Runcit Malaysia Magazine Issue 5 Tinjauan Runcit

Runcit Malaysia Officially Launched! On 28 March 2006, the Grand Ballroom of the Glenmarie Holiday Inn in Shah Alam was buzzing with excitement over the official launch of a unique publication. Leading FMCG manufacturers and marketers caught up with representatives from our other programme partners, advertising agencies, the media and members of the traditional trade in

a rare get-together. There was even a mock sundry shop in the foyer and Retail Advertising Panels lined the road leading to the hotel. It was a historic day for all of us, for it was the official launch of Runcit Media, the country’s first business improvement magazine for the traditional retail trade. And what a success it turned out to be! The milestone event was officiated by the Deputy Minister of Domestic Trade and Consumer Affairs, YB Datuk S. Veerasingam.

To those who had taken the time to share that special occasion with us, a big heartfelt ‘thank you’ from us at Runcit Malaysia. Your presence made the launch even more meaningful. The event proved to be a real eye-opener for many manufacturers and marketers. After all, this was the first time the importance of the traditional retail trade had been given so much prominence. Sure, most of us know that kedai runcit, mini-markets and Chinese medical halls are facing stiff competition from bigger and modern hypermarkets and supermarkets. However, until the first issue of Runcit Malaysia hit the road, there had not been any real and concerted effort to help improve and modernise the traditional retail trade. During the launch, there was a video presentation depicting the current scenario facing the traditional retail trade. Interviews with small retailers revealed the many problems and challenges they faced and they made pleas to manufacturers and marketers to help the sector survive. Our programme partners, too, shared their views on how important the traditional trade is to the retail industry and they pledged to help in anyway they could through their active participation in Runcit Malaysia.

In his speech, the Deputy Minister stressed that the official launch of Runcit Malaysia was a significant event as it reflected the Government’s commitment to promote and ensure the growth and sustainability of the traditional retail trade. That is also our goal, our commitment. However, we can only succeed through the active participation of manufacturers and marketers in sharing product and category information, retail know-how and best practices with us. Runcit Malaysia is endorsed by the Ministry of Domestic Trade and Consumer Affairs, and enjoys the support of leading marketers and manufactures like Boh Plantations, Dumex, Johnson & Johnson, Lam Soon, Malaysia Milk, Mamee, Nestle, Procter & Gamble, Southern Lion and Tetra Pak. Leading research firm, AC Nielsen, is an important source of market information for us, while World of Feng Shui contributes non-business-related content. As we continue this worthwhile and important mission to revitalise the traditional trade, we hope more manufactures and marketers will lend us their support. There is always a need for good editorial content for the magazine and nobody can provide this better than those in the industry itself. So, work with us. Share your knowledge through Runcit Malaysia. Together, we can rebuild the traditional retail trade into the dynamic sector it once was. All of us want the sector to not only survive, but to flourish. ALL THE BEST!

WILLIAM KHOO Executive Director,

Infovantage Sdn Bhd william.khoo@runcit.com.my

Runcit Malaysia Magazine Issue 5 Rencana Runcit

“Surviving 2006”

Runcit Malaysia takes the pulse of traditional retail businesses to check how they’ve been faring since the petrol price hikes.

You could almost hear the country groan on April 26 when the Government announced the third petrol price increase in just six months! I know I cringed at the thought of having to spend an additional RM15 on my weekly petrol bill; it would now cost me about RM60 per month just to get from home to work each day! Since my take-home pay wasn’t about to increase, I’d have no choice but to “tighten the belt” and watch my spending. As I discovered soon after, other members of the Runcit Malaysia editorial team were equally taken aback by the news. William, a seasoned marketer, said: “Manufacturing and raw materials will become more costly and that’s likely to push up the prices of most things, including food and non-food sundry items.” Chow, a sales expert, added his bit: “When consumers’ disposable incomes are squeezed by the petrol pump, they will have no choice but to spend less. They’ll have to think twice before buying anything, especially non-essential, big-ticket items, such as home furniture and fixtures, home furnishing goods, household appliances as well as electrical and electronic goods.”

Elenie couldn’t help grumbling: “That’s exactly what I told my husband; he’s been eyeing a new home theatre system but, I guess, he’ll just have to think some more before buying it.” We laughed until Alan, a former newspaper editor, asked the burning question: “Hey, how’s all this going to affect our traditional retailers? Will their businesses suffer?” Everyone felt that the traditional trade would be adversely affected, just like every other business out there. However, it would be difficult to ascertain the degree, seeing how the retailers are so dispersed. It was then that we decided to commission Runcit Media Sdn Bhd to conduct a survey that eventually canvassed 447 traditional retailers between April 18-29, 2006. Amid all the negative talk abounding in the market, we found the results a little surprising and, yes, encouraging! Evidently, the majority of retailers surveyed indicated that they had not been badly affected. In fact, their response didn’t differ all that much from an earlier survey of 652 retailers by Runcit Media in March 2006. Our hunch was that the retailers were doing relatively well due to a combination of factors – the partnership support of the better suppliers, coupled with the retailers’ own initiatives to better manage their costs and cash flows. Here’s a more detailed look at the findings. Perceptions about the economy

In the March survey, 85% of the 652 traditional retailers indicated that their businesses would do better if the economy improved. So in April, we asked another 447 retailers how they thought the economy would turn out. We found that 39% thought it would be no different from 2005 while 7% actually felt that conditions would get better. On the other hand, 35% of retailers were more reserved and felt it was still too early to comment while 19% claimed that the economy had worsened. Frankly, we had expected to find more retailers predicting a tougher economic climate. After all, with so many months left to the end of the year, it’s hard to ignore all the uncertainties springing from major global

and domestic events (eg global petrol prices hitting record levels, concerns over Iran’s nuclear development activities, rising consumer prices in the US, rising domestic interest rates and inflation (that had doubled in 2005), and so on). Sales performance after the petrol price hikes Having noted that 19% of retailers were pessimistic about the 2006 economy, it was not unexpected that 15% of retailers (in both the March and April surveys) claimed they had been “seriously affected” by the petrol price hikes. About 55% of those affected in April reported drops in sales by 10% while a smaller number (27%) said sales had gone down by 11%-30%. We certainly empathised with these retailers who obviously faced tremendous difficulties in maintaining their business performance. The bigger picture, however, was more positive. The majority of retailers surveyed (79% in March and 67% in April) declared that the petrol price increases had only “somewhat affected sales”. Interestingly, the April survey also found 9% declaring that their businesses had even improved. Shoppers’ cues

Looking more closely at the April survey, we believe that the majority of retailers had taken both proactive and reactive action. They seemed to have kept close tabs on changes in the business environment as well as in consumers’ sentiments and shopping behaviours. At least, they could tell that consumers were feeling optimistic about the economy (23%). All the same, without a unanimous sense of which way consumers’ sentiments were actually leaning, the majority of retailers were not taking any chances and prudently decided to prepare for the worst, before it gets too late. After all, they couldn’t ignore the signs of consumers changing their shopping behaviours. They were now buying only the essentials (as reported by 76% of the retailers), buying in smaller quantities than before (72%), buying cheaper alternatives (68%), and buying smaller SKUs (41%). As a consequence, sales of many product categories (including those that are important to the traditional trade) had been affected to some degree.

A helping hand With their disposable incomes unchanged, consumers were obviously reacting to higher product prices which, according to all 447 retailers in April, had gone up, indeed.

Perhaps hampered by the escalating costs, some suppliers had decided to reduce the number of trade deals and promotions (according to 53% of the retailers). On a related note, 45% of retailers claimed that some suppliers had not offered any help to improve sales.

