International Journal of Retail & Distribution Management

Malaysian hypermarket retailing development and expansion

Hasliza Hassan Abu Bakar Sade Muhammad Sabbir Rahman
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expansion", International Journal of Retail & Distribution Management, Vol. 41 Iss 8 pp. 584 - 595
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IJRDM
41,8
584
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International Journal of Retail
& Distribution Management
Vol. 41 No. 8, 2013
pp. 584-595
q Emerald Group Publishing Limited
0959-0552
DOI 10.1108/IJRDM-09-2012-0085
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0959-0552.htm
Malaysian hypermarket retailing
development and expansion
Hasliza Hassan
Faculty of Management, Multimedia University, Cyberjaya, Malaysia
Abu Bakar Sade
Global Entrepreneurship Research and Innovation Centre,
Universiti Malaysia Kelantan, Kuala Lumpur, Malaysia, and
Muhammad Sabbir Rahman
Graduate School of Management, Multimedia University,
Cyberjaya, Malaysia
Abstract
Purpose The hypermarket industry in Malaysia has created a huge momentum for modern
retailing concepts. The industry has been developing impressively, and the word hypermarket seems
in need of a new definition. There is an overlap of the definitions for hypermarket, supermarket and
shopping mall. Thus, the purpose of this paper is to focus on recent Malaysian hypermarket retailing
developments that could be used as sources for definition. A few expansion opportunities are also
emphasized in this paper.
Design/methodology/approach A review of the literature from various research studies in the
field was made. In order to strengthen the existing findings, practical implementations on
hypermarket retailing within the Malaysian market were also studied in this research. In general, this
research focuses on hypermarket retailing in the Malaysian scenario.
Findings Malaysian hypermarkets can be defined using retail developments within the industry as
sources for definition works. This industry can also be expanded further through: product brand
extension; service experience enhancement; self-checkout technology; coupons promotion; online
hypermarket; and one district one industry (SDSI) market intervention program.
Originality/value The definition of hypermarket in this research paper is streamlined further to
differentiate it from a supermarket or shopping mall. With the potential expansion opportunities, it is
expected that there will be a clearer path to outgrow this industry.
Keywords Hypermarkets, Malaysia, Retailing, Development, Expansion, Business development
Paper type General review
Introduction
Retailing begins as a local activity (Severin et al., 2001), which involves a transaction
where the buyer intends to consume a product (Liao et al., 2008). Retail and distribution
is the most consumer centric industry, which cover a wide spectrum of different
businesses (Macdonald, 1994). There has been an intense transformation of the
retailing industry over the past few decades, which has seen consumers making fewer
trips and spending less at traditional shops since they are more attracted to modern
retailing concepts (Morganosky, 1997). New and huge retail players have threatened
and taken away the opportunity of small local grocery players (Gonzalez-Benito, 2005;
Hare, 2003) including in suburban areas (Hare, 2003). The modern retail environment
offers diverse product labels, quality, price and brands (Burt, 2000). It is also becoming
 more diverse and fragmented with an overload of information and alternatives (Liao Hypermarket
et al., 2008). retailing
Consumers will perceive a retailer as a whole rather than in isolation (Swoboda et al.,
2007). Retailing is a highly diverse and dynamic sector ( Jones et al., 2005) that provides development
a supply of most household necessities to the consumer. The importance of retailers to
the manufacturer depends on the number of players in the industry (Collins and Burt,
2003). The retailing industry is one of the biggest contributors towards Malaysias 585
gross domestic product (GDP) and also provides employment opportunities (Mui et al.,
2003). Weld Supermarket was the first modern retail format that was introduced in
Malaysia in 1963 followed by other modern retailers (Kaliappan et al., 2009). The first
hypermarket that was introduced in Malaysia was Makro, in 1993 (Lee, 2004).
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Hypermarket retailing is one of the forms of modern grocery retailing in Malaysia that
is experiencing widespread expansion, and the industry is expected to expand
continuously and remain immune to the maturity phase.

