Strengths One of the Largest Players in Hypermarket Retail Industry

Strengths One of the Largest Players in Hypermarket Retail Industry According to some estimates which published in The Star Online (2010), Tesco enjoys a 30% market share of the Malaysian hypermarket industry by sales, followed by Giant (24%) and Jusco (22%). Giant grew substantially in markets mainly through the continued expansion of its hypermarket branches around Malaysia. As stated in Giants Official website (www.giant.com.my.), Giant was awarded the Top Retailer in Malaysia and Best of the Best in Asia Pacific Retailers Award for 2 consecutive years in 2007 and 2008. Giant has built a very strong retail brand, with a reputation of good value for consumers money and convenience because of a wide range of different products and services in one store. Diagram X: Market share of hypermarkets in Malaysia Sources from http://biz.thestar.com.my/news/story.asp?file=/2010/9/3/business/6973298sec=business Low Price Leader Pricing a product or service properly can mean the difference between success and failure for a company especially in these challenging economic times.  In Malaysia, Giant is synonymous with its powerful slogan which says Everyday Low Prices, Big Variety and Great Value. There is no doubt that the slogan successfully publicizes the companys mission to the public where it offers a wide variety of products at the lowest possible price (Giant, 2010). The price comparison between Giant and its competitors is frequently advertised in the newspaper for public references (refer Appendix X). It is clear that products that sold in Giant are cheaper compared to other stores. This has also resulted that Giant is still the low price leader in Malaysia. High Brand Value of House Brand Products Bernard Chia, Merchandise Director for Fresh Grocery at Giant Hypermarket Singapore, says: Consumers have started to be more receptive of house brands as retailers are continuously educating them on the good quality and lower prices of their house brands. Consumers are seeing greater value in house brands. And with the economic downturn, many are turning to house brands for instant savings. (Source: Nicole Liang, 2009, from Food Export International) Fulfilling customer needs and wants to gain customers satisfaction are vital to companys existence. Giant has been offering its house brand range since the beginning when its first store opened in June 2000 (Nicole Liang, 2009). The Giant brand comes with unique yellow and green packaging that is instantly recognizable and differentiates with other brands. Every product is backed by a quality guarantee and is always priced competitively in the category (Giant, 2010). Examples: The Giant brand products packaging Sources from http://www.giant.com.my/ourbrand/brand/2 With the intention of keeping its high brand value in the market, Giant goes as far as to introduce the Satisfaction Guaranteed or Your Money Back scheme, to further emphasize its safe food quality (Nicole Liang, 2009). Customers are welcome to return and get a refund for the purchased products if they have found any Giant brand product not up to their expectations. Great nationwide growth Giant always understands the market taste and responsive to customer needs where having over 85 branches spread throughout all the states in Malaysia. Additionally, most of the branches are strategically and conveniently located in residential areas, regardless of new or old areas. Through its nationwide expansion, Giant managed to capture more market share compared to its competitor like Jusco which mostly focus on suburban residential areas and tapping the middle to high income group consumers (Jusco, 2009, pg15). Picture X: Giant Stores Location Sources from http://www.giant.com.my/location The Star Online, 2010, Sale of Carrefour may interest Competition Commission, Retrieved 15 September 2010, from http://biz.thestar.com.my/news/story.asp?file=/2010/9/3/business/6973298sec=business Nicole Liang, 2009, Supermarket chains: House brands are here to stay, Retrieved 15 September 2010, from http://www.foodexportonline.com/html/oct09/privatelabels_supermarket-chains.html Jusco, 2009, pg15, Annual Report, Retrieved 15 September 2010, from http://www.jusco.com.my/juscohome/html/aeon_v2/oa/bursa/AEON_AnnualReport2009.pdf?PHPSESSID=l24l6cspr34mn9j0003bggme04 C:UsersLydiaDesktop20090524-2giant-vs-tesco2.jpg Weaknesses High Marketing Cost One of the Giants weaknesses is their relatively high marketing cost. Giant spends quite a lot of money for marketing purposes. To let more people to know more about the on-going promotions in Giant, Giant places their advertisements on local newspaper such as The Star, The Sun and other news press. Such advertisements are usually published on the weekend newspaper. Placing advertisement on newspaper can be quite costly. Besides, Giant prints out their promotion catalogue. Printing out the catalogue can be quite costly. Giant has different promotion catalogues for different places. For example, promotion catalogue for Sarawak Special, Malacca Special or even Putra Heights Special. This promotion catalogue is often distributed from house to house. This requires distribution fees as manpower is needed to distribute the catalogue. Recently, Giant Hypermarket also puts on advertisement on television. All these contribute to the high marketing cost. No loyalty and membership program Giant has no loyalty and membership program. Loyalty and membership is very important in order to create customer loyalty. This can be parts of their customer retention plan. It is said that retaining customers is much easier than getting a new one (Marzahn, 1996). By offering rewards to customers, they will most likely to make repurchasing from them. Compared to other hypermarket that has their own loyalty and membership program, customers are usually more attracted to them. While the economy is still recovering from the previous global recession, customers are stricter in budgeting and they are always attracted to rewards and privileges. They will want to get something in return from their purchasing. The ability to gain some rewards such as discount, cash voucher and cash rebate makes their purchase much more worthwhile. Poor pricing method Giant hypermarket has poor pricing method compared to other hypermarkets. Whenever promotions are conducted, the prices of the products will be different. The price list sometimes is not updated. Whenever the cashier scans the bar code, the price will be different from the displayed