guidelines you have to follow. You will be given a registration number that you must display in any advertisement you produce for the particular sales.

Games of ChanceThese are games that do not require skills (eg lucky draw). You have to inform and get permission from the Gambling Control Unit of the Ministry of Finance before you can con-duct such games.

MusicAccording to the Copyright Act 1987, you need a license to play sound recordings and music videos in your shop. This license is issued by the Public Performance Malaysia (PPM). You can go to their website at www.ppm.org.my for more information.

URUSNIAGA RUNCIT

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SPECIAL SITUATIONS

A business license allows you to sell most of the products available in the market in your shop. How-ever, you need specific licenses for these items:

Rice When you want to sell rice in big quantities, you need a license from Padi Malaysia. This will usually be done for you by rice companies through the wholesalers you liaise with.

Gas (for cooking) You need a license from the council to sell gas. However, you must first obtain permission from the Fire Department and have a separate store to keep the gas cylinders.

Alcohol License for this too must be obtained from the council. Usually it will be valid for at least 6 months unless you violate the rules (eg selling alcohol to Muslims and those under the age of 18).

Note:• ! It is nearly impossible to identify the full list of products that would require a license/permit so be-

fore you start selling, we suggest you check with the respective authority, to avoid flouting the law. • ! Please be reminded that certain types of licenses/permits have time duration and make sure you

renew it on time.

We hope this information will guide you to become a responsible retailer. Remember, shoppers prefer retailers with good business practices, so follow the rules!

URUSNIAGA RUNCIT

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SELECTIVE OVER OUTLETSRMSB criteria for outlet recruitment

As Malaysia’s only traditional retail trade media specialist, RMSB is re-sponsible in making sure our advertisers meet their objectives of creating brand presence and awareness in traditional retail outlets. Therefore, it is our obligation to select and recruit outlets that will be able to deliver these objectives to consumers. For our Structured Ambient (STRAM), classifica-tion of outlets is done based on our Internal Scoring Method.

RMSB INTERNAL SCORING METHOD

!"The business and the shop & facilities information are our main criteria of assessment. !"Points awarded for each criterion will determine the ‘Tier’ that an outlet falls under; Good (70%

and above) or Standard (50% - 69%).!"Outlets that score below 50% will not be recruited.

BUSINESS INFORMATION CRITERIA

1. Account with shorter payment terms manufacturers.We award points based on the number of direct dealings an outlet has with strict payment manufac-turers, i.e bread, cigarette, prepaid cards and etc.

2. Distribution of shorter payment terms products.We run checks on products from the identified manufacturers that are being sold in the outlet. This is to determine whether it has the buying capacity despite having shorter credit or cash terms with the manufacturers.

3. Presence of sponsored facilities.Points are awarded to outlets that have facilities sponsored by manufacturers (eg cigarette counter, bread shelf, ice cream box and etc). Most manufacturers sponsor these facilities due to an outlet’s strong purchasing power.

4. Years in business.We also consider the number of years that an outlet has been in operation. Those that have been around for 5 years and above usually have stable businesses.

5. Amount of sales turnover.We do not have sales related figures so this is determined by estimation. Outlets that we estimate to have monthly sales turnover of more than RM50,000 will be given full mark for this.

MEDIA RUNCIT

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SHOP & FACILITIES CRITERIA

1. LOCATION We look at facilities around an outlet and where it is located. Out-lets that have many surrounding facilities and are strategically lo-cated have higher visibility, which will ensure effectiveness of our media. More points are given to outlets that have public facilities (eg school, hospital, wet market and etc) nearby and are near/around main roads & housing estates.

2. STANDARD FACILITIES We award more points to outlets that have two or more check-out counters and own facilities like chillers, trolleys and baskets. We take into account the ventilation, surveillance (if mirrors/CCTV are installed) and other ancillaries (eg selling of fresh produce) too.

3. OUTLOOK Four points are considered under this criterion. The first

one is ownership; whether the outlet is owned or rented. The second point is the shop’s structure and the third is the shelf type. It will help an outlet to score if they have gondola shelving. Finally, we look at the shop’s display. More points will be awarded to out-lets that emphasise on good display, merchandising and category management.