Hypermarket retailing
In general, the word hypermarket has still not been defined clearly. The definition for
hypermarket is also being used for supermarket and shopping mall by some
researchers. Consequently, the issue arises of how to differentiate hypermarkets,
supermarkets and shopping malls. Most products in hypermarkets are based on fast
moving consumable products, and the majority of departments in hypermarkets are
selling basic household necessities, for example, food, vegetables, kitchen materials,
and cleaning materials. In supermarkets, there are more departments that sell durable
products. For example, we can get more varieties or brands for clothes, shoes and
electrical products. A shopping mall is a retail concept where there are many
sub-retailers within one roof. Usually more than half of the overall layout in the
building is being rented to sub-retailers. The layout of the building is purposely
designed to be rented to other sub-retailers to earn revenue from rental. According to
Basso and Hines (2007), the way consumers define retailing and how the quality and
service level is perceived depends on price, store appearance and image, which is
communicated through commercial medium. However, the perception will fade upon
maturity.
The concept of everything under one roof, self-service, discount price and free
parking have invented a new word in the industry hypermarket (Kamath and Godin,
2001). A hypermarket can be defined as a modern household retailing concept that sells
a combination of department store merchandise and groceries in wide assortment,
within a store of more than 2,500 square meters (27,777.7 square feet) to over 8,000
square meters (86,000 square feet) (Malaysian Magazines, 2003), which includes a free
and large parking area and other services. Based on a combination of perspectives
from various authors, a hypermarket is mainly based on self-service (Swoboda et al.,
2007) that sells a variety of retailer product brands, manufacturer product brands and
generic products (Esbjerg and Bech-Larsen, 2009). Intangible assets, such as product
brands, retail formats and managerial technology are features of the retailing sector
(Doherty and Quinn, 1999). All of these are offered by almost all hypermarkets.
Nowadays, hypermarkets could be considered as a modern retailing format that
provides everything under one roof. Although this concept is similar to the existing
shopping center, hypermarkets focus more on fast moving consumer products.
 IJRDM The first hypermarket was introduced in 1963 (Cliquet, 2000) by Carrefour.
41,8 Carrefour was established in 1959 as a supermarket and then converted to a
hypermarket to compete in the retail industry (Liao et al., 2008). The hypermarket
format that was introduced by Carrefour emphasized three key elements (Dupuis and
Prime, 1996):
(1) one-stop shopping in large premises;
586 (2) large parking lots; and
(3) everyday low prices.

Carrefour strengthened the brand name by utilizing a multiple format strategy in

addition to hypermarket to expand in the international market where there was an
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opportunity for discount retailing (Colla and Dupuis, 2002). Competition from the
European retailers affected the local market (Myers and Alexander, 2007). This large
format retailer or big box concept becoming familiar in the 1990 s (Arnold and
Luthra, 2000). The industry has developed extensively and impressively within a short
timeline since the consumers have been aggressively pushing this industry into
another level. Today, there are many international as well as local hypermarket players
in Malaysia.
New retail concepts enhance the industrys competitiveness (Arnold and Luthra,
2000). Hypermarkets are part of the grocery retailing industry and constitute one of the
main distribution channels for products (Kaliappan et al., 2009). It can also be
considered as a normal retailing industry that sells in huge amounts and offers a wide
variety within one outlet. Many consumers prefer to purchase household products at
hypermarkets (Arnold and Luthra, 2000). This is because it is more convenient to
purchase different categories of products at one place (Dellaert et al., 1998). This
modern retailing (Knee, 2002) is based on:
.
fixed prices;
.
no obligation to buy;
.
service;
.
entertainment; and
.
scale.