price. This sometimes causes customers to pay more than the actual price. This will create dissatisfaction to customers if they find out they have paid extra for the goods. The price list is hand written on a piece of yellow board. This price list is placed together with the products. The price list can be wrongly placed. This causes confusion to the customers. They are not sure the price of the products they wanted to buy. Besides, customers find it difficult to find a price reader to check for the price. The price readers which are wrongly placed makes it hidden from the customers. Figure: Hand written price list at Giant (Giant- About Us, 2010) Lack of Information Technology Utilization Giant website is not fully utilized Giant Hypermarket is still lacking in terms of utilization of information technology. Their own Giant website is not fully utilized. The content of the website is mostly promotions and the contest. The website is only for customers for viewing. To fully utilize the website, they can more features into their website. They can add in the products they sell in Giant and by categorizing them, it will be easier for customers to find the products they want. The website later can be enhanced into an e-commerce site where Giant can sell their products online. Thus, instead of having to go to the physical store, customers will be able to do online shopping. They can add in the wish list and shopping bag for customers in the website. Besides, in the website, there is no e- newsletter which customers can subscribe to. E-newsletter helps Debenhams to keep their existing and potential customers in touch with the latest offering such as promotions in store as well as news and events. This improves the sites traffic as well as building and expanding their customer database. Without this, customers will be sometimes being oblivious on the promotions as well as the happenings in Giant. Therefore, newsletter features should be added into Giants website. Customers can sign up for the newsletter. This consequently further improves Giants relationship with the existing customers. No Electronic Customer Relationship Management (E-CRM) Keeping in touch with customers and understanding what they think about Giant is paramount to achieve Giants goals. Customers feedback is an important component which allows customers to voice out their view or share their shopping experience which doing their shopping at Giant. Customer feedback is vital to Giants continuous improvement. Regardless of compliments or criticisms, customer feedback actually helps Giant to understand their customers need and consequently enhances their services. Giant practices traditional customer relationship management. Whenever Giant customers have any complaint, they have to approach the staff directly. Sometimes, face-to-face talk can lead to misunderstandings. Thus, Giant should utilize their website to provide electronic customer relationship management (E-CRM) for their customers. The website should allow the members to register and through login into Giant website, they are able to give their feedbacks online. Whenever they have any complaints, they can submit their complaints online. Besides, customers should be encouraged to give ratings and write product reviews after their purchases in Giants website. This helps other potential customers to make better purchase decision and this indirectly drives the product sales. Through the E-CRM, Giant will be able to know how the customers really felt towards Giant. Through those opinions, Giant will be able to take the initiatives to improve their services. Threats Competition The threats experienced by Giant are that there is stiff competition within the industry, there are other major supermarket chains, such as Tesco, Carrefour, Jusco, etc. in Malaysia that is competing alongside with Giant in the retail industry. Major example are, If competitors offers new innovative product and services why not Giant do the same thing too which more creative. Competitors might find new ways to enhance sales or production or they have superior access to cheaper raw materials. Giant famously losing market share  [1]  to particularly other well-known brand names like Tesco, Jusco and Carrefour in price competition as customers can find better pricing at other hypermarkets like Carrefour. Political New political issues in the future that might have negative impact on their business, for example, no price hike despite rising import costs, ban on construction, etc. Ban on hypermarket construction Another political issue that had negative impact on Giant business development was the rules implemented back in 2003  [2]  . The new rules banned any further development or expansion of hypermarkets in Klang Valley, including Kuala Lumpur and other states such as Johor and Penang in order to give the business opportunities for small businesses. This new rule was introduced because the three regions previously mentioned were already saturated with hypermarkets. With this rule, Giant could not expand their coverage to these areas. Fortunately, this rule is no longer in place and Giant does have few branches open in those areas. In fact, for example, to date Giant has 8 stores just in Kuala Lumpur itself  [3]  . House brand issues Another threat is that although their customers know their house brand, but it is not their customers preferable brand, their customer still prefers other established brand name products compared to theirs. Also, Giant shows that initially Bruneian cannot accept Giant due to numerous reasons, this can be scary for them because if their customers still cannot accept them for a long-term period, thus less people will shop in their store and sales will decreases. à ¢Ã¢â€š ¬Ã‚ ¨ Increase market share Strategies that would be appropriate for Giant would be to continue strategy to open more branches to increase market share and to eliminate competition. Besides, to increase marketing effort to gain customer awareness on their house brand products so that it can be a customer preferable brand in the future. In addition, Giant should add more variety on all the existing product line in their supermarkets, because this way, it will attract more customers as they will enable to buy everything under one roof, therefore make Giant their favorite and preferable shopping place. Lastly, Social or economic issues: changes on demographic trend can have significant impact on consumer spending. Risk of another economic downturn in Malaysia will have negative effects on their sales growth.