"Hard to Maintain Stores"... Distribution Restructuring 'Trend' Also in Malaysia

Struggling Against Online Market Pressure
Leading Distributor GCH Retail
Down from 147 Stores in 2014 to 60
Attempts to Expand Convenience Stores and Reorganize

[Asia Economy Kuala Lumpur Hong Seong-ah, Guest Reporter] Offline stores are struggling amid changes in the distribution market, such as the rise of e-commerce. Southeast Asia, where online shopping has become active, is no exception.

On the 18th (local time), according to Malaysian local media such as Dineji Market, the country's retailer GCH Retail announced that after closing 13 stores last year, it will also withdraw all Giant stores in the East Malaysian regions of Sabah and Sarawak. Giant is a supermarket brand of GCH Retail.

GCH Retail is one of Malaysia's major distribution companies operating premium markets such as Jason Food Hall and Mercato, as well as Cold Storage, Giant Mart, and the health and beauty brand Guardian.

GCH Retail entered Malaysia by acquiring Giant in 1999, with Hong Kong retail company Dairy Farm owning 70% of its shares. In 2014, it expanded its stores to 147, becoming Malaysia's largest retailer, but after successive closures, it currently operates only 60 stores. The Giant stores in East Malaysia have been decided to be sold to another local distribution company.

The reason GCH chose to close and sell stores consecutively is that local offline stores are struggling to secure sales. According to Dairy Farm's 2018 annual report, the Malaysian hypermarket and supermarket market is in an "extremely challenging" state. In particular, the sharp decline in sales volume and high store maintenance costs have been decisive factors in losses. Consumer behavior has also changed, with small stores generating higher profits than large supermarkets.

GCH Retail plans to strengthen its premium product lines according to customer demand and replace East Malaysian stores, where consumption patterns differ, with distributors suitable for the local commercial districts. It also plans to expand small stores such as convenience stores nationwide in Malaysia to enhance competitiveness.

Especially in West Malaysia, where the capital Kuala Lumpur is located, GCH Retail is seeking change through various experiments rather than sales. The core strategy is to reduce large stores while expanding the convenience store business. In March last year, GCH Retail opened its first ShopSmart convenience store in Kuala Lumpur and is expanding mainly in the metropolitan area. ShopSmart attracted attention as the industry's first to open a fresh food section and a coffee bar. It also allows payment of various bills. GCH Retail has received government approval to increase ShopSmart stores to 500 by 2030 and is actively expanding its convenience store business.

Unlike East Malaysia, which chose sales, West Malaysian Giant stores focused on changing the atmosphere by reorganizing shelves and changing lighting. They increased the proportion of children's products and introduced a uniform price product zone. Also, as competition intensified among industries, some regions closed existing Cold Storage stores and reorganized them into the premium market Mercato. In the case of the Penang Mercato store, they expanded home meal replacement (HMR) and single-serving dishes and began selling premium products such as Wagyu for the first time in the region.

A GCH Retail official said, "We have always prioritized customer value with a long-term perspective when operating our business," adding, "Through this business restructuring, we will contribute to national development and increase customer satisfaction."

This content was produced with the assistance of AI translation services.