The one-stop and all-under-one-roof concept that was introduced by international

hypermarkets has attracted a positive market in Malaysia (PricewaterhouseCoopers,
2004/2005). Thus, hypermarket is a common industry to everyone since it covers a
wide spectrum.
Consumers usually have more than one preference of retailer to choose for grocery
shopping (McGoldrick and Andre, 1997). Consumers usually prefer to go to large-scale
retailers for major purchases to gain a better assortment, price, discount and special
offers. They will go to smaller retail stores for fill-in trips (Reutterer and Teller, 2009).
Consequently, small independent retailers have been replaced in the market by a small
number of large retailers through sales, market share and profits. Modern retailing
provides better service, value, variety, safety, cleanliness and a more advanced
shopping environment than traditional retailing (Alexander and Myers, 1999). People
prefer to go to the hypermarket to purchase fresh products such as dairy, fine meat and
 groceries (Verhetsel, 2005). There are many varieties of products in hypermarkets with Hypermarket
diverse quality and price, which has made hypermarkets the most attractive place to retailing
shop, especially for grocery products. Consequently, small retailers that target for
fill-in trips should not compete with large scale retailers in non-service aspects, such as development
price and product quality that aim for bulk purchase from the consumers. However,
these small grocery retailers should be able to compete with large hypermarkets in
terms of service through a better personal relationship with the consumers (Reutterer 587
and Teller, 2009).
How the retailing concept is perceived is dependent on individual perception. The
price of products in hypermarkets is slightly cheaper than those in a supermarket. All
hypermarkets provide free parking for consumers as a basic service. Most
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supermarkets and shopping malls do not provide free parking except for certain
locations or by certain players. From another perspective, many hypermarkets
enhance the outlet as a shopping mall by providing more space for sub-retailers within
and outside the main building. The layout is purposely designed to be rented to other
sub-retailers. For example, Tesco is usually designed as a double storey building. The
first floor and part of the second floor are rented to other sub-retailers, while Mydin at
Ayer Keroh, Melaka, Malaysia rented indoor space as well as space outside the
building to other sub-retailers. Sometimes, there is also an exhibition in the outlet. This
concept is almost similar with shopping mall. Thus, sometimes it is a bit tricky
concerning how to differentiate one retailing concept from another.
Some retailers might operate as both a hypermarket and supermarket at the same
time in different locations. For example, Giant can be considered as a hypermarket
since they have their own building and the parking is free for the consumer, whereas
Giant supermarket is located within a shopping mall. Usually, supermarkets do not
provide free parking for the consumer. AEON, previously known as Jaya Jusco, can be
considered as both supermarket and shopping mall depending on how the layout is
designed. If AEON is dominating more than half of the layout in the building, it is
considered as a supermarket, whereas, in certain places, it can also be considered as a
shopping mall since more than half of the layout is rented to other sub-retailers. The
burden to manage a store solely by the main player can be reduced by renting part of
the layout to sub-retailers and earn a constant rental income. However, the investment
cost at the beginning will be high since the size of a shopping mall is usually bigger
than supermarket. Mydin is an example of a retail player that operates in three
retailing concepts mini mart, which is also known as MyMydin or MyMart;
supermarket, which is also known as Mydin Wholesale Emporium; and hypermarket,
which is also known as Mydin Wholesale Hypermarket.

Hypermarket retailing in Malaysia

The basic components of normal traditional retailing involve: price driven, service
delivery and time saving (Sparks and Findlay, 2000). The traditional grocery retail
shops have been replaced by supermarkets and subsequently by hypermarkets
(Chabaud and Codron, 2005; Hassan and Rahman, 2012a), which have dramatically
changed both the market structure and the regulatory policy (Gonzalez-Benito et al.,
2005). Greater floor space, modern display format and selling in large varieties and
quantities give value added to hypermarkets (Business Monitor International, 2007). In
general, smaller markets usually have fewer international retailers (Myers and
 IJRDM Alexander, 2007). The opportunity for Malaysian hypermarkets to expand
41,8 domestically is still on-going. Mydin Mohamed Holdings Berhad (Mydin) is one of
the local players that keep expanding their business operation from selling cost
effective Muslim clothes, apparel and prayer materials to a wide range of different
goods. The localized concept of halal (permissible) by Mydin, targeting a certain
religion or race, provides strong competition to other well-known players such as
588 Tesco, Carrefour and Giant (Zain, 2008).
Malaysian foreign direct investment inflow (FDI) has been stabilized and improved.
The major contributing sectors are from wholesale and retail
(PricewaterhouseCoopers, 2004/2005). The development of a new economy leads to
improvement (Kotler et al., 2003) in:
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.
buying power;
.
variety of available goods and services;
.
amount of information;
.
interacting, placing and receiving orders; and
.
an ability to compare notes on products and services.

The revolution of the grocery retailing industry is more impressive than any other
industry. Sometimes, it can be perceived as automatic development that is beyond
control. The high number of emergent retailers and the competition in this industry has
made this industry highly competitive. Competition in the retail industry has led to an
improvement in efficiency (Barros, 2006). Since 2006, Tesco, Carrefour and AEON have
made significant investments to develop a competitive network in Malaysia (Business
Monitor International, 2007). Privatization guidelines which require 30 per cent of
private equity to be held by Bumiputra (Lee, 2004) have given an opportunity for local
people to be more involved in the industry. There is also an opportunity for local people
to get involved in the industry through operational expansion of hypermarket retailing
in Malaysia.

