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Tesco confident on Malaysia online sales

May 01. 2017
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TESCO Malaysia’s online sales are expected to improve this year, in line with Malaysia’s online shopping growth of 18 per cent a year, said Tesco Stores (Malaysia) CEO Paul Ritchie.

Since 2014, Tesco Malaysia’s online sales have amounted to 179 million ringgit (Bt1.4 billion) , with more than a million orders.

As of 2016, online sales contributed only 2 per cent to the company’s total turnover.

“Generally, online grocery shopping is growing at a relatively slow pace, as Malaysians still prefer to shop at traditional markets or grocery stores,” Ritchie said at Star Media Group’s Power Talks Business Series session on Saturday.

“Consumers still want the physical aspect of grocery shopping.

“They want to touch, see, smell, and pick groceries by hand.”

More than 250 people attended the talk, which focused on the challenges and trends of the grocery business and how Tesco is positioning itself.

Tesco was the first grocery chain in Malaysia to introduce online grocery shopping two years ago.

To date, its delivery coverage has grown to reach 50 per cent of the nationwide population.

Tesco Malaysia has also partnered with Lazada and Happy Grocer to extend its online shopping services.

Despite the demand for physical retail stores, Ritchie said that large hypermarkets were no longer feasible due to the intensifying competition in the retail landscape.

Furthermore, he observed that grocery stores were downsizing.

Ritchie said that grocery stores larger than 60,000 square metres are challenging to sustain.

“Instead, the optimal solution, which we are also implementing in some of our stores, is to use space better by offering a wider and improved range of products in a smaller floor space,” he said.

This year, Tesco Malaysia will be opening two stores and four to six next-generation stores.

Tesco’s next generation stores are defined as smaller outlets with a proportionally wider range of products.

Ritchie added that Tesco Malaysia’s objective is to make grocery shopping more convenient for its customers. The new generation stores would improve shoppers’ convenience by cutting down on the number of aisles.

On retail trends, Richie felt that there would be higher demand for fresh food as more people start to adopt healthy eating practices. “More people are consuming healthy food,” he said.

Ritchie began his career at Tesco sorting out trolleys in 1980; climbing up the ranks from trainee manager to store manager and later on, retail director.

Ritchie, who has 37 years of experience, in Britain and internationally, is responsible for developing and growing Tesco’s business in Malaysia.

He was appointed CEO of Tesco Malaysia in 2015, developing the next generation of hypermarkets, while entering the competitive online market.

He has since led Tesco Malaysia to be ranked the top retailer by Kantar Worldpanel in 2016. Prior to that, Ritchie was CEO of Tesco Retail and Property, which is based in Shanghai. In that city, he played a pivotal role in establishing the first store-based grocery home shopping service.


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