Tukar: Transforming old traditions

In 2011, Pemandu has transformed 519 shops with the Domestic Trade, Co-operatives and Consumerism Ministry taking the lead, in partnership with Tesco, Carrefour and Mydin.

COMMENT

By Ravindran Devagunam

As a former airline man, I have always been amazed by how the different components in an aircraft come together to create flying machines such as the A380, which can weigh more than 560 tonnes.

If we draw a parallel, the A380 can be likened to the Malaysian economy, while some of the key components in the aircraft can constitute the 50,000 “mom-and-pop” shops around the country.

Similar to how critical the components are to the performance of the aircraft, the sustainability of these traditional shops is essential to our economy.

This is because domestic consumption contributes 70% of our Gross Domestic Product (GDP). Despite the global crises, our GDP grew 5.1% in 2011, driven by domestic demand which has grown strongly over the past two to three years.

Our economy is therefore more resilient today and we are better able to weather external economic challenges.

Hence, to drive domestic demand and consumption, Tukar or the small retailer transformation programme, serves to modernise traditional “mom-and-pop” grocery stores, making them more competitive.

In doing so, Tukar also aims to ensure the sustainability of the shops, encouraging generational growth by enabling the next generation to inherit thriving businesses with stronger and better growth prospects.

How do we go about achieving these goals? With a two-pronged approach – by modernising the shops and transforming the way the owners run their business.

In 2011, we have transformed 519 shops with the Domestic Trade, Co-operatives and Consumerism Ministry taking the lead, in partnership with Tesco, Carrefour and Mydin.

The government provided soft loans of up to RM60,000 per shop while the retailers provide their expertise to modernise the look and feel of the stores, and help owners become more business- savvy.

Once cluttered, dingy and sometimes, smelly outlets are turned into modern shops with bright lights, tiled floors, properly arranged products in spanking new shelves. Some owners have also installed air-condition. This makes shopping easier, more enjoyable – and attracts more customers.

Increasing the revenue

In addition, the retailers also advise the owners on business administration and management of cash flow, product display, as well as stock management through computerisation and bar coding.

The two-pronged transformation has had phenomenal results. In Puchong, single mother, Jessica Wong, saw her revenue increased by 30% in the first three months before it skyrocketed to 60%.

She said that while modernising her shop was important, the skills she learnt on how to manage a modern business, were equally important.

Selvaraju Krishnan in Telok Panglima Garang, Selangor, recounted the same exciting story. He knew he needed to modernise his shop but did not know what was required.

With Tukar, he has become successful. Revenue has increased by more than 60% and he is optimistic that the new skills learnt will help him become a better businessman.

For Yusmadi Mat Yassin, who owns a small outlet in Felda, Bukit Goh, located outside Kuantan, his shop became the talk of the town after Tukar.

Since then, revenue has increased and as he has stocked new products, he was instrumental to changing the diet of the villagers. Cereals have become the best-selling product in his shop!

Imagine that. Who would have ever thought that Felda villagers have a hankering for novelty cereals?

In addition, Yusmadi was delighted that he no longer has to wake up at 3am daily to purchase fresh produce from town. Carrefour delivers the produce and seafood to his doorstep daily, and he said the items are fresher than the ones he used to purchase.

This is one of the many advantages of Tukar. By connecting the owners to the retailers directly, Tukar eliminates the high cost of distribution, which can add up to 36% costs to the products.

The direct owner-retailer relationships enable shops to offer the same quality of products but at a lower price to their customers. This brings down the cost of living.

Our plan for Tukar is clear. From 2012 to 2020, our goal is to modernise 500 shops annually. We are also constantly reviewing how to take Tukar to the next level.

Recently, in response to owners’ feedback, the ministry has increased the funding of the programme to RM100 million.

This means shopowners can now obtain loans of up to RM80,000 – a 33% or RM20,000 increase from the previous loan amount of RM60,000. This will ensure that they have adequate capital for stock purchase after the transformation of their shops.

For us, being a part of Tukar has been extremely gratifying as we see the results almost immediately. We share in the joy and excitement of the sundry shopowners as their revenue increase, and as they see new possibilities for their families and businesses.

The Tukar journey has only begun. I invite shopowners who would like to participate in this programme to write to us at Tukar@kpdnkk.gov.my.

Ravindran Devagunam is Wholesale and Retail Director of Pemandu (Performance Management & Delivery Unit), Prime Minister’s Department.