Thankfully, there were still suppliers who rallied to the retailers’ side and cooperated with them. They actually increased the number of trade deals and promotions (according to 46% of the retailers) and launched more SKUs and economy packs (52%). These were definitely welcomed moves, on the part of caring suppliers, to help cushion the impact of the petrol price increases while encouraging sales to the benefit of all parties – suppliers, retailers as well as consumers adjusting to their reduced spending power.

Personal initiative

As they say, no one can help you if you don’t help yourself. So, we were happy to note that the majority of retailers surveyed in April had also taken their own measures to protect their businesses. All these steps were in keeping with good business practice which could either make or break a retailer in trying times. Bracing for tougher times ahead While it was reassuring to see the traditional trade managing well for the time being, all retailers have to brace for the full impact of the petrol price hikes on their businesses as the year goes on. After all, essential goods will soon feel the brunt after non-essential goods have had their turn. Business conditions are only going to get tougher – not only for the traditional trade but the entire retail industry. In fact, some experts see 2006 as leading to the beginning of a new economic cycle (remember the 1997 financial crisis?) and the signal for a new era for Malaysia’s retail industry. Our economy will continue to shift and turn in response to a host of environmental forces, such as inflation, interest rates, the stock market’s performance, the Ringgit’s appreciation, the continued emergence of modern China, and even wars (elsewhere in the world). All these will affect the price of goods, consumer spending and even the way of doing business. Rest assured, the modern trade can be expected to compete even more aggressively, especially among each other. Thankfully, the traditional trade has now evolved to fill a niche as the consumers’ choice for quick trips and fill-up trips for urgent food and non-food necessities. So, there is not just hope but also a growth opportunity for the traditional retailers who act now to consolidate their businesses, adopt good retail practices (eg stocking only what their surrounding communities require and even then, in the right range of SKUs and assortment of brands), and modernise their store management practices.

VIEWS FROM THE CORPORATE COMMUNITY A Dipstick Survey

We thought it’d be interesting to also get a feel of how other people (besides retailers) perceived the economy in 2006. So, we sent out a survey by email to the corporate community. Their views would be significant as they would generally have a better perspective of the country’s economic and financial affairs. Furthermore, as middle-income earners, they are viable consumers whose sentiments and shopping behaviours are definitely worth noting. A total of 59 business executives, spanning all levels of seniority, replied to us between May 3 to May 10, 2006. Here’s a quick look at the responses. About the business environment

Responding as consumers

Source: E-Poll by Runcit Media Sdn Bhd (3-10 May 2006)

RALLYING TOGETHER IN TOUGHER TIMES Did you know that traditional retailers are, by far, the most important segment of professional customers for Makro Cash & Carry Distribution (M) Sdn Bhd? In fact, this group constitutes 80% of the wholesale retailer’s clientele! Makro’s business well-being is so intrinsically linked to that of the provision shop, mini-market and Chinese medical hall operators who make their purchases there. So, when the year began on a tougher note for retailers, Makro was also affected.

According to Managing Director Pieter C Boone, the impact was felt mainly in the durable goods and food segment. He said: “Our customers became more conservative in their spending and started stocking-up less. However, they did come around more often for their supplies. So, while invoice value per purchase dropped, we still saw a reasonable level of business activity. Thanks to the support of our professional customers, we are still on track to meet our sales forecast for the year.” The economic uncertainties at the start of the year has led Makro to strengthen its commitment to ensure that both the company and its customers would be able to weather the lacklustre market conditions together. Besides increasing its efforts to continually improve its understanding of what the retailers require and to provide the solutions, Makro strove to provide the best possible prices – a basic demand of all professional customers. In order to achieve this, the company’s commercial teams conduct price checks in the market everyday. Makro also endeavoured to find cheaper alternatives in certain categories that had been especially affected by the petrol price hikes. In a bid to stay even closer to retailers, Makro instituted specialised mailers directed at

its different customer segments. Previously, there was only one standard mailer for all customers. According to Boone, these measures have successfully drawn customers to Makro. However, the wholesale retailer will not stop there and will continue to improve on its strengths. “We hope to find better alternatives for retailers by sourcing locally or synergising our buying activities regionally,” he says. Boone said he could not predict what the rest of the year would hold. “It’s difficult to tell,” he quips. “It all depends on what will happen globally.” He added that the 2006 budget to be tabled in September would be an important indicator of what lies ahead. For the present, Boone advises retailers to exercise caution. “Be realistic in your outlook,” he advises. He stresses that being aware of external factors can keep them from making bad decisions while revealing many opportunities to improve their businesses. He concludes: “Talk to people on the street and keep your eyes and ears open.”

COMBATTING INFLATION

The Ministry of Domestic Trade and Consumer Affairs wants the traditional trade to do its bit to help curb inflationary trends arising from the recent petrol price hike.

According to Business Development Director Idris Junid, retailers should do their best to keep prices at fair and acceptable levels. Not only would this keep consumers coming back but it will help to combat inflation.

For maximum impact, the Ministry itself has implemented a nationwide initiative to promote smart consumerism. “The campaign has two objectives in mind – to educate the public and take necessary action against retailers in the wrong,” he said.

Idris said that, as part of the initiative, the Ministry also launched the ‘Kedai Pilihan Pengguna’ campaign on May 4 in Kota Baru, Kelantan. The purpose was to inform consumers on the ideal sort of retail outlets they should frequent.

Under the campaign, the Ministry identified and awarded the most fair-priced retail outlets in 10 categories, including wet-markets, hypermarkets, restaurants, mini-markets, traditional trade outlets and so on. Speciality

shops, like those selling exclusively one type of item (eg shoes) are excluded. The nominees, from all over the country, were judged against criteria that included customer service, prices, quality and the environment, especially in terms of cleanliness.

Looking at the overall picture, Idris said to date the Ministry had been able to keep prices low and inflation at acceptable levels. He added that, due to close monitoring of prices and its consumer education program, the impact of the petrol price hikes on the retail industry has been manageable.

Idris advised the traditional trade to take advantage of this time to improve their businesses. He said: “Traditional retailers need to change with the times to remain competitive.”

With regard to the economic outlook for 2006, Idris said he felt it would continue to develop at a steady pace. He said, despite the petrol price hike, he was confident that the economy had the resilience to withstand this challenge and continue to develop at a reasonable rate. By Stephen Tan – Runcit Malaysia

Advice from Runcit Malaysia WE MUST BRACE FOR TOUGHER TIMES AHEAD

1. OUR ECONOMY HAS CHANGED √ Petrol prices have risen to unprecedented levels and fundamentally changed our economy. √ Our economy will continue to shift and turn in response to a host of environmental forces, such as inflation,

interest rates, the stock market’s performance, the Ringgit’s appreciation, the continued emergence of modern China, and even wars (elsewhere in the world).

√ Business conditions are only going to get tougher – not only for the traditional trade but the entire retail

industry. 2. CONSUMERS WILL SPEND LESS √ Consumers now have to adjust to the new cost of living as a result of costlier goods and services, and

lower spending power.

√ They will spend less on durable goods and non-essential items.

√ When it comes to essential goods, they will be more economy-minded, buying small pack sizes and in smaller quantities.

