According to Euromonitor, retail sales in the packaged food market in Malaysia had been estimated to reach nearly US$7.3 billion in 2019. That represents a growth rate of 24% or over US$1.4 billion since 2015. The forecast
for growth in this market is also quite promising. By the year 2024, the retail sales in the packaged food market in Malaysia is expected to reach US$8.8 billion, a growth rate of 15.1% or US$1.1billion. High growth products in the forecast
include:
- Dairy products
- Confectionery
- Ice cream and frozen desserts
- Rice, pasta and noodles
- Sauces, dressings and condiments
- Baby Food
- Baked goods
Post reports that The Malaysia food retail sector continues to rapidly develop, and premium grocery stores and convenience outlets are increasingly popular. The country’s food retailers reached US$26 billion in sales in 2019.
Industry analysts report the sector is dominated by five key players: Dairy Farm Group, Mydin Mohamed Holdings, Trendcell, Village Grocer Holdings, and AEON Group.
Euromonitor reports that despite the shrinking consumer base for the supermarkets in general as consumers increasingly favor convenience stores, premium supermarkets witnessed strong growth during 2019.
This was mainly due to the emergence of an affluent and sophisticated urban consumer base who value premium positioning and the rapid expansion of chained supermarkets in major urban areas.
Numerous recent openings of upmarket supermarkets under brands such as MaxValu Prime, Jaya Grocer, and Village Grocer have further supported the shift towards more premium grocery retailer chains. These
stores appeal largely to urban shoppers due to their prime locations, easy access, and exclusive offerings, which usually include rare, imported goods and food ingredients that are deemed hard to find at other supermarkets and even on the shelves
of hypermarkets.
The leading players in supermarkets in Malaysia continue to employ strategies that are similar to those pursued by their counterparts in convenience stores. Specifically, Malaysia’s leading
supermarket chains are increasingly focusing on ready-to-eat food, capitalizing on rising demand for all types of products that can save consumers time as well as benefiting from the high margins that these products offer retailers. This is
a sign that the country’s supermarkets are increasingly willing to respond to the higher consumer demand for convenience.
Busy urban lifestyles mean a lack of time to prepare meals from scratch at home and this is encouraging consumers to turn to ready-to-eat food as a quick and easy meal solution. One
senior source from AEON Co has commented that revenues generated from ready-to-eat food had increased substantially over the course of 2019, with the higher profit margins that these products represent encouraging the company to focus more on them
during the future.
2019 saw Jaya Grocer remain the leading name in supermarkets in Malaysia. Parent company Trendcell Sdn Bhd continues to generate strong growth, with the strategic locations of its large format
outlets a major asset. The company has however seen a growth slowdown in recent years and this can be attributed mainly to the sluggish performance of its flagship store at Bangsar Market. This has led to the company scaling back its expansion
and the opening of new stores as it faces stronger competition from Village Grocer and AEON Co.’s MaxValu Prime, each of which targets a similar consumer demographic.
AEON Co (M) Bhd generated a strong sales growth in supermarkets in 2019, supported by the strong performance of its Aeon Co and MaxValu Prime brands and its policy of trading from smaller premises that many of its rivals. Despite
value sales in supermarkets coming under considerable pressure during 2019, AEON Co pressed ahead with its program of upgrading and refurbishing its stores and expanding its product range. Aeon Co is also moving into Omni-channel retailing.
The company recently engaged HappyFresh as its partner to develop a grocery delivery service for its customers that place their grocery orders online, enabling AEON Co to capture share in the burgeoning food and drink e-commerce space.
Recent years have seen major changes to the government regulation of grocery retailing in Malaysia.
Previously, there were restrictions on foreign retailers that prevented them from operating stores with less than 3,000 sq m of retail selling space, which limited them to operating in hypermarkets. However, recent developments in the regulatory
landscape have meant that international retailers can now operate supermarkets or convenience stores in the crucial regions of Klang Valley, Penang, Johor Bahru and Ipoh. It is expected that international players such as Tesco will begin entering
supermarkets during the forecast period in order to expand their market shares and establish a wider footprint throughout the country.
Euromonitor reports that convenience stores continue to witness strong growth in terms of outlet numbers and value sales.
Increasing incomes and busier lifestyles, especially among consumers in Kuala Lumpur and other major urban areas, have translated into greater consumer demand for quick and convenient access to all types of groceries. Furthermore, the introduction
of value-added services such as EasyParcel, which enables consumers to send and pick up parcels at outlets of MyNews.com and 99 Speed Mart, has also spurred growth. These services have proven popular, bringing in additional footfall and boosting
consumer traffic in convenience stores.
Convenience stores now offer improved availability and a wider range of options for ready-to-eat fresh food, drinks and deli products, providing greater convenience to busy working professionals and time-pressed commuters. This
has generated higher levels of consumer foot traffic in convenience stores, supporting more impulse purchases of other types of products that are typically sold in convenience stores.
With MyNews.com’s new The Tarik ice cream range and Family Mart’s hot food items such as its Korean Cheese Ramen, category players are regularly launching new experiences to attract consumers. Moving
forward, the leading players in convenience stores are expected to focus on growing the contributions made to their revenues from food service in order to capitalize on rising demand and boost their profit margins.
99 Speed Mart remains the leading player in convenience stores in value terms.
The player has recently expanded its distribution network by adding 198 new convenience stores across Malaysia over the course of 2019. The retailer has also extended its reach into suburban locations such as Kuala Kangsar and Temerloh.
KK Super Mart remains an innovative presence in convenience stores in Malaysia. Towards the end of the review period, the retailer opened a concept store that serves as a comprehensive 24-hour haven rest stop, providing
consumers with ready-to-eat fresh food, a work zone and massage chairs, all set in a prime tourist destination in the heart of Kuala Lumpur. This elevated shopping experience includes innovations such as cashless transactions and represents
a clear signal of KK Super Mart’s intention to move into convenience stores that are specifically targeted at commuters and on-the-go convenience needs rather than merely adhering to its current household shopping-oriented offering.
Best Prospect Products
Post reports that U.S. products with the best prospects for sales in the Malaysian food retail market include dairy, fresh & processed fruits, seafood, wine, pork and beef.