For further enquiries, please contactMs. Chua Soah Sen

Sales Operation ManagerRuncit Media Sdn. Bhd, Suite 12.01, 12th Floor, Menara Merais,No 1 Jalan 19/3, 46300 Petaling Jaya, Selangor Darul Ehsan.

Tel: (03) 7957 1718; Fax: (03) 7956 5109; E-mail: [email protected]

MEDIA RUNCIT

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SERVING WITH NEW ROLESExperienced team of field supervisors

SELECTING SITES

FS: Nor Shahrizal B. Mad Sani

Site selection is done for two purposes: new recruitment (identify potential outlets) and specific selection (choose outlets that meet the advertisers’ requirements). In new re-cruitment, we classify outlets based on our Outlet Grading System. The classification will also be our guide in specific selection. Talk-ing to new retailers is easy as I used to work as a salesman for an FMCG company.

From time to time, I will do inspection in re-cruited outlets. RMSB needs to be fair to both the advertisers and retailers. Therefore, we ensure that our media are in good condi-tion at all times and the fees we promised to retailers are paid. Consequently, retailers too must help us take care of the media. It is a mutual responsibility.

RECRUITING OUTLETS

FS: Badli Hairulnizam B. Bahaman

Before joining RMSB, I worked as a sales-man for one of the biggest FMCG companies in Malaysia. Therefore, I had to be friendly, patient and convincing to all my clients. Now that I am an FS, I find the experience very beneficial. Especially in outlet recruitment, my communication skills come in handy.

When recruiting, I make sure that every po-tential retailers understands what RMSB has to offer. Usually, retailers will sign up once they realise how they can benefit from us. I rarely encounter uncooperative retailers but when I do, I never feel disappointed. After all, we are only trying to help them and their businesses grow.

MEDIA RUNCIT

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Runcit Media Sdn Bhd (RMSB) aims to provide the best service to all its clients, be it the retailers or advertisers. One way RMSB achieves this objective is by carefully selecting its team of Field Super-visors (FS). Each one of them is chosen based on their experience in the FMCG industry and strong drive to contribute in the efforts to modernise the traditional trade. Read these testimonials to learn more about the roles and dedications of RMSB Field Supervisors.


INSTALLING & MAINTAINING MEDIA

FS: Seaw Sek Chuan

As a Field Supervisor, I am in charge of in-stallation and maintenance of these media. I do most installations except for the Retail Ad-vertising Panels (RAP), where there will be a Technical Team to help me. Every installation is done according to our Standard Operating Procedures (SOP).

We also have SOP for maintenance of our media. We try our best to avoid termination but if the same damages/bad practices keep occurring, we have no choice but to remove them from the particular outlets. I regard my job as one way of helping the traditional re-tailers. I believe that media help in making outlets look more attractive and driving more sales.

DELIVERING RUNCIT MALAYSIA MAGAZINE

FS: Aizil Azlan B. Saadon

When it comes to Runcit Malaysia Magazine, I always consider myself the middleman be-tween sources and receivers of information. Every time a new issue comes out, I make it a point to read the whole magazine so that I will be able to give a good explanation of the magazine when I send it to the retailers.

Many retailers have told me that the maga-zine is very informative, easy & interesting to read and they are always waiting for new is-sues to come out. However, there are a few who cannot be bothered. They would either ignore or refuse to listen to my explanations about the magazine. This saddens me be-cause I know it is a loss on their part as the magazine is one of our initiatives to help re-tailers modernise and survive in this ever-challenging business environment.

MEDIA RUNCIT

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PART-TIME WORM BREEDING

Hikmat Ali is not only a hardworking retailer, but also an innovative one. Although his shop has been operating successfully for the past 5 years, Hikmat wanted to get more out of his business. So, in October 2008, Hikmat began a worm breeding business in his own shop! According to him, worms can be used to process organic fertiliz-

ers and for cosmetic purposes. His purpose of doing this unique business is to promote the use of organic fertilizers and de-crease the use of chemical fertilizers. He also wants to contrib-ute to the industry by helping the import and export sectors grow. Hikmat believes that worm breeding can be commercial-ised in Malaysia. Those who are interested in this business may contact him at 012 504 4177.