√ More than ever, they will insist on products that offer the best value at reasonable prices. 3. TRADITIONAL RETAILERS MUST BE CAUTIOUS √ You have not yet felt the full impact of the petrol price hikes on your businesses; it will come as the year

goes on. √ When that happens, you will reaise that changes to the economy are so significant that doing business will

never be the same again. √ While the modern trade will compete more aggressively, you should start taking advantage of your special

qualities as the consumers’ preferred source of urgent necessities and quick trips (see article on page …) 10 SURVIVAL TIPS FOR TRADITIONAL RETAILERS

1. Continue to attract consumers by offering the products that they need and expect from you as a traditional retail outlet.

2. Stock trusted, leading brands that have been proven to sell well. 3. Do not overstock on any particular item. 4. Keep your store clean. 5. Practise good display and merchandising. 6. Encourage the use of Point-of-Purchase materials (see article on page …). 7. Maintain reasonable prices. 8. Be ethical in your dealings. 9. Ask your suppliers for promotional support. 10. Manage your cash flow well.

STOP PRESS! Just before printing of this issue, Tenaga Nasional Berhad announced a 12% rise in electricity rates. This situation will increase the upward pressure on the price of goods and services. Runcit Malaysia will examine the impact of this development in a future issue.

Runcit Malaysia Magazine Issue 5 Rukuniaga Runcit

Know Your Customers’ Rights Every consumer is legally protected against unscrupulous traders, so make sure you don’t find yourself in trouble with the law. Mr Tan bought a pack of batteries at your shop. He later came back and claimed that they didn’t work. You refused to replace them and insisted that the batteries were in good condition when you sold them. What wrong have you done? You’ve denied Mr Tan his right as a consumer to reject defective goods. This right is stated clearly in Section 45 of the Consumer Protection Act 1999. The Act was created to protect consumers in general. And as a trader, you need to be familiar with this Act to run your business in an ethical and honest manner. Here’s what you need to know about the Consumer Protection Act 1999. Who is a consumer? Everyone is a consumer, including you. A consumer is someone who needs and buys a service or product at a price that is agreeable to both the consumer and the trader. What is the Consumer Protection Act 1999? Implemented on Oct 1, 1999, the Act provides protection to consumers. Under the Act, a disgruntled consumer can refer any dispute or claim of less than RM10,000 to the Tribunal for Consumer Claims. What rights do my customers have? Consumers have the right to purchase all products and services such as food, clothing, health, education and housing being sold. They are also protected from products and services that are defective or which may expose them to danger.

From time to time, the Ministry of Domestic Trade and Consumer Affairs publishes a list of products considered to be unsafe. Retailers, suppliers and manufacturers have to stop the selling or advertising such products. Under the Act, you also cannot mislead your customers or make unfair claims about your products. If you do, your customers can claim for damages. Who is liable for defective products? A defective product is one which does not meet an expected standard. The manufacturer, importer, supplier and retailer are all liable for defective products. So don’t sell defective products knowingly. A consumer can claim for damages through the Tribunal for Consumer Claims. What if I have sold a defective or unsafe product? You should replace the item or refund the money if the consumer returns the item within a reasonable time. Your customer has every right to reject a defective product. He or she can also reject a product that is very different from the sample or demonstration model. What advertising practices should I not adopt? You must not advertise products at prices you have no intention of honouring. You also must not promise free gifts or prizes unless you really mean to give them. Also, the price of ‘discounted’ items must not be higher than the normal price. Did You Know? There are several other Acts that protect consumers. Among these are: • The Price Control Act 1946 • The Control of Supplies Act 1961 • The Trade Descriptions Act 1972 • The Hire Purchase Act 1967 • The Weights and Measures Act 1972 • The Direct Sales Act 1993 Protect Yourself As a retailer, you can take several steps to protect yourself against complaints about defective goods:

1. Check all goods when you receive them from suppliers. Look out for dented and rusty packaging, and make sure food-related items have not expired or are near their expiry date.

2. Conduct regular checks on products displayed or in the store to ensure they are in good condition. 3. If you come across defective or expired products, contact your supplier to see if they can be returned

and the money refunded or the item replaced.

Adeline Wong, Runcit Malaysia

Runcit Malaysia Magazine Issue 5 Perspektif Runcit

Champion of consumer rights FOMCA, which has championed the rights of consumers for over 33 years, believes the traditional trade can continue to succeed by responding to consumer needs. Consumer protection groups are often viewed with some suspicion by retailers and manufacturers. This should not be the case. Although their primary role is to protect the interests of the buying public, the messages they send out should be heeded by all, especially retailers, because they reflect what consumers want. The message is simple: satisfy the consumer and you will succeed. Runcit Malaysia spoke to FOMCA president N. Marimuthu on this and a number of other issues:

Q: Give us some background on FOMCA. A: The Federation of Malaysian Consumers Associations (FOMCA) is a non-governmental organisation. It is voluntary, non-profit, non-political and civic-oriented. It is the umbrella body of 14 registered consumer associations in Malaysia. FOMCA links the activities of consumer associations in Malaysia, as well as at the international level, and works towards strengthening consumer protection through lobbying, networking, representation, campaigning and education. FOMCA’s work is focused on empowering consumers in the context of a developing country with a growing sense of consumerism. In this regard, it goes beyond the traditional role of consumer protection in the marketplace (or “value for money” approach). Instead, FOMCA adopts a “value for people’, “value for environment” and “value for money” philosophy. The formation of consumer associations in numerous states by the early 1970s resulted in the government calling for the establishment of a federation to coordinate their activities. FOMCA was formed under the leadership of former Director of Information Dato’ Mohamed Sopiee Sheikh Ibrahim at a general meeting in Alor Star, Kedah, from 10-11 June 1973. The main objectives and roles of FOMCA are to:

o Serve as the coordinating, consultative and advisory agency of member consumer associations in Malaysia.

o Address and advocate consumer interests in order to promote consumer welfare. o Resolve consumer issues through policy development and advocacy. o Provide representation for member associations to deal with the government. o Disseminate consumer information and undertake consumer education.

The constitution of FOMCA prohibits it and its 14 affiliates from engaging in commercial and political activities. Elections to its General Council are held every two years. The council is responsible for managing FOMCA’s day-to-day affairs, which it carries out through an administrative office staffed by professionals.

Q: How has FOMCA's role changed? A: In this age of globalisation and trade liberalisation, FOMCA has broadened its scope to give it a wider, global perspective. In all our research, policy advocacy, media statements and preparation of materials, we look at things from a global perspective: how global market forces affect us and the new types of consumption patterns emerging. We also realise that consumer issues have broadened to encompass many new areas – e-commerce, globalised trade, international trade agreements, regional economic groupings, etc. To cater to such a wide range of issues, we have expanded our operations by hiring additional professional staff. We have established a National Consumers Complaints Council to handle general consumer complaints, and a Malaysian Standards Users Association to address issues relating to the development of industrial standards. Pusat Pemantauan Perdagangan & Perkhidmatan Pengguna Nasional was set up by FOMCA to function as a national price surveillance centre to monitor the prices of goods in Malaysia. Q: What are some of the challenges faced by FOMCA? A: The road to better consumer protection is a hard and continuing struggle. With global forces changing the face of consumerism and reshaping the landscape of our social economy, we are continuously faced with new challenges and new consumer issues. The private sector is endlessly coming up with new and innovative marketing tactics, and current legislative is not expansive and holistic enough to provide comprehensive consumer protection. Law enforcement is still weak and consumers have gradually become unresponsive, unaware and passive. Q: How does FOMCA view the role of traditional retailers? A: Traditional retailers have been around for decades. However, the barrage of hypermarkets in recent years is slowly killing off the traditional retail industry. Many who operate near hypermarkets and shopping malls have folded up due to aggressive competition, but those in residential areas are still managing. Times have changed and the consumer market is widening, but we believe that traditional retailers will continue to play an important role in the community. Although they may lose out to modern retailers in terms of pricing, infrastructure and product range, they still enjoy strategic locations and customer loyalty. Hypermarkets and shopping malls are drawing a great number of consumers, but they remain scarce and scattered, and many of them are not sited in residential areas. Many people still prefer the convenience of neighbourhood shops for their daily needs. They like the warmth and friendliness of neighbourhood retailers and would rather pay a little bit extra instead of travelling all the way to congested hypermarkets and shopping malls. Traditional retailers, therefore, must recognise their competitive advantage and improve their service and shop environment. Improvements do not always mean massive renovations. Simple things, like ensuring their premises are clean and free from rodents and pests, products are fresh and customer service is good, don’t cost anything extra. Q: Are there any common consumer issues arising from traditional retailers and how is FOMCA addressing them? A: We have received complaints about some traditional retailers who sell expired products. Other common problems are that traditional retailers do not keep their products and premises clean. Most shops are chock-full of products and the narrow aisles makes cleaning and shelving difficult. Shop owners must ensure that their products and services are of the highest quality. They must seize the opportunity to capture and retain a segment of the consumer market.

