Sustainability in Retail Industry: Competition Factors among Small Retailers and Supermarkets Agro-Food Business

By Ismail, Mohd Khairi; Kumaran, Vikniswari Vija et al. | International Journal of Entrepreneurship, January 1, 2018 | Go to article overview

Sustainability in Retail Industry: Competition Factors among Small Retailers and Supermarkets Agro-Food Business


Ismail, Mohd Khairi, Kumaran, Vikniswari Vija, Sarifuddin, Syamsulang, Gorondutse, Abdullahi Hassan, Sabarudin, Nur Adyani, International Journal of Entrepreneurship


INTRODUCTION

At the early stages, the retail sector in Malaysia has been pioneered by some form of retail businesses. Grocery stores, night market and a mini-supermarket are where the major consumers purchase their daily necessities. Selling the daily needed goods is a factor why the consumers make purchase. This situation can be seen when retail stores such as farmers' markets and wet markets remains the popular retail business until the end of 2000 (Report of the 9th Malaysia Plan, 2006). Retail activities continue to expand and become the subsector contributing to the national economy. Initial landscape of retail sector began with traditional stores, wet markets, and hawker which next moved to a modern retail stores such as supermarkets and hypermarkets (Wel et al., 2012). In 2000, the retail sector has recorded a contribution of RM. 31,081 million to the Gross Domestic Product (GDP) (the 8th Malaysia Plan, 2001). It is due to the increase in income which influenced the consumer demand. This situation can be seen through the increase in retail businesses such as grocery stores, supermarkets and so on in the period of 2000 and above (Arshad, 2008).

Based on the Business Times, in 2010, growth in the retail sector was 8.4%, which is worth RM77 billion. The increase in supermarkets and hypermarkets was a contributing factor to this situation (Hassan & Rahman, 2012). Changes in conditions such as urbanization, rising incomes, changing lifestyles and consumer perception of product quality led to an increase in supermarkets, especially in urban areas with high population density (Arshad, 2008). In Malaysia, the number of modern retailers started to improve in 2000 through modern retailers both locally and overseas companies (Shamsudin & Good, 2005). Under the National Key Economic Areas (NKEA), largescale retail companies such as Mydin, Carrefour, Econsave, and Giant encouraged to venture into the retail sector. With over 10% of Malaysia's GDP is contributed by domestic consumption, wholesale and retail NKEA provide the basis for this sector to increase the amount of the Gross National Product (GNP) of the country with RM 156 billion and create 454,190 new jobs by 2020 (Economic Transformation Plan, 2010). The involvement of supermarkets are also likely to help and beneficial to consumers in terms of offering quality food and reasonable prices.

According to the "Thailand's Shopping Habits Survey" report in 2001, the existence of supermarkets had taken over the function of retailers as the major shopping options premise for residents of Bangkok. This condition seemed to be competitive for the small retailers. This is due to the convenience, and the prices that affect the consumers to make a choice where to buy. With factors such as price, comfort, quality and customer relations, competition in the retail industry also increased. However, this causes number of small retailers to decline due to the competition with large-scale retailers, especially in the agro-food business (Arshad & Shamsudin, 2007). Therefore, this study discusses the competition in the retail sector in the perception of small retailers in the agro- food business due to the existence of supermarkets.

LITERATURE REVIEW

Retailing is a business activity that has been practiced long. This activity is extremely broad, involving small to large business entities. Retailing is often associated with the concept of selling goods to end users (Baron et al., 1991). Kotler (2003), states that the retail sales activities of products and services are to the end users which involving the private use and not for business purpose. Ali et al., (2010) noted that the retailers are divided into large retailers and small retailers. Large retailers are retailers that operate on a large scale, including supermarkets, hypermarkets and so on (Reutterer & Teller, 2009). Rather small retailers include 3 types of groups such as hawkers, businesses stalls and small shops. …

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