Name: Hikmat Ali bin Liaquat AliName of Shop: Pasar Mini AfdalTown: Klang, SelangorFS: Badli

RISING FROM FAILURE

For 25 years, Ooi Chai Kean ran a business with his father. Unfor-tunately, when his father died, the business failed. For some rea-sons, Ooi just could not find a way to continue running the busi-ness. After 4 months of being jobless, Ooi’s wife and father-in-law offered to help him start a new business. Starting from scratch, Ooi worked really hard to succeed in his new business. With continu-ous support from his wife, Ooi can now be proud of the success that he has achieved. He is very thankful that since starting the new business, there are not many problems and his sales are really good.

Name: Ooi Chai Kean & Ang Bee SienName of Shop: Pasar Mini Impian EmasTown: Alor Setar, KedahFS: Rodi

2 SUCCESSFUL BUSINESSES

Bakri Mohamad started selling ice in 2002. After years of dealing with retailers, he found that there were a lot of room for improvements. Therefore, he decided to start his own retail business. He opened a retail shop next to his ice factory. Bakri always prioritizes his shop-pers’ convenience. He is now planning to renovate his shop for this purpose and has even provided delivery service. While his retail business is doing well, so does his ice business. Demand for Bakri’s ice went up so high that in 2006, his old factory could no longer handle the operation. Therefore, he moved his factory to a new location. Now, Bakri’s new factory can produce up to 2000 bags of ice tubes a day (each bag carries 15kg of ice). Bakri owns 7 lorries that can deliver his ice all over Perlis and Kedah.

Name: Bakri bin MohamadName of Shop: Beseri Mini MarketTown: Beseri, PerlisFS: Rodi

CAKAP!CAKAP RUNCIT

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MINI ONE-STOP CENTRE

It is always a hassle to go to different places to run our daily er-rands. This was what Eng Be Hiang was concerned about when he decided to open a mini one-stop centre. Eng runs a retail shop, wet market, mini post office and provides coin exchange & mobile phone services under one roof. He has always strived to provide ease and convenience to his shoppers. His retail shop was opened in 1998, followed by the mini post office in 2004. His post office offers almost every service that a regular post office does. The service is much needed in his neighbourhood consider-ing that the nearest post office is 3km away. Those who needs his coin exchange service can contact him at 013 456 9598. Some-times, Eng even gets insurance agents to open a counter in his premise. Delivery service too is provided when needed. With his shop surrounded by housing and business areas, Eng can be rest assured that his business will continue to grow.

Name: Eng Be HiangName of Shop: Pasaran KHTown: Kulim, KedahFS: Rodi

OPENING PROMOTION

Ms Ong Lily has been so successful in her retail busi-ness that she is able to expand it. In July 2008, she opened another branch of her shop. She wanted to do something special to celebrate the opening so she conducted a lucky draw. It was held from July 1 till December 31, 2008. For the grand prize, she offered a motorcycle. The draw managed to attract shoppers to come to her new shop. The shop is 3km away from Ong’s first shop and sells everything from groceries to daily necessities like clothes.

Name: Ong LilyShop: Pasaraya Kawang Sdn BhdTown: Air Hitam, KedahFS: Rodi

CAKAP!CAKAP RUNCIT

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GROWING WITH KNOWLEDGE The only way forward

Although considered a mini market, CS Brothers Sdn. Bhd. is far from being small. Located in Plaza Anggerik, Cheras, it is ca-pable of catering to a vast number of con-sumers. Mr. Loo Yew Poh, general manager of CS Brothers Sdn. Bhd. shared his stories with us.

THE NEED TO BE DIFFERENT

CS Brothers Sdn. Bhd. started as a traditional retail outlet in Cheras. The business was good but Loo knew it could be better. When other outlets started mushrooming in the area, Loo and his partners decided that the only way to compete is to provide cheaper alternatives to consumers. Therefore, in No-vember 2005, the business was moved to Plaza Anggerik where it turned into a mini market that combines retail and wholesale business strategies under one roof.

A successful 3 years later, the business branched out to 2 more locations. Now, CS Brothers Sdn. Bhd. can also be found in Kajang and Puchong. “All 3 branches are doing really well. I guess we are lucky to have picked the right locations,” said Loo happily. He admitted that his experience of working in a supermarket before starting his own busi-ness has helped him greatly.