Q: What is FOMCA's future direction with regard to consumer protection? A: We are now focusing on educating the young. We firmly believe that to improve the level of consumer protection in the country, we must first nurture this awareness in future generations. All our consumer programmes are geared towards educating and empowering the young. Concepts such as sustainable consumption, sustainable living and smart consumerism will be incorporated in future programmes to create a new generation of ethical, responsible and intelligent consumers. Access to information today is relatively easy, but the reliability of the content is questionable. We will strengthen our research capacity and continue to provide credible and reliable information so that consumers will be more knowledgeable and, thus, better protected. Jothi Jeyasingam – Runcit Malaysia

Runcit Malaysia Magazine Issue 5 Kedai Runcit

POS Materials Boost Sales POS materials have two important functions: they help boost sales and can make your shop more attractive POS (point-of-sales) materials, often provided free by suppliers, serve to inform and influence shoppers, and to stimulate sales. Their persuasive powers are impressive, as can be seen in two recent surveys. An American study found that 59% of shoppers are influenced by in-store displays (Source: Arbitron, 2005). Another survey revealed that 81% of shoppers learn about promotions through shelf signs, 33% through display signs and 14% through outdoor signs (Source: Unilever). The chart below shows how different POS materials affect sales (Source: Mediaedge:cia). It suggests that more than 40% of shoppers will notice displays at the end of aisles, on shelves, on cashier counters and hanging from ceilings. Because of these signs, 25% to 59% of shoppers will buy the items advertised.

Source: Mediaede:cia

Basic Functions of POS Materials POS materials are more than just fanciful props in a shop. They also serve the following important functions:

• Draw the attention of shoppers to products • Improve the visibility of products • Help products sell faster • Highlight new products, product innovations and promotions • Improve the attractiveness of the shop • Point out key benefits, messages and prices of products • Direct shoppers to designated areas • Serve as product reminders • De-emphasise rival products

Types of POS Materials POS materials come in various shapes and sizes, and each has its own special use. Here are some commonly-used POS materials.

1. Category Signs (C-Sign) This is used to highlight a particular product category and brand. Strategically located in the aisle and above product categories, these signs are easily visible. As such, they quickly and effectively direct shoppers to the categories they seek. These signs can be modified to suit the needs of individual retailers.

2. Shelf Edges (Shelf-E) Shelf edges are prominent because they literally stand out from the shelf. They are used to highlight important information like product, brand and price. These powerful POS materials reinforce key product messages, encourage purchases and can block out competitors’ messages. Shelf edges come in various creative forms, like protruding and 3-D signs.

3. Retail Advertising Panels (RAP) Also known as display signs, RAP come with the name of the shop at the top followed by the product or brand name. RAP are placed outside the shop. Since they are located in less cluttered areas, the key messages stand out. These signs serve as product reminders and support media advertising to create awareness. They are especially prominent in residential, suburban and rural areas.

4. Counter Tops (C-Top)/Show Cards These are usually found at the cashier’s counter and serve as a final reminder for shoppers to buy certain products. They can help block out competitors’ messages and act as product or brand posters to reinforce key messages. Counter tops often highlight ‘Call-To-Action’ messages and have proven to be extremely powerful tools in helping products move faster.

5. Stickers/Shelf Strips These come with adhesive or normal backing and are put on shelves where products are displayed. A common sight in shops, they can be a nuisance when overused. 6. Wobblers These come in all shapes and sizes, and are usually placed next to or around the products with the aim of catching shoppers’ attention.

7. Shelf Talkers These are usually located right under the products and carry advertising messages. 8. Flaglines These are usually hung outside the shop and serve as attention grabbers. They come with product information and key advertising messages. They also help decorate the exterior of the shop, especially during promotion periods. 9. Banners Like flaglines, these are often hung outside the shop. These are usually made of cloth and carry key messages, like ‘Grand Sale’, ‘Mega Sale’ or ‘Closing Down Sale’. 10. Posters These are possibly among the oldest forms of POS materials. Their size depends on how the posters are used. They are usually put up where they can be seen easily by shoppers – behind the cashier’s counter, high-traffic areas, etc. 11. Hanging Mobiles Suppliers frequently use these to highlight the presence of their products. Depending on the size, design and choice of colours, these POS materials can be very impactful. 12. Headers/Display Cards You can often find these in ‘hot spots’ – the ends of display racks or on Dump Bins – to announce a special offer. 13. Decals These rounded, self-adhesive stickers are stuck on walls and glass panels to highlight the price and key messages of a product. Decals are not very popular because they can leave a glue residue when removed. Take advantage of POS POS materials are important tools to boost sales and to make promotions more eye-catching. Be creative when putting them up to ensure shoppers can easily see them. Remember this rule: shoppers won’t buy what they can’t see. POS materials can be quite costly and if not put into good use, will be wasted. Don’t make the mistake of removing them soon after you put them up. Instead, allow them to remain on display for as long as possible to reap the benefits. By Chow Nyuk Loong & Adeline Wong – Runcit Malaysia

Runcit Malaysia Magazine Issue 5 Kedai Runcit

‘P.O.P.’ WHEN THE GOING GETS TOUGH

Often, we can learn a lot from other markets – in this case, the US. Not only was hurricane Katrina the country’s most extensive and costly natural disaster, it also created a major upheaval in the economy. Petrol prices soared to the extent that retailers began to fear that consumers would stop driving to retail establishments or simply have less money to spend when they got there. Well, shopping continues to this day but the market has become a lot tougher. In response, the US retail industry has decided to call on the power of P.O.P. (point-of-purchase) media. In fact, consumer goods giant Procter & Gamble was so convinced of the importance of this in-store advertising medium that the company announced in a major business newspaper that it would devote a greater part of its promotion budget to P.O.P. In the company’s opinion, this was a worthwhile investment considering how the first few seconds after consumers encounter a product on a store shelf or other display are critical in determining whether they stop to consider purchasing it or simply move on.

You might be surprised but the spotlight on P.O.P. also shines hotly in Malaysia, with marketers relying more heavily on such media to maximise their competitive advantages in the shopping aisles (please see Evolution of Malaysia’s Retail Industry, Runcit Malaysia, Feb-Mar 2006 issue). And why not? P.O.P. is paying off, not just for the suppliers but also for the retailers. Just ask the 69% of those surveyed in March 2006 and they’ll tell you that it’s a boon for business! By Stephen Tan – Runcit Malaysia

Runcit Malaysia Magazine Issue 5 Kedai Runcit

10 Tips to Improve Sales How you display your merchandise has a direct impact on your sales. In this issue, we share with you 10 tips on how you can generate more sales through better displays and merchandising. Tip 1: Shelf Location Product visibility is very important. Put the products you want to sell faster in the best positions to catch the attention of shoppers. The ideal position is eye-level, also known as the ‘buy level’. When placed in the right place, even a simple shelf display can become very appealing and prominent.

