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#39 Food & Grocery: Just An Attractive Or Future-Proof Market?

Updated: Feb 17, 2022

Food and groceries have long been among the largest industries in the world. This is because over the past decades it has been a place to supply food to the people. But the question is, is the food and grocery industry only attractive because of its lucrative returns, or is it an industry that survives for a long time?

First impression about the Supermarket.

When talking about supermarkets, surely you can imagine a large store filled with various types of necessities where you just have to pick up the goods, put them in the cart and go straight to the checkout counter. Nowadays there is even an automatic payment counter where you only need to scan the barcode of the goods and continue to make payments using credit or debit cards. So convenient!

But did you know about how the people of the past around the 1910s made purchases of their necessities?

History of the Establishment of Supermarkets.

This is the beginning of the history of opening grocery stores. In the old days, customers would usually wait in front of the counter and only have to ask the items they needed to the merchant who was behind the counter. Then, an assistant will help to pick up the items that the customer wants. Often the items needed back then were not readily packaged like items are nowadays. Therefore, the assistant needs to measure and pack the goods exactly as requested by the customer. At that time, buying necessities took quite a long time because the journey to buy goods did not involve a shop, but involved several other shops such as greengrocer, butcher, bakery, fishmonger, and dry goods store. Dairy products are usually delivered by the milkman himself.

Figures on the Establishment of Supermarkets.

It was such a situation that prompted some young entrepreneurs at the time to embark on a start to the opening of supermarkets. Among the figures is Vincent Astor who opened Astor Market in 1915, Clarence Saunders who opened Piggly Wiggly stores in 1916, Michael J. Cullen with the opening of King Kullen Grocery in 1930, and several other names that are still in discussion about who the originator is in this industry.

However, the names of the starters to the grocery industry are not among the big names in the market today. This is because many retail-based companies have been established in line with modernity today. But there are still one or two retail companies that are the origin of this industry and still survive to this day, among them is The Kroger Company.

More interestingly, The Kroger Company managed to rank first in the Top 10 Supermarket Companies in 2019 with total sales of $119.70 billion. They also managed to beat two competing companies that are increasingly gaining buyer response, which is Walmart and (includes Whole Foods market) in the Top 10 Retail Companies List in 2019.

What about the grocery market in Malaysia?

According to a statement issued by Euromonitor International which provides information related to market research, data, and analysis, stated that the supermarket brand with the name Jaya Grocer under the company Trendcell Sdn Bhd has become the leading supermarket in the Malaysia grocery market by 2020. However, some other supermarkets such as Tesco, AEON, Giant, Ben’s Independent Grocer (BIG), Econsave, and Mydin are among the popular supermarkets and still have a place among shoppers in Malaysia. As of 2020, there are about 40 supermarket chains in Malaysia and most of them are located in the Malaysian capital, Kuala Lumpur.

Since 2020 when the whole world experienced the Covid19 pandemic situation, it has indirectly changed some of the marketing strategies of this grocery company. Among them is that they started using the concept of e-commerce in response to emerging demand trends nowadays. Most supermarkets in Malaysia are starting to use omnichannel strategies to provide the best buying services for their loyal shoppers. This strategy must have received a response among buyers after Malaysia had to undergo a movement control order (MCO) for a long time. And through a report released by Euromonitor International stated that Aeon Co (M) Bhd has topped the list as a supermarket that has successfully utilized this online shopping service and successfully making great strides due to pressure on delivery slots in 2020.

Just an attractive or future-proof market?

Turning to the main topic for this article, have you ever wondered why more and more companies out there are trying to enter the grocery market? This answer will necessarily have 2 answer choices or maybe even more.

The 2 answers are, the first answer is because the grocery market is one of the very attractive markets and the second answer is because it is a future-proot market. So which one is the best answer? Perhaps both answers apply to companies that are beginning to be interested in entering this market. Let's find out about this more through this article specialized in the grocery market in Malaysia. And remember, this is an industry that investors should keep their eyes on!

What is a grocery market?