A CHALLENGING START

“Dealing with suppliers, stocking and manag-ing finances were 3 of our biggest chal-lenges,” Loo commented. In the beginning, he had to make do with higher terms given by his suppliers. He was also faced with losses due to overstocking. Consequently, managing finances became tricky because he had to cover his overheads and deal with the losses. Fortunately, the business thrived after 2 years.

BIGGER RESPONSIBILITIES

For Loo, it is definitely more challenging to manage a mini market than a small outlet. “Since this shop is bigger and the opening

hours are long, we have to hire more em-ployees. We aim to train and retain for our employees to provide the best services at all times. We also ensure that their welfare are well taken care of,” he explained.

Good management of stocks is the key to a successful business. Loo regularly checks his stocks to make sure the quantities and va-rieties are able to cater to his shoppers’ needs and wants. Surprisingly, only one central management handles the finances of all the 3 branches. “It could be hard at times but we believe this is the best way to mini-mise loss due to administrative errors,” said Loo.

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SHARED KNOWLEDGE, GREATER POWER

Loo strongly believes that learning is a life-long process. Everyday, Loo would spend some time to surf the Internet and read books. He is inspired by the success of WALMART, CARREFOUR & TESCO. Loo also checks on his competitors regu-larly. “You need to find out which product is sold cheaper at other shops. Only then will you know how and when to ne-gotiate with your sup-pliers,” he explained.

Knowledge is meant to be shared. This is another one of Loo’s admirable philoso-phies. “I take pride in sharing whatever I know with anyone, be it my partners, employees or friends. You’ve got nothing to lose. When they grow, you grow too. It’s a win-win situation,” said Loo. He reminded retailers to constantly strive for improvement as the retail world contin-ues to grow.

PILLARS OF SUCCESS

Loo believes that shoppers, suppliers and the retailers themselves determine the success or failure of a business. He urges retailers to be consistent in their service and not be easily contented with what they already have. He added that good relationship with suppliers could be built by gaining their trusts. Loo also believes in the power of ad-vertising. He happily welcomes RMSB’s ad-vertising media (like Shelf-Edge and Shelf-Violator) into his shop as he sees it as a good way to inform his shoppers of new and good quality products.

He admitted that doing business is even harder now with the abundance of hypermar-kets and supermarkets. However, it does not mean that retailers should just complain and blame their circumstances. “If you don’t know how, find out. You’ll never get any answer by confining yourself in the shop all day,” said Loo ending the interview.

RUNCIT MALAYSIA thanks Mr Loo Yew Poh for sharing his success stories. Hope-fully you will be inspired by this article.

WIRA RUNCIT

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ACT FAST

Chinese New Year is over and we hope all of you had a great share of this year’s fes-tive business! While some of the hypermarkets have re-ported good sales, most of the kedai runcit in the Klang valley that we came into con-tact with do not have much to cheer about, as the off take of their festive goods was below their expectations! The current poor trading environ-

ment that coincided with the opening of new school term were linked to this dismal per-formance, not to mention the fact that there was also cutback in expenditure in practically every household!

The question that is now on everybody’s mind is the effect it will have on the remaining months of the year. Currently, there are no visible reassuring indications. Therefore, we encourage all of you to be fully prepared be-cause if you anticipate what is to come, you can still take remedial measures to minimise the impact on your business! Most of you have been in business for years and we are more than confident that you can successfully weather the storm; notwithstanding the fact that we in Runcit Malaysia will continue to provide you the latest market developments! We have already started to put you in the right frame of mind to face the challenges ahead in our final issue of 2008. We hope you will take the recommendations seriously so as to maintain a healthy business growth!

CONSIDER THESE OBSERVATIONS

a) Shoppers are now more cautious in spending.

b) The focus is on daily necessities with no over buying.

c) Shoppers are resorting to cheaper alternatives, although there is no weakening in brand loyalty.

d) Pricing is key but shopping environ-ment too must be comfortable.

e) Shoppers prefer outlets with good customer service and business prac-tices.