Tip 2: Shelf Facings The more facings a product has, the faster it will sell. Some researchers put the figure at a staggering 124% increase in sales! It helps if you know the top three brands in each category. If you’re not sure, ask your suppliers for ACNielsen’s data on top-selling brands. This will help you decide which products should have more shelf facings.

Tip 3: ‘As Advertised’ Signs If a product has been aggressively advertised in newspapers or on television – for example, a new or a reformulated product – take advantage of its high profile. Use signs like “As Advertised in Newspapers & on TV” to grab your shoppers’ attention. Make sure the signs are bold and prominent. Tip 4: Related Items Put related items close to each other. According to research, this can generate up to 170% more sales than if they are displayed far apart. For example, put toothpastes and toothbrushes together. Similarly, display shampoos, hair conditioners and other hair-care products close to each other. The logic is simple. Shoppers buy on impulse when they see a related product they can use.

Tip 5: Informative Signs Shoppers like to know what they are buying. So, give as much information as you can about the products you display – how much they cost, where they are from, what they are made of, the benefits of using them, etc. Even simple signs can boost sales by up to 33%. Tip 6: Promotion Signs These are usually used to highlight new or improved products on promotion so that they stand out from the rest on a crowded shelf. Such signs can increase sales by up to 18%. Tip 7: Slogan Signs Make use of slogan signs, if available. After all, those who shout the loudest will get the most attention – and sales. Slogans will draw the attention of shoppers who are busy looking for items on their shopping lists.

Tip 8: Displays Help Sell Unadvertised Items Not all products are widely advertised. To help lesser-known products sell faster, use creative signs on these products so that your shoppers will notice them. Research has shown that this can result in a huge 420% increase in sales! Tip 9: Store-wide Sale Tie-Ins Exploit all ‘hotspots’ and ‘high-traffic areas’ with the effective use of POS (Point-of-Sale) material to coincide with a special promotional item. This will attract the attention of shoppers and accelerate sales. Tip 10: Slip-Case Displays Brand owners sometimes provide very attractive displays for their items. Use your creativity to enhance the overall appearance of these displays. Well-placed and attractive displays will draw shoppers and boost sales.

Try these effective sales-generating tactics and you’ll be surprised how much you will benefit. Good luck! Chow Nyuk Loong and Adeline Wong – Runcit Malaysia

Runcit Malaysia Magazine Issue 5 Sudut Runcit

7 Steps to Grow Your Business If you know when most people do their shopping and what they want, it is easier to plan your business The typical person follows a well-defined pattern when it comes to grocery shopping. He or she will make stock-up trips, fill-up trips and quick trips on a regular basis, so use this knowledge to your advantage. Stock-up Trips Most people do grocery shopping during the first and last weeks of the month. They usually shop for an hour on these trips and spend between RM100 and RM150 per visit. Most shoppers in large urban centres – 55% – visit hypermarkets or supermarkets for stock-up trips. Fill-up Trips In between stock-up trips, people often run out of some items or need to buy things they forgot to get earlier. Hence, the need for fill-up trips, when they will buy fewer items (9 on average), and spend about RM50 per visit. Most people visit provision shops (52%) for fill-up trips. Quick Trips Many married women work, but still need to cook. Their decision on what to prepare for dinner is usually made on the day itself. She will buy just 4 or 5 items, and spend less than RM20 per quick trip. Some 65% of people visit grocery shops for quick trips. Quick trips are more profitable for retailers as shoppers are in a hurry and will grab what they need, instead of going elsewhere for the lowest prices. Dual-income families also prefer to save time, rather than money, by making fill-up and quick trips. Here are 7 steps to profit from such trips 1. Know Your Best Customers Make sure that no retailer knows the shoppers in your neighbourhood better than you do. Try to recognise your regular shoppers, remember how much they spend per visit and pay more attention to them. Make it a point to listen to customer complaints. An unhappy shopper will say negative things about you and this can harm your business. 2. Focus on What Your Customers Want During stock-up trips, shoppers look for the lowest prices. But for fill-up and quick trips, their time is as important as their money. So, focus on: a. Always having what they want b. Reasonable pricing c. Making it easy for them to grab-and-go 3. Carry the Right Products With less space than supermarkets and hypermarkets, provision shops can’t carry as many items. However, you can still meet most of your customers’ needs by making sure you carry the best-selling items. Also, talk to your customers about what they want you to stock. ACNielsen will help you by carrying a list of best-selling brands by category in each issue of this magazine. Having fewer items on your shelves makes it easier for customers to find what they want. 4. Everyday Reasonable Prices for Known Value Items Shoppers do not expect you to match the promotional prices of hypermarkets. For fill-up and quick trips, they are likely to compare your prices to non-promotion items. ACNielsen publishes a list of the Top 500 Best-Selling Items annually for retailers to manage pricing. Use the list to ensure you offer reasonable prices. For more details, contact your Runcit Media representative.

5. Self-service Boosts Sales In modern trade outlets, self-service is the rule. And for good reason: self-service stimulates impulse sales, creating an opportunity for you to sell more. Making your shop self-service and easy to negotiate may involve a change in layout and shelving.

6. Reduce Costs, Improve Productivity You can improve your financial performance significantly by:

1. Reducing the cost of inventory carried 2. Improving the productivity of space used

To cut costs, carry only the best-selling items and order only the right amount. But don’t order too little or you will run out of stock. Sales lost due to out-of-stock items can be as high as 4% of total sales. Improve space productivity by allocating bigger areas to your best-selling and most profitable categories. By minimising backroom space, you will also increase your selling space. This will improve store layout and makes it easier to monitor stock levels.

7. Keep Up With Change People continuously change their consumption and shopping habits. If you are doing better than the competition, then continue to do what you do. If not, you need to change to meet the opportunities and threats in the marketplace. So, know what your shoppers want!

Conclusion According to ACNielsen’s 2005 Shopper Trends Report, this is what shoppers look for when it comes to grocery shopping: 1. Convenient to reach 2. Close to home 3. Always have what I want 4. Good value for money 5. Low prices for most items 6. Attractive promotions 7. Easy to find what I need Provision shops are more convenient to reach and closer to home. Exploit this advantage by identifying what your shoppers need most and focus on meeting their needs.

Article and charts courtesy of ACNielsen.

Runcit Malaysia Magazine Issue 5 Media Runcit

Runcit Media – Your Source of Insights and Information

As Malaysia’s foremost traditional retail media specialist, with a comprehensive network of more than 7,000 outlets in over 1,200 towns throughout Malaysia, Runcit Media Sdn Bhd is in a unique position to provide brand exposure, trade feedback and create B2B touch-points between manufacturers/marketers and retailers. Runcit Media has the distinction of pioneering the Retail Advertising Panel (RAP), an effective point-of-purchase medium and outdoor signage to create strategic brand awareness. Both marketers/manufacturers and retailers in suburban and rural areas have benefited from this unique brand-promoting medium. Runcit Media’s other media – Counter Top (C-Top), Category Sign (C-Sign) and Shelf Edge (Shelf-E) – have also proven to be highly effective message communicators.

