MYDIN’s response to ‘Kedai Rakyat pulling a fast one’

Source: Free Malaysia Today - 25 November 2011

From Ameer Ali Mydin, via e-mail

KR1M would like to respond to several issues raised by Douglas Tan in his article, ‘Kedai Rakyat pulling a fast one’. Our products are generic products. There are no advertising cost, no frills on packaging, and produced by local suppliers and manufacturers. As a result, we are able to save advertising charges and bring down the cost and by selling at a very small margin, KR1M products are 30%-50% cheaper against popular brands which are mostly international brands. In fact, KR1M generic products when compared to other hypermarket generic products of similar quality are also much cheaper.

On the question of the number of outlets,KR1M has already opened seven outlets, there will be a total of 25 outlets by year end 2011 and 60 will be opened in year 2012. Therefore, by year end 2012, there will be in total 85 KR1M outlets all over Malaysia. On the open tender process, KR1M is not privy to how the decision was made. We can only guess that as Mydin being the largest local retailer with experiences in wholesale and retail, coupled with existing supply chains, and willing to open KR1M on a CSR basis, we were chosen to run the KR1M stores operationally. No KR1M products are more expensive than the current market price of similar quality products.

We would appreciate if actual products can be highlighted and not just shoot from the hip. At our press conference on Nov 14, we stated very clearly that Tony Pua has maliciously compared KR1M generic products with Carrefour Big Savers products of different quality when rightfully he should have compared KR1M generic products with Carrefour brand products and when compared correctly, all KR1M products are much cheaper. It defies logic on why Tony Pua has never replied nor clarified nor disclosed why he did this. When conducting promotions, retail stores usually have a budget to work with, in bringing down the promotional prices. These are usually applied within a certain promotional period and many a time, for a short duration only. After the promotional period is over, prices will rise up again and back to normal. For KR1M products, prices are maintained low at all times to ensure that it benefits the Rakyat.

So, it defies logic again on how Douglas Tan can compare say, two days paranormal offers with KR1M prices which are maintained long-term. Let us be fair here. Prices of other popular brands are determined by their respective manufacturers. There is a RSP set determined for the products. It is not true as per what was mentioned by Douglas Tan that generic labels are associated with lower quality products. Generic products are priced cheaper as what I have mentioned earlier as there are no advertising costs and no frills on packaging. It baffles me as to whoever gave you the idea that generic products are of lower quality. Please read up the meaning of generic products before you make such assumptions and in this case, allegations.

Generic brands have been available in the market for a long time even in the US and other developed countries and are well-received as the prices are low and helps their citizens to save. It is just like how hypermarkets came out with their respective House Brands. I just do not understand why when we are trying to adopt the good practice from other developed countries, we receive so much objections and cynical remarks from fellow Malaysians even though it is for a good cause. I also fail to understand why, despite Tony Pua shouting at every corner in wanting to help “poor Malaysians”, he does not want to pass the test results to the Ministry of Health which any responsible citizen should do for the improvement of mankind? More so, being a MP. We have thus far no issues on our procurement department which maintains the highest standard, as stated above. Tony Pua’s assertions and allegations are unfounded.

On the claims that RM40 million was spent to renovate 31 stores at a cost of RM1.3 million per store, may we know how Douglas Tan arrived at the figures? KR1M would love to give him a contract to do all our renovations and assets purchases, if he can even do the smallest KR1M outlet at RM70,000. Please do not say things based on assumptions or know nothing about without doing proper homework. RM40 million has been allocated by the Government to set up KR1M stores all across the country. The amount is used for renovations only fit-out works such as tiling, ceiling and lighting installation, painting, cashier counters, display racks, signboard, equipment such as chillers and freezers, computer systems, CCTV and Point Of Sales (POS) System. Please be informed that the cost to set up a new KR1M outlet is between RM250,000 to RM750,000 depending on the size of the store which are from 1,500 square feet to 5,000 square feet. So, it is estimated that 85 outlets at an average cost of RM470,000 would utilise the total budget of RM40million. Kedai Rakyat 1Malaysia (KR1M) was formed to ease the burdens of the low income earners in the urban areas.

The operational aspect of KR1M is being handled by MyMydin, the team that specialises in mini-market concept store operations, which Franchise is open to Malaysian entrepreneurs who want to embark on retail business. The whole concept of MyMydin operations now has become a benchmark to all other mini market operators. The idea has been accepted by the public and its credibility is proven by the increasing sales record in all of its stores. In addition to that, other mom-and-pop stores are also widely called upon to sell KR1M products in their existing shops so that consumers can reap more benefits by having more KR1M products available in other mom-and-pop stores. I do not see how KR1M’s presence can be a threat to mom-and-pop stores, but instead complement their business. There is no subsidy involved in goods being sold in KR1M. Why appoint Mydin to operate these stores? Mydin has been appointed as the operator and administrator of KR1M to ensure the existence of KR1M in the country will serve the Rakyat with the hope of lightening the cost of living.

Mydin has 54 years of experience in the wholesale and retail business, and therefore, it is well established in terms of personal retail management and state of the art supply chain management systems. Mydin is the only homegrown hypermarket which realised the idea of creating KR1M was brilliant, and a great way to incorporate it into Mydin CSR programme. Mydin has also proven to be a role model and a champion by giving IKS and PKS suppliers and manufacturers the opportunity to grow big and be successful in the retail market. Such opportunities are rarely given by other foreign operators as their objectives are merely to reap profits from our beloved country. We feel everyone and anyone can ask to do this. There is no monopoly here. The willing operator would have to show its ability to run the KR1M outlets on a CSR basis. We would, of course, be more than happy if other local retailers such as Econsave, 99 Speedmart and Sunrise would offer to do KR1M outlets.

Please let us not be so naïve and ask the foreign hypermarkets as this would also result in them controlling our modern retail trade in small formats. As you should be aware, foreign hypermarkets already control more than 50% of modern retail trade currently. There are no extravagant costs involve, therefore, taxpayers need not to be worried. As this is a CSR programme, the operator is obliged to absorb certain costs involved when operating KR1M outlets. The products have not failed on any Malaysian standards set by the Ministry of Health as they have been in the market even before the 1Malaysia brand came about and has been widely accepted by consumers. All of the manufacturers of these products have been in the market for many years and are very reputable.

I’m sure the ministry has been conducting many check across all brands to ensure the safety of consumers is not compromised in any way and the 1Malaysia brand has and will always give priority to acceptable quality and great low prices to give great savings and overall benefit to the Rakyat. To date, we have only unfounded, unsubstantiated allegations by Tony Pua. If he can so kindly provide his test reports to the ministry, I’m sure they will take appropriate action. It appears that making false, unsubstainted allegations is the easy part for Douglas Tan. The difficult part is for him to justify the allegations, unfortunately the damage to the IKS Suppliers and KR1M is already done. KR1M hopes that Douglas Tan will be more of a responsible journalist and as he claims “is an active member of the DAP but does not let it define his opinions”.