TIPS TO OVERCOME CHALLENGES

To enjoy maximum benefit, we are sure you will know how to capitalize and exploit the situation. Here are some of our recommenda-tions:

a) Review your business processes. Strive for better productivity, effi-ciency levels and cost effectiveness.

b) Be sensitive and mindful of the changes in consumers’ shopping habits. All planned activities must be in tune with their needs.

c) Be bold to innovate in order to pro-gress.

d) Be well stocked to minimise missed opportunities due to out-of-stocks situations.

e) Provide good customer service to keep your loyal supporters and gain new ones.

f) Deploy effective promotional gim-micks. Implement “Best Buy” items to convey an overall “Low Price” strat-egy to your shoppers.

g) Strive for tactical excellence in mer-chandising at all times. A good dis-play has:

• ! Logical shelving arrangement

• ! Visibility (show more, sell

more)• ! Accessibility and prominence

(eye level is buy level)• ! Stability and security

• ! Easy access for stock rota-

tion and replenishment • ! Sufficient stocks to generate

an impactful display• ! Effective point-of-sale mate-

rials• ! Correct pricing of products

Do remember that these can only be effec-tively executed if you do not default in your payments to suppliers. If you need to delay the payments, talk to them and ask for a grace period and make sure that you honour it. This will ensure continuity and regularity in the supply and that whatever campaigns that have been mapped out will proceed accord-ing to plan. All the best to you and we hope your business will continue to grow and pros-per in 2009!

PAK RUNCIT

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PAK RUNCIT Q&A

QUESTION 1

I have been doing business for the past 16 years but suppliers have not provided good service to me. Some of my stocks have ex-pired years ago. I still keep them. I was asked to buy in big volume. I have called the suppli-ers so many times, but they won’t come and change the stocks. Please give me your opin-ion on this. I can’t survive if this continues.

– P/M Forza-Penaga, Pulau Pinang

A. We have dealt with this problem on several occasions and yet there are still a lot of retail-ers who are ignorant of the proper course of action to be taken, resulting in some having to absorb the losses! Generally, goods with expiry dates are returnable and exchange-able, unless it is clearly stated of its “No Re-turn Policy” at the point of purchase. To our knowledge, brand owners are very particular about stock hygiene in the trade and if their products are no longer in saleable condition or fit for human consumption, they will be at-tended to without any delay. Any procrastina-tion on the part of the brand owners will do them more harm than good, unless they are totally not aware of it and that the responsible parties acting on their behalf are not doing their job! This situation can be averted, if re-tailers exercise extra care and caution and put the following into action:

a) Strive for “Quality Purchases”, with mini-mal or no trade returns.

b) Thoroughly check products with expiry dates and reject anything with less than 6 months shelf life. It is also advisable to take small trial order for new items where the off-take has yet to be proven. Keep proper records for close monitoring of the stocks.

c) Buy what you can sell, not what the sup-pliers want you to stock.

d) Ensure proper storage of the products in the display area and warehouse. Do not stock perishable products, if you do not have the required facilities.

e) Pay particular attention to the handling of products, especially during loading, un-loading and when you make home deliv-eries.

f) Train your staff to practise stock rotation and make sure they are familiar with the FIFO (first-in-first-out) system.

g) Buy from reputable suppliers and not any fly-by-night operators. You must be fully aware of their call frequency, trading terms and trade return policy.

h) It is always recommended to buy on credit and sell to consumers on cash ba-sis. This will help to protect you from un-scrupulous suppliers.

Having said that, we will now try to resolve the problems of P/M Forza with the following course of action to be taken:

a. The identified brand owners are not the actual suppliers. Distribution of products is undertaken by a team of appointed distributors.

b. If your purchases are made on credit ba-sis and you still have outstanding bills to settle, you have the right to hold back the payments.

c. Contact your suppliers immediately and caution them that if the expired stocks are not taken back and replaced immedi-ately, you will lodge a report with the brand owners.

d. Give your suppliers a grace period of one week and if nothing happens, we suggest you write in officially or call the brand owners to lodge a complaint. The for-warding address of the brand owners and the telephone numbers are usually found on the packaging of the products.

We sincerely hope that the suppliers/brand owners will attend to the expired stocks im-mediately and you will not have to incur any losses. All the best!

