Food Retailing in Malaysia: a Study of Supermarket Use in Peninsular Malaysia
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FOOD RETAILING IN MALAYSIA: A STUDY OF SUPERMARKET USE IN PENINSULAR MALAYSIA A THESIS SUBMITTED IN FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY IN THE DEPARTMENT OF BUSINESS AND MANAGEMENT, UNIVERS)TY OF STIRLING BY KHALIFAH BIN OTHMAN NOVEMBER 1987 ABSTRACT FOOD RETAILING IN MALAYSIA: A STUDY OF SUPERMARKET USE IN PENINSULAR MALAYSIA. This study examines the extent and patterns of supermarket use in Kuala Lumpur, the capital city of Malaysia and the town of Alor Star, a small town in the northern part of Peninsular Malaysia. A total of 436 household heads were interviewed for the study. Although the supermarket was first introduced in Malaysia in 1964, the study revealed that the adoption of supermarkets among respondents was still low. Even in the high income residential areas, the percentage of respondents that could be classified as heavy users was less than 50%. However, the percentage of heavy users was found to be significantly higher in high and middle income residential areas than that of low income residential areas. The study aJso showed that there were different patterns of food shopping behaviour among respondents. Perishable food is commonly bought from wet-markets, staple food is normally purchased from neighbourhood grocery stores while processed food is mainly bought from supermarkets. Log-linear analysis showed that car-ownership has the strongest influence on the extent of supermarket use. Among the three major ethnic groups the Chinese were found to have the strongest tendency to patronize supermarkets. On the other hand the Malays -ii- were found to have the lowest tendency to become heavy supermarket users. The results of this study could be seen as useful, first, to supermarket operators in Malaysia in planning their marketing strategies. Consumer profiles associated with heavy supermarket users may be used as a basis for market segmentation. Secondly, it is useful to the government in its modernisation process of retail outlets, particularly in smaller towns, which should proceed slowly and with care. The urgent need of the food retail system today is the improvement and modernisation of the present wet-market system, where fresh food should be sold efficiently in a more hygienic environment. -iii- ACKNOWLEDGEMENTS First and foremost I would like to express my sincere and utmost gratitude to my supervisor, Professor John Dawson, without whose guidance and encouragements would not have made the completion of this project possible. I wish also to thank the staff members of the Department of Business and Management, University of Stirling for their valuable advice. Particularly to Dr. Leigh Sparks, who had helped me to review my questionnaire; to Mr Mark Gabbot and, from the Computer Advisory Service, Mr. Simon Booth for their invaluable guidance in the sorting out of the Log-linear models. May I also take this opportunity to thank the Institut Teknologi Mara and the Malaysian Public Services Department for jointly sponsoring my study at the Stirling University. I am most grateful for their financial support. To the students and lecturers of Institut Teknologi Mara at Shah Alam and Penis Branch who have diligently helped me to carry out the survey, the words "Thank you" are never enough. I also wish to thank Encik Muhamad Embung of Dewan Bandaraya Kuala Lumpur, and Encik Ahmad Abdullah of Majlis Perbandaran Alor Star for their assistance in providing the sample frames for the consumer survey. Lastly, but by no means the least, my gratitude goes to my wife, Rufiah and my four children, Azrin, Fikri, Nani and Zuri for their understanding and emotional support throughout the course of my project. -iv- TABLE OF CONTENTS Page Abstract.................. ................ 3. Acknowledgement s . .............. ......... 3. 3. i_ Table of Contents.........................................iv List of Tables ........ Vii List of Figures ......................................... X CHAPTER 1: PROBLEM STATEMENT AND RESEARCHOBJECTIVES • ............................1 Introduction...............................1 The Problem...... ............. 3 Research Objectives .................6 SignificanceoftheStudy ..................8 LimitationsoftheStudy..................13 Supermarket: Definition ...................14 Development of Supermarkets ...............1 6 Factors Leading to the Growth of Supermarkets ........................20 Summary.. .................................25 CHAPTER2:CONCEPTUALFRAMEWORK...........................28 Introduction . ................. 