Expansion through product brand extension

Nowadays, consumers have borderless product varieties to choose from. Thus, brand
is important (Ilonen et al., 2011) to sell any type of product. The extension of an existing
hypermarket corporate brand to a new product by using the same brand is known as
corporate brand extension (Keller and Aaker, 1998). Consumers can easily choose any
place to shop since almost all hypermarkets are offering the same products. The only
way to differentiate is by offering hypermarket corporate brand extension products
that are only available in a particular hypermarket outlet. Corporate brand extension
products by hypermarkets increase the variety or assortment on the shelves. This is
not just for the sake of display but can also be used as a strategy to attract people to
purchase more at a cheaper price (Anchor and Kourilova, 2009; Uusitalo, 2004). In
general, although most hypermarkets seem to be extending the corporate brand to
product brand, there are still some hypermarkets, especially local players, that have
still not extended the existing corporate brand since they are still not clear concerning
the significance of such a strategy (Hassan and Rahman, 2012b). As a stepping stone to
look at the significance of hypermarket corporate product brand extension, it would be
beneficial to focus on factors that could impact on the brand extension (Story and
 Loroz, 2005) or feedback concerning the impact on diverse product categories within Hypermarket
real environmental settings (Thorbjrnsen, 2005). The importance of brand extension retailing
leads to investigation concerning how far the brand could be stretched (Meyvis and
Janiszewski, 2004) and deeper investigation concerning the factors that could enhance development
the elasticity (Ahluwalia, 2008). There are very few findings concerning the main
driver and assessment of brand extension elasticity (Ahluwalia, 2008; Burt, 2000).
Thus, further research is needed concerning the effect of the success in brand extension 589
by the corporate entities (Keller and Aaker, 1998).

Expansion through service experience enhancement

The scope of a service is very wide. Service involves an intangible product (Heizer and
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Render, 2004) or any activity that supports sales. Service is complex and involves
mixture levels of environmental, consumer and variables of service provider (Varca,
2004). A planning base on solution selling is important for service differentiation
(Arnold et al., 2009). Although service is complicated to measure and most consumers
evaluate it according to the corporate image, it would be interesting to study the
differences in service and product brand (Pina et al., 2006). Shopping is not just about
purchasing products from shelves. It also involves shopping experience (Beldona and
Wysong, 2007; Brun and Castelli, 2008). The shopping experience can be stimulated
through a sensory experience. This sensory experience can be enhanced by giving free
sample products for the shoppers to experience (Beldona and Wysong, 2007). There is a
lack of further findings concerning the ways to design and enhance service
consumption experience, such as the effect of music, consumption time, waiting time,
physical environment, service provider, consumer assessment, purchase intentions and
behavior (Bolton et al., 2007). While previous marketing research only focused on
minimizing costs, the current marketing research is now moving into branding and the
experience of the consumer (Parment, 2008). However, most of the existing findings
mainly focus on shopping experiences in shopping malls instead of hypermarkets
(Ahmed et al., 2007). Thus, it would be worth looking into consumer shopping
experience at hypermarkets since most people purchase basic household necessities
from hypermarkets.

Expansion through self-checkout technology

The checkout operation is crucial for all hypermarkets to determine the flow of the
products. It gives a hint to the management concerning the stock availability and
product preferences. The products will only flow going in and going out from the
hypermarkets stock if there is an exchange between the hypermarket and the
consumer. This exchange will only be realized through the electronic bar code scanner
and payment transaction medium at the checkout counter. Hypermarkets will order
directly from the supplier when the cashier scans the bar code of a product. Thus,
modern technology, such as an electric scanner will monitor sales performance
(Jamieson, 1996). Systems, such as point-of-sales scanning and electronic data
interchange (EDI) (Larson and Sijbrands, 1991), promise even better data collection
opportunities for syndicated suppliers in the future (Segal and Giacobbe, 1994). The
productivity of product flow is crucial at the checkout counter of hypermarkets.
Technologies, such as scan-ahead system and traffic monitoring, are able to reduce
checkout queues (Jamieson, 1996). The consumer is often alone in a crowd while
 IJRDM shopping. Modern technology, such as self-check-out systems, persuades the consumer
41,8 to shop and do everything by themselves (Esbjerg and Bech-Larsen, 2009). The
checkout counter is a one-stop place for an exchange or transaction between the
consumer and the hypermarket to happen. Due to the nature of the operation of
hypermarkets, the checkout counter can be interpreted as the only spot where the
consumer is being purely served by the hypermarket. The other sections in the
590 hypermarket might be considered to be self-service areas where the consumers have to
shop by themselves. For the time being, there is still a lack of research concerning the
Malaysian market, especially concerning the checkout operations between the
consumer and the hypermarket.
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Coupon as a major promotion expansion