Let's take a look at what the grocery market is as a whole. First, what is a grocery market? The groceries and food market is a market that includes all retail sales such as food products whether packaged or not, beverages including alcoholic or non -alcoholic, tobacco, and household products. The four categories mentioned above (food, beverages, tobacco, household goods) are groceries that will be traded in any supermarket, whether small or large-sized supermarkets. The four categories also have their sales percentage data so that sellers can know which items are the main needs of customers.

Malaysia grocery market analysis.

According to a report released in 2020, the grocery and food market has recorded a large percentage of the food category at 82.8%. This is not a strange thing because wherever the report is issued, the food category is ahead of other categories. After all, food is the main source for humans to meet their basic needs. The second category is tobacco. This is very surprising because it is not the beverages that are in second place. Tobacco recorded 8.2% while beverages were in third place by 7.3%.

Although the percentage of purchases is not as high as the percentage recorded in the food category, both have their markets, especially tobacco. In Malaysia, until 2019 it was recorded that 49% of adult males in the country smoked, exceeding rates in developed countries such as Britain, the United States, and Sweden. So it is not surprising if tobacco ranks second. And the last one was household goods which accounted for only 1.7%.

As for the overall market value of groceries and food, it has recorded an increase of 5% in 2020 with a value of $ 52,677.7 million. And then over 5 years, from 2016 to 2020, the compound annual growth rate is 8.7%. The increase in the market rate for groceries and food in Malaysia in 2020 is due to the Covid19 pandemic.

Malaysia's First Grocery Mobile Commerce App.

You may know some company names such as Mydin which is the first Halal retail chain grocery in Malaysia, Econsave, and Servay Hypermarket which is also a Malaysian -based retail grocery company that each has a network of branches throughout the country. But, did you know the first Malaysian company to develop an online grocery app?

The first Malaysian company to develop an online grocery app was not from the company names mentioned above but it was developed by a local company, Jocom International Holdings SDN. BHD. (Jocom) by its subsidiaries company Jocom MShopping SDN. BHD. Jocom has also been recognized as the First Grocery Mobile Commerce Application in Malaysia by the Malaysia Book of Records (MBOR) in 2017!

Jocom is an app developed by revolutionizing the way shoppers buy groceries and shop online via smartphones. Carrying the tagline 'Just Order Conveniently On Mobile', Jocom tries to present its attractive side which is quite different from the existing online grocery app to attract local customers where Jocom provides integrated solutions that protect consumers and vendors.

Jocom also provides a special slot for vendors who want to work with Jocom to promote their products by providing features such as a flexible pricing system, products will be displayed on Jocom's social media platform, products will be promoted with selected promotional methods such as signage and others. Those are features that are not used by any other online grocery app. The features have indirectly opened a new gateway to conduct business easily on the app where it will help promote merchants through product listings on the Jocom app.

As of 2021, Jocom has amassed a whopping three million users, 500 vendors, and 15,000 SKUs. The increase in the percentage of consumption of buying groceries online in Malaysia has affected Jocom's sales revenue which earned around US$40 million between 2015 to 2020. The outbreak of the Covid19 pandemic as well as the implementation of movement control orders (MCOs) have boosted Jocom’s sales by 30% even as the world is still struggling with economic downturns and supply chain disruptions.

Malaysia's e-commerce market has tripled to more than US$3 billion in 2019 since 2015. According to the Malaysia Economic and Strategic Outlook Forum 2021, it is expected to reach up to US$11 billion in 2025. And this gives a good sign for Jocom for prospects. Currently, Jocom has already started its expansion to China by channeling the sale of Malaysian products to Chinese consumers.

Final thought.

So if you are an investor or an entrepreneur, what is your view on the grocery market in Malaysia? Is it an industry that has a wide and attractive market or maybe it is a market that will survive for a long time? It's up to you. If the advantages and disadvantages are evaluated, both questions apply to the grocery market in Malaysia.

When this market goes up and down due to changes in the situation, it provides a new challenge and experience to investors as well as a grocery supplier company, and of course, it is very exciting and attractive! Meanwhile, since the establishment of the first supermarket until now, it has also proved that the grocery market is indeed a future-proof market and even spread widely throughout the world as well as one of the largest markets in the world.

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