Asia Business

Malaysia gives help to struggling corner shops

Sathianathan Mariappan runs a convenience shop in the sleepy town of Banting in Selangor state.

His Marchel Enterprise mini-market is the only one in the neighbourhood of 1,000 people, but even he is facing stiff competition with three supermarkets within a kilometre from his store.

Big retailers often sell the same items at a cheaper price, says Mr Sathianathan.

"Their products may be $1 cheaper, so we can't beat them on price, because we have to survive somehow," he says.

The Malaysian government says there are some 50,000 of these small retail shops across the country.

Officials say many of them are in danger of closing.

"Every time a hypermarket is set up, 10 of these mom-and-pop shops disappear," says Ravindran Devagunam, head of the retail sector under the prime minister's economic transformation unit.

"From our economic standpoint, we cannot afford to do that," he says.

Boosting consumption

The government is looking to boost consumer spending in the coming decade, as US and European demand for Malaysia's cheap exports start to wane.

According to the government, domestic consumption accounted for 54% of the economy in 2009.

That is why it has launched a new programme to help small retailers like Mr Sathianathan compete.

He was given a loan of RM60,000 ($20,110; £12,350) to modernise his store that can be paid back over a 15-year period.

That's just enough money to apply a fresh coat of paint on the walls, install new flooring, ceiling fans, lights and shelves - basic touch-ups needed to mirror the ease of shopping at big supermarkets.

Before the makeover, Mr Sathianathan's shop had concrete floors and was dimly lit.

He described his store as "messy", with frequent complaints from customers that it was too dirty.

Image caption Sathianathan Mariappan is a convenience store owner

The front counter, where he used to keep the store's cash flow loose in a plastic bag, is replaced with a new checkout machine.

It helps Mr Sathianathan know when he needs to reorder new stock before it runs out.

Better business

He says these small changes have made an impact and business has picked up.

"Percentage-wise, there has been a 10% boost in sales, and it has only been one month after the renovation," he says.

The clean storefront and neatly lined stock has not gone unnoticed by his loyal customers, like Sangara Nair Kuttapu and his family.

He says he prefers to do all of his shopping at small shops rather than at supermarkets.

"Now with the renovations, the store is tidier and it's easier to find things," says the 42-year-old.

Many neighbours in the area rely on shops like Mr Sathianathan's.

Ramayee Murugan, 63, lives behind the store and does not have a car to drive to the nearest supermarket.

"It's easier for me to shop here, because I can just walk here," she says.

Doing their part

Big retailers, such as Carrefour and Tesco, are also doing their part to keep small businesses alive.

The government has asked them to play a central role in boosting domestic demand and drive economic growth.

Some hypermarkets are now making their stock available to small retailers at trade prices.

The hope is that this will give consumers, especially in rural areas, more choice at a cheaper price.

Image caption Supermarkets have been asked to help Malaysia's small retailers

This is about driving consumption, says Low Ngai Yuen, marketing manager for Carrefour Malaysia and Singapore.

We offer small shops our best-selling products, so we know it will generate revenue for them, and this in turn will help out big retailers too, she says.

"If the local economy is thriving, then it's also good for our business," says Ms Low.

The government aims to modernise 5,000 small shops over the next 10 years, creating an estimated 50,000 additional jobs.

Some storeowners say they have had to hire more workers and expand to keep up with increased business.

It's these success stories that drew Sivakumar Govindasamon, 38, to finally apply for the government loan to renovate his store, the Nivetaa Mini Mart.

He has always wanted to spruce up his shop, but never had the money to do it until now. Mr Sivakumar had to close his business for a week for the renovation, but he says it was worth it as he looks at his two employees re-stocking the newly built shelves.

Mr Sivakumar's investment is timely. In two years, there will be hypermarkets opening up near his neighbourhood.

The question remains whether there will be enough money to be made for both the big and small retailers to survive, side by side.

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