2 8 Institutional Change in Retailing .........29 WheelofRetailing ...................29 Retail Life Cycle....................32 Retail Accordion.....................34 Dialectic Process ...................37 Natural Selection in Retailing .......39 Three Wheels of Retailing............40 Retailing Environment ................43 Store Choice ........................56 Store Image..........................58 Store Attributes and Store Image.....60 Summary...................................65 CHAPTER 3: RESEARCH METHODOLOGY ..........................67 Introduction..............................6 7 • Research Hypothesis .......................67 Research Design........69 • Consumer Survey...........................7 5 Sampling Procedure...................77 Survey Methods .......................81 Sample Size..........................82 Sample Frame .........................85 Pilot Survey.........................87 The Fieldwork......88 Supermarket Survey .......................88 Data Analysis .........89 Problems and Difficulties .................90 Summary...........92 -v- CHAPTER4:THEMALAYSIANSETTING.93 Introduction..............................93 ABrief History ......................95 Demographic Structure ................96 Economic Background ..................99 Urban Growth ........................1 06 Future Economic Outlook.............107 Malaysian Retail Scene ...................111 Types of Retail Institutions ........114 Traditional Retail Outlets .....11 4 Modern Retail Outlets ..........123 Malaysian Retail Trend ..................1 25 Summary. • .............................134 CHAPTER 5: SUPERMARKET DEVELOPMENT IN PENINSULARMALAYSIA...........................137 Introduction • • • ..........................1 3 7 Growth of Supermarkets in Peninsular Malaysia ......................1 38 Joint Venture Supermarket Companies ......145 Factors Leading to the Growth of Supermarket in Malaysia. .......148 Characteristics of Malaysian Supermarkets ...................152 Summary..................................1 60 CHAPTER 6: RESEARCH FINDINGS (1) .........................162 Introduction.............................1 62 Descriptionof Samples ...................162 Income ..............................162 Income and Residential Areas ........167 IncomeandEthnicGroup.............172 Ethnic Group and Residential Areas..173 Ethnic Group and Occupation .........175 Education...........................1 7 5 Income Level and Family Size........179 Income Level and Car-Owneship.......180 Income Level and Credit Facilities..182 Income Level and Working Wife.......183 Income Level and Opinions on Prices at Supermarkets ...........184 Food Retail Outlets ...................... 1 86 Retail Outlets and Household products ..................1 88 Conclusions ..............................201 CHAPTER 7: RESEARCH FINDINGS (2) .........................203 In t r odu c t ion.............................2 0 3 Basic Patterns of Supermarket Use ........203 Use of Supermarkets .................203 Supermarket Use and Income ..........211 Supermarket Use and Residential Areas ...................216 Supermarket Use and Ethnic Group....221 Supermarket Use and Occupation......225 -vi- Supermarket Use and Education.......228 Supermarket Use and Working Wife....230 Supermarket Use and Car-Ownership.. .232 Opinions on Supermarkets.. ..........236 Functional Relationships between Supermarket Use and Socio-Economic Variables .................240 Logit Models ............241 Hypothesized Relationships ......241 Conclusions ..............................255 CHAPTER8:SUMMARYANDCONCLtJ5ION5 .......................259 Research Implications ....................268 Suggestions for Further Research .........269 BIBLIOGRAPHY........ ............. ........................ 272 APPENDIXES: Appendix 1: Household Survey 282 Questionnaire . ...... 2 9 1 Appendix 2: Supermarket Survey Quest i o nna i r e ............................2 9 2 -vii-- LIST OF TABLES Table Page 2.01 Illustration of Retail Life Cycles ..................35 2.02 Store Attributes for Department Stores and Grocery Stores...... .......63 2.03 37Factors:Howtheystackup 2 ......................64 4.01 Malaysia: Population Size and Age Structure 1 980-1 990. ........................... 97 4.02 Population Distribution between Rural and UrbanArea-byEthnicGroup ........................100 4.03 Basic Indicators ...................................102 4.04 Composition of Malaysian Exports by Value ..........103 4.05 Malaysia: Balance of Payments ......................110 4.06 Number of Hawkers in Selected Asian Cities .........117 4.07 Urban Retail Statistics in Peninsular Malaysia: 1 976-1 980 .....................1 26 4.08 Principal Retail Statistics - Peninsular Malaysia 1980: Types of Retail Institutions byLegal Status ....................................128 4.09 Types of Retail Establishments .....................131 4.10 Principal Statistics of Retail Establishments in Peninsular Malaysia by States ...................133