One of the ways to obtain discount from hypermarkets is by using coupons.
Consumers can easily obtain the coupons from a newspaper. The way cashiers interact
with the consumer will influence the consumer to either redeem or not to redeem the
coupon. Consumers will redeem the coupons if they are made to feel welcome and
confident by store personnel. Metaperceptions or the feel of perception by cashier, such
as poor or cheap will demotivate the consumer from redeeming the coupon. However, if
the consumer feels that the cashier perceives using a coupon is smart, the consumer
might redeem it accordingly. Lower socio-economic people might feel embarrassed to
use coupons, but still have to use it because the usage of a coupon is strictly driven by
economic need (Brumbaugh and Rosa, 2009). The findings prove that consumers who
often use coupons are those who have a higher income and higher education level then
those who seldom redeem it. The intention to use coupons depends on the ability to
read, accessibility to media, perception of store policies, product categories and brands
(Bawa and Shoemaker, 1987). The usage of coupons is still not widely practiced in
Malaysia. It was recently started by Carrefour. Due to this, there is always space for
researchers to discover new knowledge concerning consumer acceptance towards
coupon redemption. The findings could be extended to real practice for the benefit of
both the hypermarket and the consumers.

Online hypermarket expansion

With intense competition and high population in certain areas, especially in urban and
suburban areas, electronic hypermarkets could become an alternative for those who
prefer to stay away from stressful congestion. Although electronic hypermarkets have
been introduced and accepted by consumers in certain countries, especially in the
Western countries, this concept has not been implemented in Malaysia. In fact, there
has been no research made on the Malaysian market concerning how consumers will
behave towards purchasing basic fast moving consumption necessities and products
through the internet. Thus, this new strategy could be a new gap for both practitioners
and researchers to explore in the Malaysian market. To ensure that all implementation
efforts are successful, it would be better to prioritize the research findings concerning
how the consumer will behave (Hassan and Rahman, 2012a).

One district one industry (SDSI) market intervention expansion

Satu Daerah Satu Industri (SDSI), also known as the One District One Industry
program, was introduced to encourage local entrepreneurs to produce at least one or
 two products or services at the district level and to compete at the national and Hypermarket
international level (Johor State Federal Development Department, 2008). Through retailing
on-going training, guidance and financial support, the program assists in developing
the overall local products and services in the market (Sarawak Economic Development development
Corporation, 2011). As a public-private-partnership approach, the hypermarket
channel is a platform for all new local entrepreneurs to introduce new products and
services to the market through this program. There is also an opportunity to share 591
experiences with participating hypermarket players, such as Mydin, Tesco and
Carrefour, concerning how to improvise the existing products and service quality as
well as enhancing the marketing strategy (Melaka International Trade Center Sdn Bhd,
2007). Since the majority of Malaysians purchase basic necessities and household
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products at hypermarkets, this SDSI program is expected to assist local entrepreneurs

to create brand awareness for potential consumers through the hypermarket channel
and generate an impact on brand momentum. On the other hand, it becomes new
sources of supply for the participating hypermarkets.

Recommendation and conclusion

Hypermarket retailing is highly accepted by Malaysian consumers as the main channel
to purchase basic household necessities. In general, the development of hypermarkets
has been far more aggressive than supermarkets and shopping malls. This offers
plenty of room to work on definition. It can also be expected that the definitions for
supermarket and shopping mall will be adequately explained through other research to
prevent an overlap of definitions and confusion among the retailing concepts. Moving
forward, it is expected that hypermarket retailing in Malaysia will continuously
develop with more innovative ideas through collaboration between practitioners and
researchers with the consensus of consumers.
Retailers should delight and surprise consumers (Knee, 2002), and should limit
consumers sovereignty and persuade them to act in particular ways (Esbjerg and
Bech-Larsen, 2009). Instead of listening to what consumers need and desire, nowadays,
retailers tend to come out with new changes that influence consumers to adapt to the
modern retailing styles. Although the way hypermarkets manage the retail operations
should be according to the consumers preferences (Uusitalo, 2001), the successful
original ideas for retailing come from the retailer and not the consumer (Knee, 2002).
Thus, an innovative strategy is expected to boost the hypermarket brand momentum
(Hassan and Rahman, 2012c). In line with this, there should be more research
conducted to fill all existing gaps and discover potential paths for expansion of the
industry. However, the research outcome will only be fully useful if there is strong
collaboration with the practitioners who are interested in implementing new
innovative ideas.

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Corresponding author
Hasliza Hassan can be contacted at: hasliza.hassan@mmu.edu.my or liza.hassan@yahoo.com

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