But did you know that there are other ways you can use Runcit Media to build an even better relationship with the traditional retail trade? And that in the long run, you will have an edge over your competitors through the knowledge and data gained from Runcit Media’s information-gathering services? B2B Touch-Points

This is provided through Runcit Malaysia magazine, the country’s first and only B2B medium dedicated to the traditional trade. Packed with practical, simple and colourfully illustrated articles to help retailers develop new ways to attract shoppers, improve operations and compete effectively, this quarterly magazine also invites marketers/manufacturers to be programme partners. As a programme partner, you’ll enjoy many benefits:

1. Use the magazine to express your company’s views on current issues. 2. Share operational know-how and experience. 3. Impart category knowledge. 4. Advertise your brands/products. 5. Access magazine-based survey findings on the traditional trade.

Your participation in the programme allows retailers to know your company better, generating greater brand loyalty and closer rapport with retailers.

Runcit Bus

If your company seeks a cost-effective alternative to complex and formal research normally carried out by marketing information companies, you should ride on Runcit Bus, a value-added service from Runcit Media which provides vital trade and competitor information drawn from some 1,500 outlets nationwide. With information gained from Runcit Bus, you can:

1. Gauge product penetration, distribution performance and product pricing in the traditional trade. 2. Identify the contribution of traditional channels to sales growth. 3. Detect your competitors’ brand strategies and performance. 4. Better understand the traditional retail trade.

Generally, Runcit Bus utilises three main checking methodologies:

1. Over the counter (OTC) checks. 2. Face-to-face interviews with close-ended questions or multiple answers. 3. Field surveys.

3,700 Outlets

Other Value-Added Services Runcit Media also provides:

1. Outlet information: demographic, geographic, facilities and others; 2. Sales and distribution information: distribution checks, sales coverage, competitors’ activities and

pricing. 3. Feedback gathering from retailers on your services and effectiveness of promotions.

Category Performance - Brand X

The information provided by Runcit Media through these services is current and constantly updated. We are confident it will help you in your decision-making process and give you a competitive edge over your competitors. Call us to find out more! For enquiries, please contact: Elenie Tan, Client Service Head, Runcit Media Sdn Bhd Tel: +603 7957 1718; Fax: +603 7956 5109; email: elenie.tan@runcit.com.my Adeline Wong – Runcit Malaysia

Runcit Malaysia Magazine Issue 5 Teknologi Runcit

No Refrigeration, No Preservatives Required As a provision shop operator, packet drinks form a sizeable portion of your merchandise. In fact, they probably are very popular among your customers as nutritional beverages or thirst quenchers. These products have been an integral part of your business for a long time. But have you ever wondered why these products do not require preservatives or refrigeration (unless opened), yet have a long shelf-life?

According to David Tan Hui Yau, Processing Director of Tetra Pak (Malaysia) Sdn Bhd, this is achieved through the aseptic processing technology using Ultra High Temperature (UHT) method, and aseptic packaging system. "Basically, food and drinks spoil because of pathogens, yeast, spores, virus and vegetative cells. However, when you process them using the UHT method, all harmful micro-organisms present in the product will be destroyed, and by using the aseptic packaging system to package them, any unwanted microorganisms are also prevented from entering the products and spoiling the contents. Hence, this produces a safe and hygienic product with a long shelf life without the need of any preservatives," he said. Tan said Tetra Pak is the world leader in processing, packaging and distribution

systems for the liquid food industry. He said Tetra Pak launched the first aseptic filing machine in 1961, and developed the aseptic roll-fed carton system. "For our pioneering efforts, in 1989 the Institute of Food Technologist (IFT) named aseptic processing and packaging the most important food science innovation to have occurred in the last 50 years." Tan said the reasons for the award included outstanding safety for consumers, and outstanding nutrient and flavour protection of food processed and packed in this manner. "Tetra Pak is not a drink manufacturer, but a partner to companies that supply drinks and beverages. Many major suppliers worldwide use our technology, which means they have confidence in us, so you should, too," he said.

Tan added that Tetra Pak's partners, i.e. the food and drinks manufacturers, are complying with the industry standard of quality control, like lSO 9000, Hygiene Control, Hazard Analysis Critical Control Point (HACCP) and Good Manufacturing Practices (GMP).

The Aseptic Packaging Process The entire process is conducted in a closed system to protect the product from any external contamination. A. Liquid food product in blend tank contains

microorganisms B. Product is heated up to 140 degrees for a

total of only 4 seconds and then quickly cooled down to destroy all harmful microorganisms and ensure the nutritional value, aroma, flavour and texture of the product is retained.

C. Product is filled under sterile conditions into Tetra Pak's aseptic package.

Tetra Pak aseptic package has six layers, each serving a different function. 1. Polyethylene - Protects against outside moisture. 2. Paper - For stability and strength. 3. Polyethylene - For extra protection. 4. Aluminum foil - Protects against oxygen and light, retains vitamins and flavours. 5. Polyethylene - Extra protection. 6. Polyethylene - Seals in the liquid. Once packaged, the product inside a Tetra Pak aseptic carton is:

• Protected from light, air and moisture. • No need for preservatives. • No need for refrigeration (unless opened). • Protected from bacteria. • Remains fresh. • Long shelf life. • Durable.

DELIVERING GOODNESS:

UHT milk remains the dominant liquid milk segment with a 70% share. It is mainly flavoured and largely consumed by children.

Carton is currently the dominant packaging type for Asian beverages, while chrysanthemum tea and lychee remain the most popular flavours till today.

The three most popular flavours are orange, grape and mango. Carton is the leading packaging type, with 1-litre family packs showing a strong growth trend.

Article courtesy of Tetra Pak (Malaysia) Sdn Bhd

Runcit Malaysia Magazine Issue 5 Wang Runcit Debit Cards Can Generate More Sales In the last issue, we wrote about the different modes of payment retailers should consider. In this issue, we discuss the benefits of debit cards – for both retailers and shoppers. Most Malaysians are familiar with credit cards, but many are still in the dark about debit cards. Simply put, debit cards are ATM cards that allow shoppers to pay for their goods straight from their bank accounts. With 12 million ATM bankcard holders in Malaysia, you can imagine the potential for boosting sales if you allow your shoppers to use this ‘pay now’ method. National debit card programmes have been successful in all countries that have implemented them. Singapore introduced its Nets Card in 1987 and, today, nearly all retailers there accept debit cards. In Malaysia, debit cards are still relatively new. Introduced in 2003 by GHL Systems Bhd, it takes the name Bankcard e-Debit. But most Malaysians have never heard of it, much less use it. There are currently only about 2,000 merchants in Malaysia who accept debit cards.

Alex Tay Beng Lock, Group Managing Director of GHL Systems, says there is a lack of awareness of debit cards here. However, he is convinced that the e-debit programme will take-off once people learn to appreciate its benefits. “Our problem is the lack of awareness. If consumers know about it, they’ll want to use it,” he says, adding that GHL Systems is working with various banks to promote the use of Bankcard e-Debit. A Sales Booster For retailers, the most obvious benefit is an increase in sales. This is because by accepting debit cards, retailers are giving shoppers another option to pay for goods. Says Tay: “Let’s take an example. A shopper wants to buy items costing RM150,

but he has exactly RM150 in his pocket. Given the choice, do you think he will prefer to use a debit card to pay for the items? Of course, he would! Because if he uses cash, he will then have to find an ATM to withdraw money to put back in his pocket. “If you force the customer to walk out of the shop to find an ATM to withdraw money, there’s a chance he will not buy the items.” With an alternative method to pay for purchases, shoppers will likely spend more in a shop. This means more sales for you. In fact, Tay says that merchants who accept cards – both credit and debit cards – are known to enjoy an increase of 30-40% in sales. Safety and Security Credit cards are often associated with fraud, but this is not the case with debit cards, says Tay. “There are hardly any fraud cases with debit cards because of two elements: we have chip-based cards and PIN. You have to lose both the chip and PIN before any fraud can take place. So, debit cards are extremely safe. “And to protect the PIN of a customer’s debit card, a cover is put on the EDC terminal. Called a ‘privacy shield’, it prevents the cashier from seeing the PIN when a customer uses the card. So safety is not an issue,” Tay insists.

