Breaking into the Malaysian wholesale and retail network
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Breaking into the Malaysian Wholesale and Retail Network as a Small SME Manufacturer: A Case Study Mohd. Murray Hunter School of Bioprocess Engineering Kolej Universiti Kejuruteraan Utara Malaysia
Breaking into the Malaysian wholesale and retail network
Breaking into the Malaysian wholesale and retail network
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1. Breaking into the Malaysian Wholesale and Retail Network as
a Small SME Manufacturer: A Case Study Mohd. Murray Hunter School
of Bioprocess Engineering Kolej Universiti Kejuruteraan Utara
Malaysia
2. Underdeveloped Market Developing Market Developed Market
Most Items Imported
Fragmented with few large customers
Heavy use of intermediaries
No market segments
Local production following international trends
Cooperation with international firms
Large customers developing although market still
fragmented
Beginning of market segmentation
Open market to the world
Own production with exports
Markets adequately covered with products
Full market segmentation
Hunter (1993)
3. Malaysia Underdeveloped Market Developing Market Developed
Market Beginning to rely on imports again: Colgate, Unilever Aspect
of market globalisation Market segmentation still weak; along
ethnicity lines only Large customers developing bringing more
market concentration Still undeveloped logistic systems Category
management still in infancy Local firms exporting to the world
Still many market gaps Global trends do not necessary follow Poor
Innovation
4. Manufacturer National Distributors Wholesalers Consumers
Hypermarkets Super- markets Sundry Stores Convenience Stores
Chinese Medical Halls Malaysian Retail Market Channels &
Structure
5. Hypermarkets
Hypermarkets make up approximately 15% of the national market.
Tesco (12), Carrefour (12) and Giant (20), dominate this sector.
Makro (8) is a closed system for wholesalers and small business
customers, although this policy varies from time to time. There are
approximately 50 hypermarkets in Malaysia.
6. Supermarkets
Supermarkets can be broken down into two categories. Those
foreign owned and part of a chain like Jaya Jusco (7) and Giant
(numbering around 65), locally owned groups like Fajar (16), Suiwah
(6) and Econsave (16),(numbering around 100) and those locally
owned independent supermarkets with no affiliations (numbering
around 220). This is approximately 25% of the market.
7. Sundry Stores
Approx. 80,000 in Malaysia in both urban and rural areas,
majority independently owned small family businesses. Attempts have
been made to franchise or develop chains like Felda and Pernama,
but not so successful. This is about 30% of the market.
8. Convenience Stores
These usually franchised stores are rapidly growing in numbers
as both 7-Eleven & the petrol companies have seen opportunities
to enter into the retail trade. Their market share is approximately
6% but rapidly rising.
9. Chinese Medical Halls
Traditional Chinese medical halls are scattered across the
country and often develop into a small supermarket or sundry store.
They, together with pharmacies have around 14% market-share but
this is losing out to the convenience stores and chain pharmacies.
About 6,000.
10. Pharmacy
Pharmacies primarily part of chains like giant, but still
number of independents. They are specialist stores usually selling
OTC and widening ranges to include herbs and nutraceuticals.
11. Other
A specialist group that sells confectionary, OTC drugs and FMCG
goods. Number around 200.
Sell books, magazines, Newspapers, drinks, etc.
An emporium group with 10 stores throughout Malaysia
specialising in emporium items and some FMCG.
12. FMCG Market Fragmentation/Concentration Comparison Between
Malaysia, Thailand, Hong Kong and Australia
13. Klang Valley & Central Region (N. Sembilan) 35%
Southern Region (Johor & Melaka) 15% Perak 8% Penang 5%
Kedah/Perlis 15% Pahang 8% Kelantan/Terengganu 8% East Malaysia 6%
Approximate National Market Break-Up
14. Barriers to Entry
15. Market Fragmentation
16. Centralisation
17. Merchandising
18. The way of doing business
19. Guanxi
20. Financial Issues
21. Agadir Sdn. Bhd.
22. Start Up Strategies
23. Introduction Sales & Marketing Building Up Sales Skills
Account Management Concept Sales Planning
24. Manufacturing Strategy
25. Growth Strategy
26. Product Strategy
27. Key Findings
Malaysia is a much more complex market to achieve success in as
a manufacturer even though it is still a developing market.
Developed markets like Australia and New Zealand offer much more
potential for Malaysian SMEs in terms of sales volumes, profits and
positive cash-flow.
28. Key Findings
The strategy of developing FMCG products specifically for the
Malay market segment appears to pay off very well.
29. Key Findings
Malaysian products can be of high enough standard in the FMCG
category to be successful in developed markets.
30. Key Findings
The Malaysian market does not at this point of time value
innovation and innovative products from SMEs in the FMCG
categories.
31. Key Findings
It is possible by non-Chinese companies to break into the
Chinese dominated retail market through the development of sales
skills and adapting to their way of doing business .
32.
There is a steep learning curve for the novice in the retail
sales and distribution.
Key Findings
33. Key Findings
Lack of ethics and bullying of large companies against small
companies is common in the retail industry here in Malaysia.
34. Key Findings
Supplier relationships are one of the most important factors in
the success of an SME in Malaysia.
35. Key Findings
SME manufacturers in the FMCG categories must work on margins
of at least 100% to achieve positive cash-flows.
36. Key Findings
High value items, rather than low value, high volume items will
make it easier to achieve a positive cash-flow.
37. Key Findings
Sales in the retail sector in Malaysia are not sustained sales
and have to be continually pushed by the salesforce.
38. Key Findings
It is possible to train inexperienced people into professional
occupations such as sales, if you can build self-confidence,
self-esteem with a supportive and like minded group around
them.
39. Key Findings
Fatigue is an important factor in sustainability in the FMCG
industry if undertaking own distribution.
40. Key Findings
The structure of the retail trade is rapidly changing,
requiring a new approach to sales and marketing, which will provide
opportunities for non-Chinese to enter into this currently Chinese
dominated profession.