PAK RUNCIT

PAGE 32 OF 36


QUESTION 2

Prices have gone up this month but our profit is shrinking. It used to be 10% but now only 7% to 8%. We have already set aside more money to buy stocks but profit is very little. How do we settle this problem?

– P/M Tilai-Raub, Pahang

A. This is a common problem faced by retailers espe-cially when the higher cost of goods cannot be com-pensated with no increase in selling prices. The situa-tion is further compounded, when the products in question fall under the Controlled Items, in which, the retailers have no choice but to comply with the ruling. However, in the case of Non-Controlled Items, there are a few options open for you. Still, careful consid-erations have to be given to any price action in order to ensure its competitiveness. Under normal circum-stances, any price action will have to come from the brand owners cum suppliers. This means, the whole trade will be activating it at the same time. This move will help to minimize any negative impact it might have on businesses until the new prices become fully effective. If the price action falls on the decision of the individual operator, a checklist will first have to be established to cover the following:

a) Is your current selling prices competitive vis-à-vis the neighbourhood stores?

b" Do you think your neighbourhood stores will also increase their prices?

c) What are the chances of requesting from the brand owners for a better margin to offset the higher cost of goods?

d) How will your customers react to the new prices and what will the consequences be if the neigh-bourhood stores delay or postpone their price increase?

This is obviously not an easy decision to make and unless you are very sure with the answers, it is better to adopt a “wait and see’ approach. Alternatively, as your next course of action, you can also embark on a cost saving exercise. Try reviewing/reducing your op-erational expenses to make it more cost effective. We are quite confident that you will end up with some very positive results in this area.

Last but not least, you can also off set part of the de-clining profit by getting into new businesses that re-quire minimal investments, in terms of the time, space, manpower support and capital (eg selling pre-paid phone cards). We hope you will arrive at the right decisions and your profits will return to normal in due time. Good luck!

PAK RUNCIT

PAGE 33 OF 36


LOVE THEIR TUMMIES EVERYDAY

GOODNESS OF VITAGEN FOR EVERYONE

Every bottle of VITAGEN contains billions of good bacteria from Chr. Hansen’s Laboratories, a world leading bio-technology company in Denmark. Coming in a range of variants, there is a VITAGEN for every age!

GOOD THINGS LAST

• ! LB is a true classic – the first VITAGEN variant

introduced to Malaysia.• ! Loved by consumers for over 30 years.

• ! Packed with real fruit juice from apple, grape, orange and honeydew.

SENSATIONAL TROPICAL TASTE

Good news for pineapple lovers! Now, VITAGEN Regular is available in pineapple flavour, a tangy tropical taste that adds more fun to the goodness of VITAGEN.

LESS, LESS SWEET

• ! VITAGEN Less Sugar is the first cultured milk drink with low sugar

content in the market.• ! With only 25% sugar content, VITAGEN Less Sugar is great for

health conscious consumers.• ! Available in 3 tasty variants; LB (original), Grape & Orange.

FOREVER IN BLOOM

• ! VITAGEN with Collagen is the first cultured milk drink innova-

tion of its kind in Malaysia.• ! 500mg of Halal marine-based collagen peptides (imported

from France) in every bottle.• ! 2 bottles a day help to fully replenish body’s collagen needs.

• ! Collagen has been found to produce a glowing & radiant

complexion, counteract wear & tear of bodily joints.• ! VITAGEN with Collagen is enriched with dietary fibre & Vitamin C.

ADVERTORIAL RUNCIT

Please contact Cotra Enterprises Sdn Bhd at 1 800 88 5587

Consumers want healthy lifestyles. And with better awareness of digestive health, many are adding cul-tured milk drinks into their diets. Love your shoppers’ tummies with VITAGEN and enjoy the taste of grow-ing sales everyday.

GOOD BACTERIA, BAD BACTERIA

• ! VITAGEN is a fermented milk drink manufactured

by fermenting skim milk with a type of good bac-teria called lactobacillus acidophilus.

• ! These good bacteria help increase the number of

beneficial bacteria in the intestines and suppress the growth of harmful bacteria, keeping the intes-tinal system in balance for a healthy body.