Contests & Promotions Many shoppers favour supermarkets and hypermarkets over traditional outlets because of their many contests and promotions. Due to budget constraints, small retailers cannot offer such attractions. But if they participate in GHL Systems’ e-debit programme, traditional retailers, too, can help shoppers enter exciting contests. Tay explains: “Small retailers don’t have the money to run their own contests and promotions. However, if they join our e-debit programme, they can give shoppers a chance to win fabulous prizes, like cars and plasma TVs. The programme will also help retailers increase sales as we only accept entries with purchases worth at least RM30. So, in a way, we run a year-round promotion for participating retailers.” Shoppers Gain, Too Shoppers will definitely enjoy the convenience of debit cards. They don’t have to worry about not having enough cash when they shop. They can buy anything that catches their eye, even when they don’t have enough cash on them. All they need to do is to bring their ATM Bankcards, which can only be used by the rightful owners. In a way, Tay says the use of debit cards can also solve many social problems. “If using debit cards become a way of life, people will carry less cash. So, the number of snatch thefts and robberies will also reduce.” Another benefit is that, unlike credit card usage, there are no charges for shoppers who use debit cards because the exact amount is deducted straight from their bank accounts. They only pay for what they buy. Tay adds: “Paying with debit cards is also cheaper than withdrawing money from ATMs because some banks charge a fee after you make more than four withdrawals a month. Also, there is a daily limit you can withdraw from an ATM. But if you use an ATM Bankcard, you decide how much the limit is. You can tell the bank you want to set your limit, say, to RM5,000 a day. So you are in control, not the bank.”

It’s Reasonably Priced If you are now convinced that accepting credit/debit cards will help your business, the next step is simple: you need to only pay a small fee to have an Electronic Draft Capture (EDC) terminal installed in your shop. “The rental of an Electronic Draft Capture (EDC) terminal for debit cards is only RM88 per month, while the facility for both credit and debit cards combined is RM140. This works out to less than 5% of an average retailer’s monthly operating costs. If it can help raise sales by 30-40%, it’s really worth it,” says Tay. Getting a Bankcard e-Debit Terminal If you want a Bankcard e-Debit terminal in your shop, just contact GHL Systems (See Enquiries on Bankcard e-Debit) and a meeting will be arranged. You will need to pay a deposit for the terminal, after which your application will be sent to the bank concerned. Within two weeks, you should get the terminal installed. It’s that easy! Adeline Wong – Runcit Malaysia

Enquiries on Bankcard e-Debit Keen to find out more about the Bankcard e-Debit programme? Then call GHL Systems at 03- 6286 3388 or email edcsales@ghl.com or edcpool@ghl.com. You can also contact the people listed below: Joe Pie Chong Seng H/P No: 016-263 5300 D/L No: 03-6286 3268 Email: pcs@ghl.com Damon Hen Saul Kuaw H/P No: 019-355 4133 D/L No: 03-6286 3288 Email: hsk@ghl.com David Tan Yen Seong H/P No: 019-382 3950 D/L No: 6286 3398 Email: tys@ghl.com Maxie Boon Learn D/L No: 03-6286 3260 Email: bol@ghl.com

Runcit Malaysia Magazine Issue 5 Wang Runcit

Loans Help, But Be Careful Do you really need a loan for your business? What kind of loan facilities are there? In this issue, we talk about when a loan is necessary and the different credit facilities available to small- and medium-size enterprises. We hear of business owners getting loans all the time. But what are the loans actually for? If you’re not careful, having a loan may cause you more trouble in the long-run. Don’t make the mistake of thinking that a loan is the answer to all your business problems. With a loan, you will have more capital to start or expand your business. In fact, many smart business people actually run their businesses entirely on loans because they know how to manage their businesses wisely and know that the profits they earn will far exceed the interest they have to pay back to the bank or lending institution. Beware of Pitfalls Before you take a loan, you need to do some serious thinking. If the loan is to start a business, expand or buy new equipment, then you should prepare a sound business plan to convince your potential lender that you have the ability to repay it. If you are toying with the idea of getting a loan to cover your personal debts, that’s a big mistake!

Additionally, you must be prepared to face the fact that if your business fails, the assets you mortgaged when taking the loan are at risk. You must ensure that you can pay back the loan, plus the interest charged.

Always keep it mind that a loan is just that – you still owe the bank or lending institution that granted it to you. And you must pay back the loan and the interest in the time period agreed on. If you fail to do so, you may face legal action. So be realistic and practical. Only take a loan if you are sure you can repay it.

If you’ve approached banks and other lending institutions for loans, but can’t get any, that’s probably because you have no credit-worthiness. You may have a bad record of borrowing money or had businesses that fail. If that’s the case, maybe running a business is just not the right thing for you.

And don’t resort to unlicensed money-lenders if banks turn you away. The risks are even much higher and most borrowers end up paying ridiculously high interest rates. In general, business loans come under two main categories – asset acquisition and working capital loans. Asset acquisition loans are for the purchase of items like vehicles, equipment and buildings, while working capital loans are credit facilities to finance daily operations. Asset Acquisition 1. Equipment leasing Leasing is a convenient way to purchase equipment if you are short of cash because you do not have to pay the full amount immediately. In simple terms, the bank buys the equipment on your behalf and leases it to you. You then make monthly or quarterly payments to the bank. Once you have paid the whole sum, ownership of the equipment is transferred to you. Leasing also allows you to raise cash from equipment you already own. The bank buys your equipment – for example, your van – and leases it back to you. This is like taking a mortgage on your house. You can then use the cash to expand other areas of your business or to cover short-term cash-flow problems. In the meantime, you can continue using the equipment. 2. Term loan This is a fixed sum loaned to you for a specific purpose. It must be repaid within the agreed period. It can be used to buy equipment or to renovate your shop. Working Capital 1. Overdraft An overdraft allows you to withdraw more money than what you have in your account – up to a limit set by the bank. You will be charged interest and a fee for this. Overdrafts come in different forms – Overdraft Straight, Overdraft PO and Overdraft Invoice.

a. Overdraft Straight is the most common type of overdraft. It is basically a fixed amount you can use, either partially or fully, anytime you wish and for an indefinite period. The amount is based on how much you have in the bank and your business record.

b. Overdraft PO and Overdraft Invoices are for a fixed period. The amount loaned is based on your purchase orders (PO) or invoices. The bank will often also consider the credit rating of your clients.

2. Bank Guarantee This is a written contract by the bank that allows you to buy goods and equipment or to draw on loans to expand your business. If you are unable to settle a debt, the bank will act as a guarantor and will pay the sum first on your behalf. The initial claim is made against you, not the bank. 3. Letter of credit This is a document written by the bank to your supplier/potential supplier guaranteeing that your payment will be made on time. If you fail to make payment, your supplier can approach the bank for the amount. The initial claim is made against the bank, not you. 4. Short-term loan If you need temporary working capital, a short-term loan may be the answer. You are often required to repay the loan within five years and repayments are made monthly or quarterly. 5. Long-term loan If you want capital to start a business or to expand it extensively, you may need a long-term loan. The amount is usually based partly on the lifespan of the asset (for example, a building) you want the loan for. It is for more than five years, and repayments are often monthly or quarterly. If you’re not sure what kind of loan or credit facility you should apply for, talk to a bank officer. Most commercial banks offer various schemes to suit businesses of all sizes.

