SUPERMARKET BATTLE HEATS UP

JOSEPHINE BOW

KUALA LUMPUR, Malaysia (FNS) -- The supermarket battle in this fast-developing Southeast Asian nation is about to intensify. For one thing, local supermarkets now have new competition from outsiders. Among recent entrants are Dutch cash-and-carry operator Makro and Singapore leader NTUC FairPrice, both of whom opened first-time outlets here last year.

Meanwhile, traditional open-air markets are still strong competitors to supermarkets.

After first appearing on the scene in the 1970s, Malaysian supermarkets began gaining momentum in the 1980s. But the field is far more crowded today, at a time when the country is boasting a solid 8% growth rate, a per capita income topping $3,000 and a burgeoning middle class.

Today, supermarket industry leader Parkson Corp. operates a network of four Parkson Grand superstores and 25 smaller Parkson Ria outlets. Annual sales volume is more than $18 million. But its supremacy is being challenged. In traffic-congested metropolitan Kuala Lumpur, Japanese department store operators Yaohan, Isetan and Sogo have all opened obligatory basement supermarkets, each one bigger, brighter and better stocked than the last.

With the downtown area saturated, foreign and local supermarket operators alike are looking to the suburbs and secondary cities. Japanese Jusco already has four stores and plans to invest another $90 million for six more outlets over the next three years.

Singapore's NTUC FairPrice, already getting much of its daily produce from Malaysian farms, hopes to expand its retail program here, too, beginning with its flagship outlet in Ampang Point Shopping Center, one of the capital's newly touted suburban shopping areas.

Other players remain convinced about the growth potential. An outlet for French hypermarket Carrefour in another middle-class suburb is set to open in two years, for example.

But after a quick check at the paltry yet often pricey fresh produce offerings in even the best stocked of supermarkets, it looks like official "wet markets" found in every neighborhood, and unofficial street vendors, will still be around for some time.

"Fruit and vegetables at traditional markets are always fresher, far cheaper and the choice is much better," said Geraldine Beh, a local retail manager. With so many culinary schools to satisfy, it's also difficult for supermarkets to stock all-comprehensive cooking supplies. Finally, many Malaysian women remain primarily housewives and still have time to shop.

"Most of our customers are working women," said the manager of a downtown Parkson Grand. "They will buy everything they need -- produce, dry goods, cleaning supplies -- but can still only take what they can carry in two hands."

Parkson is readying for the shake-up. A recent "six for six" promotion encouraging lower-priced bulk buying tested local readiness for wholesale buying. A projected central distribution system will alleviate traffic congestion and streamline logistics for the 10,000 stocked items that are currently delivered separately to each outlet.

Although inventory management is still manual, about 90% of Parkson's lines are already bar-coded and $2 million has recently been invested in a point-of-sale computer system. To improve economies of scale and overall turnover, $60 million is earmarked for expansion. Eight new stores are scheduled to be built over the next two years, doubling the company's current 1 million square feet of floor space.