MALAYSIA’S NO 1 CULTURED MILK DRINK

• ! VITAGEN is the first cultured milk drink in Malay-

sia.• ! The brand has been the market leader for over

30 years.• ! With consistent advertising, promotions & educa-

tion programmes, VITAGEN ensures continuous support from consumers.

PAGE 34 OF 36


ENERGISE YOUR DAYWork better with healthy eating & exercise

Your business day starts early and you work from the time you open your shop until you close it. Eating nutritious meals at regular times will help sustain your energy levels through the day and keep you productive.

RE-FUEL WITH BREAKFAST

• ! Eat energy-giving foods. Bread, rice or porridge, oat porridge or ready-to-eat

cereals provide energy-giving carbohydrates. Wholemeal bread, oats and whole-grain cereals are good sources of fibre too. • ! Watch the fat and sugar. Do not make high-fat foods (eg roti canai, nasi lemak,

fried rice, etc) an everyday affair. Drink milk or fresh juice. Have other beverages with less sugar.

BOOST ENERGY WITH LUNCH

• ! Have some of everything. A healthy lunch should contain rice or noodles, lots of vegetables and some meat, fish or poultry. Also, have fruits for dessert.• ! Eat moderately. Do not overeat as it will make you

sleepy.

SNACK WHEN HUNGRY

• ! Have a beverage. Milk, yoghurt or a chocolate malt

beverage (eg MILO) provide energy, protein, calcium, vitamins & minerals.• ! Nutritious nibbles. Nuts, fruits (eg dates, bananas,

apples) and high-fibre cracker biscuits are healthy choices.

RE-CHARGE WITH DINNER

• ! Set a time. It prevents you from eating dinner too late in

the evening and too close to bed time.• ! Take your time. If possible, eat dinner with the family.

FEELING sluggish all the time? You could be lacking physical activity. Regular exercise improves your blood circu-lation, fitness and also encourages the release of certain hormones that help your body stay energetic and keep your mind alert. Try to exercise for 30 minutes as least three times a week. Even something as simple as brisk walking can make a big difference!

With Tracy Lew

Corporate Nutrition Advisor

Nestle Products Sdn Bhd

For more information, call Nestle Toll Free Line at 1 800 88 3433

Article in collaboration with

GAYA HIDUP

PAGE 35 OF 36


REWARDING THE TRADEThe GOODMAID way of appreciating customers

GOODMAID wanted to ensure continuous support from their customers. Therefore, they conducted the ‘Buy & Be Rewarded’ trade campaign. In this ‘everyone’s a winner’ cam-paign, a mystery card was booked for each customer who purchased a minimum of RM200 worth of GOODMAID’s products every 2 months. At the end of the campaign, a draw was done to determine which mystery card goes to which retailer.

Apart from GOODMAID’s officials, representatives from Runcit Media Sdn Bhd and the Kuala Lumpur Chinese Medical Hall Association too were invited to draw the mystery cards. Prizes were given to retailers after they opened the cards that were sent to them by GOODMAID’s sales representatives.

“THANK YOU & CONGRATULATIONS! We deeply appreciate the support from all retailers who had

participated in this campaign,” Lim Bing Tik, Chief Executive Officer, GOODMAID Chemical

Corporations Sdn Bhd.

Yong Sheng Chee from the Kuala Lumpur Chinese Medical Hall Association drawing the mystery card.

Pasaraya Megaherbs & Food Sdn Bhd (Tmn Megah, PJ)

From left to right, Ng Chang Liang (Outlet Manager), Maggie Law (GOODMAID Sales Representative) & Hiew (GOODMAID Regional Sales Manager)

Pasar Mini Daily Fresh & Supplies (Klang, Selangor)

From left to right, Wong Chee Wai (Shop Owner), Chin (GOODMAID Sales representatives) & Michael Tang (GOODMAID Regional Sales Manager)

GOODMAID Chemical Corporation SDN BHDTel: (03) 62939558 Fax: (03) 6203 9557 Website: www.goodmaid.net

Suite C-12-12, Plaza Mont KIara, No 2, Jalan Kiara, Mont Kiara, 50480 Kuala Lumpur

PAGE 36 OF 36

!END!

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