Where to get a loan? While you can go to any bank to enquire about small business loans, there are several institutions specialising in loans for SMEs. Their contact details are: Credit Guarantee Corporation Malaysia Bangunan CGC, Kelana Business Centre, 97, Jalan SS7/2, 47301 Petaling Jaya, Selangor. Client Service Centre: 03-7880 0088 Tel: 03-7806 2300 Fax: 03-7806 3308 Email: mailbox@cgc.com.myWebsite: http://www.iguarantee.com.my Bank Pembangunan Malaysia Berhad (Formerly known as Bank Pembangunan & Infrastruktur Malaysia Berhad) Bangunan Wawasan, Jalan Sultan Ismail, Peti Surat 10788, 50774 Kuala Lumpur. Tel: 03-2611 3888 Fax: 03-2692 8250 Email: eng_y@bpmb.com.myWebsite: http://www.bpmb.com.my SME Bank Malaysia or Bank Perusahaan Kecil & Sederhana Malaysia Berhad (Formerly known as Bank Industri & Teknologi Malaysia Berhad) Menara SME Bank, Jalan Sultan Ismail, Peti Surat 12352, 50774 Kuala Lumpur. Customer Service Centre: 1-300-88-3131 Tel: 03-2615 2020 / 03-2615 2828 Fax: 03-2692 8520 / 03-2698 1748 Website: http://www.smebank.com.my Adeline Wong – Runcit Malaysia

Runcit Malaysia Magazine Issue 5 Feng Shui Runcit with Lillian Too

The Prosperity Signature A signature is said to attract great prosperity and success for a person if it starts with a firm upward stroke and ends with another firm upward stroke. Check the signatures of any successful people that you know and, when you are convinced that this is correct, practise your own new signature until you achieve these auspicious strokes. The most auspicious signatures illustrated below are signatures A and C.

Signature A From a feng shui perspective this will be the most auspicious signature of the four shown here. Note the upward starting stroke, and the upward ending stroke. This denotes a good beginning and a good ending to every project and job undertaken.

Signature B This signature is only partly correct. It starts with a firm upward stroke, but ends with an equally firm downward stroke. A signatures that ends with a backward movement is not auspicious. It indicates a sad ending.

Signature C This is another example of a signature that has excellent feng shui. Once again note that the beginning stroke is upward and the ending stroke is also upward. An ending upward stroke, which is a line under the signature, is also regarded as part of the signature. Thus, those of you who do not have an upward ending stroke could include a firm line upward to create prosperity luck.

Signature D This signature has an almost unnoticeable downward slant to its ending. It is, therefore, not auspicious. If your signature looks like this, try to change it so the stroke is moving upwards. Article courtesy of World Of Feng Shui

Runcit Malaysia Magazine Issue 5 Halaman Pak Runcit

Bicara Runcit Question: How do I boost the sale of products that are not selling well? Kedai Runcit Hj Sohaili Bin Hj Othman, Kubu Gajah, Perak. Answer: When a product is not selling well, you first have to establish the reasons for the poor demand. Ask yourself the following questions: 1. Do I do have the right customer base? If you do not, then the product is not suitable for your shop. No matter what you do, sales will not improve much.

2. Do I have the right pricing strategy? Check whether your pricing strategy is competitive for the area you are serving. For all you know, other shops in your neighbourhood are selling the product at a lower price. 3. Am I stocking the right size of the product? If your customers have a lower disposable income, then offer the product in smaller sizes so that they can afford to buy it. Only after you have identified the reasons why a product is not selling well can you then find a solution. Remember that shoppers are always looking for bargains and value-for-money products. The more ‘promotional gimmicks’ you can offer, the greater the likelihood of increasing sales. Question: Since there are more supermarkets now, will suppliers and distributors support small retailers where pricing is concerned? Kedai Runcit Hj Sohaili Bin Hj Othman, Kubu Gajah, Perak. Answer: The business of a supplier or distributor is not made up of supermarkets alone. Other types of outlets, regardless of size, are just as important. Each company has its own pricing policy and this is not dictated by the size of a particular category of outlets The distribution channels of a supplier or distributor can also influence pricing structures. The different distribution channels can be summarised as follows: 1. Open Market This is usually undertaken by a Distributor which deals with an outlet that is credit-worthy.

2. Semi-Closed System The distribution is carried out by a Distributor and a number of Appointed Key Wholesalers.

3. Closed System The distribution work is handled by a few Appointed Dealers, Resellers or Stockists. The common price list of a mass-distributed product offered on an Open Market basis is usually structured as follows:

a. Recommended Consumer Price and Retail Price These prices apply to all outlets classified as ‘retailers’, that is, they buy goods and sell them to consumers. They include supermarkets, mini-markets, provision shops and Chinese medical halls.

b. Wholesale Price Wholesalers are also known as Re-sellers. They buy in bulk and re-sell the goods to retailers.

If you feel that the cost of your goods is much higher than it should be, you can always ask for the official Price List (assuming you are not buying from a direct supplier). If you are dealing with a wholesaler, the official Price List can be used as a point of reference.

Question: Some salesmen ask me to issue cheques without the payee’s name as they claim this is the instruction from their companies. What do I do? Kedai Runcit Yen Le Chan Trading, Sg Bakap, Pulau Pinang. Answer: In any business transaction, it is always recommended that you safeguard your own interests. This includes payments, whether they are by cheque or cash. From what you tell us, the salesmen are obviously up to no good and such actions can eventually lead to a Criminal Breach of Trust (CBT) case. Such requests are very common among salesmen who are in financial difficulties arising from the following: a. Gambling debts. b. Spending more than what they earn. c. Forward-spending (the reckless use of credit cards). Do not be taken in by such irresponsible and unscrupulous salesmen. It is in your own interest to report them to the companies concerned. If you give in to their requests to make out cheques without the payee’s name, it could have adverse repercussions on your business. You may find your supplies cut off if your payments are not recorded or updated on time by the company. When you make a cheque payment to any supplier, you must ensure that the following details are strictly adhered to: a. The Payee’s name must be clearly written and in full. If it is a ‘Sdn Bhd’ company, make sure that detail is included in the cheque. If the name of the Payee is ‘Dicken Malaysia Sdn Bhd’, do not simply write ‘DMSB’, as this can lead to abuse by salesmen.

b. Remember to cross the cheque ‘Account Payee’ and strike out the words ‘or Bearer’. The words ‘Account Payee’ can also be pre-printed on all your cheques. c. The amount and words must tally. Do not under any circumstance ask the salesman to write the cheque on your behalf. Once the cheque is handed over to the salesman, ask for a receipt. Depending on the policy of the company, this is either issued immediately by the salesman or posted a few days later by the accounts department of the company. If you do not receive a receipt after a week, you should phone up the company. You are also strongly advised not to pay in cash because if the amount is substantial, it can be very tempting for an unscrupulous salesman to walk away with it! There is no fool-proof method to guard against unethical salesmen. Use your judgment when it comes to payments and supplies. If your suspicions are aroused, we would advise you to immediately contact somebody in authority in the company. Chow Nyuk Loong, Runcit Malaysia